J&J’s bankruptcy effort fails Supreme Court test, say Holdouts

Johnson & Johnson’s third effort to end lawsuits alleging its powder caused thousands of women to get cancer should be thrown out because it violates U.S. Supreme Court precedent and distorts the purpose of the U.S. bankruptcy system, creditors say they did not occur in the court records.

The health care giant can’t force women with ovarian cancer to join a proposed $8 billion settlement under a U.S. Supreme Court ruling earlier this year, lawyers who have long battled J&J argued . In June, the justices voted 5-4 to reject drugmaker Purdue Pharma’s attempt to impose a $6 billion settlement on withholdings, which opposes a deal that would have ended years of addiction lawsuits linked to the epidemic. of opioids.

The company will be in court Monday afternoon, trying to stop all legal action outside of a Chapter 11 bankruptcy filed last week by Red River Talc, the unit created by J&J to settle tens of thousands of lawsuits alleging that baby powder once contained talc contaminated with toxic substances.

Most of the more than 62,000 childhood dust cancer lawsuits filed so far have been gathered before a federal judge in New Jersey for pretrial information exchanges. The attorneys at Red River will attempt to put these cases on hold while the bankruptcy case proceeds.

The new bankruptcy case is J&J’s latest attempt to use special bankruptcy rules that allow corporations facing financial turmoil to force the end of all product liability lawsuits. The rules require the company to win more than 75 percent of the votes of the alleged victims and set up a trust fund to pay the damages. Instead, all current and future lawsuits would be funneled through the trust, rather than being fought out in court and decided by juries.

Johnson & Johnson says it has overwhelming support for the roughly $8 billion deal. Because 83 percent of alleged victims voted in favor of the settlement, Red River Talc qualifies for the special rules, the company claims.

The same lawyers who successfully defeated J&J’s first two attempts to file for bankruptcy asked Judge Christopher Lopez to throw out the new case as well. Opponents, including attorneys from the law firms Brown Rudnick LLP and Otterbourg PC, also claim that J&J rigged the victim vote by including women with gynecological cancers that cannot be linked to the tainted baby powder.

The company “bought the votes of the holders of these negative-value, non-redeemable claims by offering a Quickpay payment of $1,500,” the objectors said in a court filing.

The Purdue ruling does not prevent Johnson & Johnson from using bankruptcy because the baby dust claims involve alleged asbestos poisoning. Decades ago, US lawmakers added rules to the bankruptcy code to help companies facing asbestos lawsuits. Those rules have been upheld by the U.S. Supreme Court and may benefit Johnson & Johnson, the company said in a statement.

The company also disputed claims that the vote was rigged, calling the allegations “dishonest.”

Over the past 15 years, juries have awarded billions of dollars in damages to people who blame J&J powder for fatal cancers like ovarian and mesothelioma. Some of these verdicts were later overturned on appeal. The company has struggled to reach a so-called global out-of-court settlement with some victims and end the lawsuits.

J&J said its talcum powders never caused cancer and had properly marketed its now-retired talcum 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 across the globe.

The bankruptcy case is Red River Talc LLC, 24-90505, U.S. Bankruptcy Court for the Southern District of Texas (Houston).

Photo: The Johnson & Johnson logo is displayed outside the company’s headquarters in New Brunswick, New Jersey. Photographer: Mark Kauzlarich/Bloomberg

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