“At the time of LTL’s filing, J&J had well over $400 billion in equity value with a AAA credit rating and $31 billion just in cash and marketable securities. It distributed over $13 billion to shareholders in each of 2020 and 2021. It is hard to imagine a scenario where J&J … would be unable to satisfy their joint obligations under the Funding Agreement.”
Finally, it’s the news talc-related cancer victims have been waiting for. The United States Court of Appeals for the Third Circuit has dismissed Johnson & Johnson subsidiary LTL Management’s petition for bankruptcy. With this ruling, Johnson & Johnson faces the most significant roadblock yet in its attempt to misuse the U.S. bankruptcy system to limit its liability in talc-related cancer and mesothelioma claims.
When J&J reorganized its talc liabilities into a shell company then filed bankruptcy in late 2021, they hit the “pause” button for more than 38,000 Johnson’s Baby Powder and Shower to Shower talc-related cancer plaintiffs and more than 400 mesothelioma claimants.
With this new order, the bankruptcy proceedings are halted for now, and the district court has been directed to lift its stay, which stopped trials from moving forward. We are ready to move forward and continue to hold J&J accountable.
Click here to read the court order denying Johnson & Johnson’s bankruptcy petition.
What Does This Mean for Talc Lawsuits?
It’s not over yet.
J&J has a couple of moves it can still make, and we anticipate that it will.
- The first is to request a special type of hearing called an en banc hearing. This type of hearing is usually only done when decisions of considerable significance are being made. An en banc hearing, or rehearing, means that all of the judges in a court will hear an issue together. Normally, a single judge or a smaller panel of judges hears arguments. The current order was decided by a panel of three judges. An en banc hearing would mean that all 14 judges for the United States Court of Appeals for the Third Circuit will take on the issue of whether or not the bankruptcy petition can be dismissed.
- The final move J&J can make is to petition an appeal the decision of the United States Court of Appeals for the Third Circuit to the U.S. Supreme Court. The Supreme Court will then either agree to hear the petition or to deny a hearing. If they hear the petition, they will make a final, standing decision on the issue.
We remain hopeful and are cautiously optimistic. We are hoping that the wait will be over soon for the women and their families who have waited far too long for justice.
The women and their families who have filed these lawsuits are more than just “plaintiffs.” They are people, and we will continue to fight.
We are resuming the work we’ve really never stopped — to prepare for and move toward trials. With trials comes increased pressure for J&J to settle, but they’re likely already feeling more pressure since their effort to limit claims through bankruptcy has hit a significant snag.
As you know from our monthly updates, we’ve spent the last several months representing our clients on the LTL Management bankruptcy Talc Claimants’ Committee, making sure that, if the bankruptcy moves forward, their rights will be protected.
We also continue to serve on the Imerys bankruptcy Claimants’ Committee doing the same. You’ll recall that Imerys is the company that supplied talc to J&J for decades. They have also been named as a defendant in these lawsuits, and their bankruptcy proceedings continue.
We’ve also spent months combing through and updating our records. Many of our clients received communications asking for permissions or information, and we’re grateful to everyone who has responded in a timely manner. This litigation has now gone on for several years. Some of our clients have since defeated cancer. Unfortunately, some have not. Either way, we’ve been making sure our records reflect their realities.
Today, we are ready for trial. A date has not yet been set, but we will continue to update our clients through our monthly email updates and Facebook page.
What Did the Bankruptcy Denial Say?
The United States Court of Appeals for the Third Circuit issued a 56-page order outlining the legal foundation for its denial. In the Cliff’s Notes version, it said that LTL Management, the shell company formed by J&J for the purpose of putting its talc liability in bankruptcy, has a $61 billion safety net from its J&J parent company and therefore is not under financial distress and therefore cannot file bankruptcy.
Click here to download the court order.
Some of the highlights include:
- “Here the debtor was in no financial distress when it sought Chapter 11 protection. To ignore a parent (and grandparent) safety net shielding all liability then foreseen would allow tunnel vision to create a legal blind spot. We will not do so. … Because LTL was not in financial distress, it cannot show its petition served a valid bankruptcy purpose and was filed in good faith under [Bankruptcy Code].”In other words: The court will not ignore the fact that LTL has billions of dollars available to resolve these litigations and is not in financial distress.
- We thus reverse the Bankruptcy Court’s order denying the motions to dismiss and remand this case with the instruction to dismiss LTL’s Chapter 11 petition. Dismissing its case annuls the litigation stay ordered by the Court and makes moot the need to decide that issue.” This means that this court is overturning the lower court’s ruling, and that the stay, or pause, on trials is lifted.
- “At the time of LTL’s filing, J&J had well over $400 billion in equity value with a AAA credit rating and $31 billion just in cash and marketable securities. It distributed over $13 billion to shareholders in each of 2020 and 2021. It is hard to imagine a scenario where J&J and New Consumer would be unable to satisfy their joint obligations under the Funding Agreement.” This is in reference to the funding agreement, which was introduced as part of the LTL bankruptcy. That agreement guaranteed that J&J would fund whatever agreement is reached between talc claimants and the bankruptcy court. This court is saying that J&J more than has the ability to pay pretty much whatever amount it is required to pay by courts in talc litigation, and that it does not need to file for bankruptcy protection.
- “LTL has a funding backstop, not unlike an ATM disguised as a contract, that it can draw on to pay liabilities without any disruption to its business or threat to its financial viability.” The court is saying parent company J&J can fund anything LTL might need to pay plaintiffs the damages they are owed.
In short, this is all excellent news for the women and families who have been hurt by Johnson & Johnson’s greedy profiteering from a dangerous product.
Above all, this is not about lawsuits. This is, and always has been, about mothers, grandmothers, daughters, and wives whose lives have been forever altered. It has come out time and again in trials that J&J knew its talc caused cancer for decades. Not only did they hide that fact so they could continue to make huge profits; they intentionally targeted minorities and overweight women — people who they thought they could lie to longer.
We are more than excited about this decision and will continue to fight for justice. We feel there is a light at the end of this long, long tunnel. We have renewed faith in our judicial system and are hopeful, once again, that it will work in favor of protecting Americans like us.
