Johnson & Johnson will likely have to wait until next year before it can restart negotiations to resolve 38,000 lawsuits filed by people who claim one of its oldest products, baby powder, causes cancer and other diseases.
A federal judge questioned whether spending money on formal settlement talks makes sense while victim advocates oppose mediation.
“I can order it tomorrow, but I don’t have any great anticipation there will be” progress, U.S. Bankruptcy Judge Michael B. Kaplan said during a court hearing in Trenton, New Jersey Monday afternoon. “I’d rather have their hearts and souls in it.”
Last month, J&J created a unit to hold its talc liabilities and then put that company, which has no operations, into bankruptcy. The goal is to negotiate with victims to create a trust with at least $2 billion to pay all current and future baby-powder claims. The bankrupt unit, LTL Management, wants to get mediation started immediately, Greg Gordon, the lawyer leading the Chapter 11 case, said in court.
Before LTL filed bankruptcy, the groups made “good progress” in settlement talks as part of a separate bankruptcy case filed in Delaware by the former J&J talc supplier, Imerys Talc America, Gordon said.
Tens of thousands of women claim the talc in baby powder causes cancer, a charge J&J denies. For years, the company focused on fighting lawsuits one at a time in courts around the country until the consumer giant switched tactics and decided to try to resolve all current and future claims in bankruptcy.
The lawsuits against J&J, baby powder retailers and insurance companies have been put on hold until Jan. 14. Kaplan scheduled a hearing for early January to decide whether to extend that legal stay over the objections of victim advocates, who argue they should be allowed to keep pursuing their cases.
A committee of baby powder claimants said in court papers it will soon ask Kaplan to throw LTL out of bankruptcy and end a temporary halt to all of the talc lawsuits. Kaplan tentatively scheduled a four-day court hearing early next year to decide whether the LTL case was filed in “bad faith.”
Until that court fight is resolved, it makes no sense to try to negotiate a broader settlement, committee attorney David J. Molton told Kaplan.
Critics say J&J’s bankruptcy strategy violates the spirit of the Chapter 11 rules because it allows a profitable company to stay outside of bankruptcy, but still enjoy the protection granted by the lawsuit stay.
The case is LTL Management LLC, 21-30589, U.S. Bankruptcy Court, Western District of North Carolina (Charlotte).
Photo: Johnson and Johnson baby powder. Photographer: Justin Sullivan/Getty Images North America
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