Bankruptcy judge denies J&J settlement plan related to baby powder containing talc
A U.S. bankruptcy court judge has denied Johnson & Johnson's settlement plan related to baby powder containing talc, providing another setback in the company's efforts to resolve the matter.
This is the third bankruptcy case for a J&J company as it relates to the baby powder issue.
Red River Talc LLC, a J&J subsidiary, was seeking confirmation of a proposed prepackaged Chapter 11 bankruptcy plan that would have been one of the biggest mass tort settlements in history, if approved. Red River and J&J proposed to pay $9 billion to settle ovarian cancer and other gynecological cancer litigation claims based on talc-related products.
But Judge Christopher Lopez of the U.S. Bankruptcy Court for the Southern District of Texas, Houston division said in a court filing that J&J used a faulty voter solicitation process when dealing with personal injury claimants.
J&J said in a statement that it will not pursue an appeal, and instead will return to the civil law system 'to litigate and defeat these meritless talc claims.' It will also reverse about $7 billion of a previous reserve.
The company said that it has settled 95% of filed mesothelioma lawsuits, concluded all state consumer protection claims, and all talc-supplier disputes.
Last year a subsidiary of J&J proposed to pay approximately $6.48 billion over 25 years as part of a settlement in the U.S. to cover allegations that its baby powder containing talc caused ovarian cancer.
The lawsuits filed against J&J had alleged its talcum powder caused users to develop ovarian cancer through use for feminine hygiene, or mesothelioma, a cancer that strikes the lungs and other organs.
The claims contributed to a drop in J&J's sales of baby powder, prompting the company to stop selling its talc-based products in 2020. In 2022, J&J announced plans to cease sales of the product worldwide.
J&J said at the time that the reorganization plan for the subsidiary was significantly different from a previous reorganization that was announced. The company said that the plan would resolve 99.75% of all pending talc lawsuits against it and its affiliates in the U.S.
At the time, J&J said that the remaining pending personal injury lawsuits that relate to mesothelioma would be addressed outside of the plan.
Shares of J&J declined more than 3% before the market open on Tuesday.
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