Judge Blocks J&J Talc Baby Powder Deal

A United States bankruptcy judge has dismissed Johnson & Johnson’s proposed settlement plan regarding its talc-based baby powder, marking another stumbling block in the company’s efforts to address related issues.
This particular case marks the third time a J&J entity has faced bankruptcy proceedings because of the baby powder controversy.
Red River Talc LLC, a subsidiary of J&J, sought approval for a prepackaged Chapter 11 bankruptcy arrangement that, if accepted, could have been one of the largest mass tort settlements in history. Both Red River and J&J had proposed a $9 billion fund aimed at settling claims related to ovarian and other gynecological cancers allegedly caused by talc-containing products.
However, Judge Christopher Lopez from the U.S. Bankruptcy Court in the Southern District of Texas in Houston ruled that J&J employed a flawed method when soliciting votes from personal injury claimants.
In response, J&J announced that it would not pursue an appeal against this decision, opting instead to revert to conventional civil litigation to fight these claims, which it characterized as unsubstantiated. The company also disclosed plans to roll back approximately $7 billion from a prior reserve.
The company has asserted that it has resolved 95% of mesothelioma lawsuits filed, concluded all state consumer protection claims, and settled all disputes with talc suppliers.
In a preceding year, a J&J subsidiary had proposed a $6.48 billion settlement over a span of 25 years to settle U.S. allegations implicating its talc-based baby powder in causing ovarian cancer.
Allegations made against J&J accused its talcum powder of causing ovarian cancer due to its use in feminine hygiene, along with mesothelioma, a cancer affecting the lungs and other organs.
These lawsuits had contributed to a decline in J&J’s baby powder sales, leading the company to cease selling its talc-based products domestically in 2020. In 2022, J&J announced plans to discontinue global sales of its talc products entirely.
At the announcement of the reorganization plan, J&J stated the new plan differed significantly from an earlier reorganization proposal. The firm projected that the plan would address 99.75% of ongoing talc lawsuits within the United States involving itself and its affiliates.
J&J had also mentioned that any outstanding personal injury lawsuits connected to mesothelioma would be managed separately from this proposed settlement plan.
Following the judge’s decision, J&J’s stock price fell by over 3% in pre-market trading on Tuesday.