Lawyers defending Johnson & Johnson’s strategy for moving about 38,000 talc lawsuits to bankruptcy said the costly litigation had stressed its consumer health business, and that chapter 11 offers a fairer forum and opportunity to accelerate payments to cancer victims.
Greg Gordon, a lawyer representing a bankrupt J&J talc unit, denied there was evidence its chapter 11 case was filed to gain an edge over personal-injury plaintiffs, saying that bankruptcy court is “the only forum that exists in this country" to fairly and efficiently resolve the unwieldy talc litigation.
“The evidence was clear that the goal of the restructuring and the bankruptcy was to quickly and equitably resolve current and future claims," he said Friday during closing arguments on whether his client, a J&J subsidiary called LTL Management LLC, should remain in chapter 11.
The bankruptcy filing by LTL, filled with J&J’s talc liabilities and placed in chapter 11 in October, puts injury claimants in the same or potentially better position than if their claims had remained in the civil jury system, Mr. Gordon said.
LTL’s lawyers highlighted a funding agreement under which J&J has agreed to pay any amounts the subsidiary is deemed to owe to former talc users alleging it caused ovarian cancer or contained asbestos. J&J has denied the allegations and said its talc is safe.
The funding agreement is worth as much as $60 billion, Mr. Gordon said, which represents the fair-market value of J&J’s consumer health business before it underwent a restructuring last year that moved the talc liability to LTL.
J&J so far has offered $2 billion to settle the litigation. LTL’s legal officer testified during the trial that the parent company could increase the offer if Judge Michael Kaplan of the U.S. Bankruptcy Court in New Jersey allows the chapter 11 case to proceed.
If that happens, Mr. Gordon said LTL has agreed to bring in an examiner to conduct an independent investigation of the prebankruptcy restructuring to lift the “cloud" over the bankruptcy case.
“Nobody has escaped liability," Mr. Gordon said. “We are here, the claims are here, the assets haven’t been removed, they’re still there."
Mr. Gordon said J&J’s consumer health business was besieged by litigation that could have been “potentially financially crippling." J&J had no other viable options for resolving the litigation after the Supreme Court declined to review a $2.1 billion judgment in Missouri, Mr. Gordon said. He also cited pending lawsuits by shareholders over the company’s sales of talc as well as investigations by state attorneys general.
Injury claimants’ request to dismiss the subsidiary from chapter 11 is now up to Judge Kaplan, who has said he intends to rule by the end of the month. If the bankruptcy case is dismissed, talc plaintiffs would be able to move ahead with lawsuits against J&J that have been on hold since LTL filed chapter 11.
Mr. Gordon said if the chapter 11 case is dismissed, plaintiffs’ lawyers would benefit—not cancer victims—because outside of bankruptcy claimants are facing years and potentially decades before the full adjudication of their claims in the tort system. Although some talc plaintiffs could win substantial awards, most will receive nothing, he said.
“The only potential beneficiaries of dismissal are plaintiffs’ firms who have the potential every once in a while to hit a big-time verdict and collect a 40% fee off of that," he said.
This story has been published from a wire agency feed without modifications to the text
