J&J wins plaintiff’s endorsement of $6.5 billion baby powder settlement

Johnson & Johnson has cleared a key hurdle to advancing a $6.5 billion plan to settle thousands of lawsuits by people who say its baby powder gave them cancer, according to people familiar with the matter.

More than 75 percent of the group signed off on J&J’s proposal in a secret ballot that ended in late July, said the people, who asked not to be identified, discussing the results that have not yet been announced as certified. Such an outcome would boost the company’s latest bid to limit liability at a unit it set up as part of the lawsuit settlement effort.

Clare Boyle, a spokeswoman for J&J, declined to comment on the number. With lawsuits piling up, the company hired a consulting firm to organize the vote on the settlement and tabulate the results. The litigation is ongoing, and J&J’s efforts to settle the lawsuits continue to face significant obstacles.

The settlement offer includes claims that the talc-based version caused ovarian and other gynecological cancers. Separately, the company said in May it had resolved 95 percent of claims that its baby powder was contaminated with asbestos and caused mesothelioma, a type of cancer that forms in the tissues around the heart and lungs.

J&J said its talcum powders have never caused cancer and that it has properly marketed its baby powder for more than 100 years. Last year, the company discontinued the talc-based version of the product and replaced it with a cornstarch-based substitute.

Although the settlement plan likely still faces significant legal challenges from plaintiffs who object to the terms, the voting milestone would set the stage for the J&J unit to again ask a judge to grant it bankruptcy protection. A federal appeals court ultimately rejected two previous bids to gain approval in New Jersey, where the healthcare company is based.

When three-quarters of plaintiffs favor a settlement, the companies can try to fast-track Chapter 11 bankruptcy cases. With that level of support favoring J&J’s plan, the unit could ask to speed up a “pre-packaged” filing in the state his home state of Texas, which is perceived as more business-friendly than New Jersey.

Outstanding claims

Under J&J’s current offer, it would pay $6.5 billion over 25 years to address current and future claims for ovarian and other gynecologic cancers. Separately, the company has already had to pay about $5 billion in talcum powder lawsuits, including cases related to mesothelioma, other cancers and allegations of illegal marketing by US states. J&J said there could be thousands more filings to file.

Most of the pending cases are being consolidated before a federal judge in New Jersey for pretrial exchanges.

The consolidated case is In Re Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, 16-md-2738, US District Court, District of New Jersey (Trenton).

Photo: Photographer: Gabby Jones/Bloomberg

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