Cancer victims urge court to end J&J bankruptcy roadblock to lawsuits

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People who sued Johnson & Johnson over the company’s talc products on Monday urged an appeals court to revive their claims.

They asked a panel of the 3rd US Circuit Court of Appeals in Philadelphia to dismiss the bankruptcy of J&J’s subsidiary LTL Management, saying that LTL is a “made-up” company created solely to avoid spending their day in court. to get.

J&J, which claims its talc products are safe, was spun off from LTL in October, transferred its talc obligations to it, and bankrupted the newly formed subsidiary days later.

That restructuring strategy, known as the “Texas two-step,” halted about 38,000 lawsuits J&J faced, alleging that its baby powder and other talc-based products contained asbestos and caused mesothelioma and ovarian cancer.

How a bankruptcy ‘innovation’ stopped thousands of lawsuits from sick plaintiffs

Critics, including lawmakers and legal experts, say J&J’s bankruptcy maneuver could provide a blueprint for other major companies to avoid juries in mass lawsuits.

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Circuit judge Julio Fuentes asked cancer victim attorney Jeffrey Lamken during Monday’s arguments whether the bankruptcy court could offer a more efficient solution to the claims than dealing with cases one by one in other courts.

Lamken said the court should not make a general ruling on whether bankruptcy is “better” because its protection should be reserved for companies that are in financial difficulties and need to reorganize.

He argued that cancer victims should be given the opportunity to sue, because bankruptcy requires a comprehensive settlement that must be reached through a lengthy court process before an individual case can be settled. LTL is not under pressure to act quickly, as it has no operations and will not be fined if it goes bankrupt, Lamken said.

David Frederick, who represents a separate group of cancer claimants, said the bankruptcy will allow LTL to pay “less money, slower.”

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“Not a cent will be paid until the last appeal of the last objector is settled,” Frederick said.

But the J&J opposing bankruptcy court allows all current and future talk lawsuits to be settled together, which it says is the quickest and fairest way.

Litigating in other courts produces a wide variety of outcomes. Some plaintiffs will hit home runs and win big sentences, while “most people won’t even get their shots,” and some die before their cases go to trial, LTL attorney Neal Katyal said.

Perpetual lawsuits also create significant “dead weight” in attorneys’ fees and court costs, Katyal said.

The company has set aside $2 billion to settle talk claims, which LTL executives describe as a starting point rather than a “cap.”

J&J stops global sales of talc-based baby powder

Before the bankruptcy filing, J&J faced costs of $3.5 billion in judgments and settlements, including one in which 22 women were sentenced to more than $2 billion, according to bankruptcy court files.

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But more than 1,500 talk lawsuits have been dismissed without J&J paying anything, and most of the cases brought to trial have resulted in defense convictions, voidable lawsuits or judgments for the company on appeal, according to LTL’s court records. .

The cancer victims are asking the appeals court to overturn a New Jersey bankruptcy judge who allowed LTL’s bankruptcy to continue. LTL’s bankruptcy filing automatically ended lawsuits against LTL, and U.S. bankruptcy judge Michael Kaplan in Trenton, New Jersey ruled in February that LTL’s bankruptcy should also end talk lawsuits against parent company J&J.

By refusing to dismiss the case, Kaplan said the bankruptcy court is better equipped to deal with mass torts than other courts.

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