On Wednesday, May 1st, Johnson and Johnson announced a plan to resolve all current and future talc claims through a consensual ‘prepackaged’ reorganization. It is expected that 99.75% of claims against J&J, and its affiliates, will be resolved across the United States.
All talc-related complaints against the company in its bankruptcy cases filed by its talc suppliers (Imerys Talc America, Inc., Cyprus Mines Corporation, and their related parties) will also be resolved. The remaining pending personal injury lawsuits related to mesothelioma and State consumer protection claims will be resolved outside the Plan.
Significantly, the Plan provides for a three-month solicitation period during which ovarian claimants are informed of its terms and will have the opportunity to vote for or against the Plan– an opportunity they were denied in prior bankruptcy cases. If 75% of claimants vote in favor of the Plan, a Company subsidiary may file a consensual “prepackaged” Chapter 11 bankruptcy to secure its confirmation.
The present reorganization will ensure that the plaintiff lawyers who stand to gain personal financial benefit from the claimants do not delay the process.
“Unlike the prior cases, it is the vote of the claimants — and not the conflicting financial incentives of the small minority of plaintiff lawyers who stand to receive excessive legal fees outside of a reorganization– that decides whether the Plan may proceed,” said Erik Haas, Worldwide Vice President of Litigation, Johnson & Johnson.
Keeping in mind the best interests of the claimants, the Plan commits the Company to pay ovarian claimants a present value of approximately $6.475 billion to be paid over 25 years. According to their judgment based on historical run rate, most claimants will never have “their day in court.”
The company discontinued sales of its baby powder in North America in 2020, and worldwide in 2023. Currently, the talcum in the market is replaced with corn starch based product.
Lawsuits against Johnson & Johnson
The lawsuits filed by 59000 claimants 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.
According to Reuters investigation, from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos, and that company executives, mine managers, scientists, doctors and lawyers fretted over the problem and how to address it while failing to disclose it to regulators or the public.
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Lawsuits are meritless, says J&J
The company has reiterated its stand on the safety of its products. It believes that those talc-related claims are baseless. It argues that they have been rejected by independent experts, as well as governmental and regulatory bodies, for decades. It also attached a site link, www.FactsAboutTalc, for users to gain verified facts and data on its talcum products.
Mr. Haas expressed his contempt over “meritless” litigation that have adversely impacted US businesses through “forum shopping, the distortion of scientific literature with junk science, and the unregulated and surreptitious financing of product litigation.”
Impact on shares
The announcement of the plan followed a rise in shares in early trading on Wednesday. It jumped from $144.59 per share to $148.90 on Wednesday at 9:30 am GMT-4. The next day, on Thursday at 9:30 am GMT-4, it further rose to $152.14 per share, rising by 2.39%.
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