By Dietrich Knauth and Mike Spector, Reuters
Photo: Justin Sullivan / Getty Images / AFP
Johnson & Johnson said on Wednesday it is moving forward with a US$6.48 billion (NZ$10.93 billion) proposed settlement of tens of thousands of lawsuits alleging that its baby powder and other talc products contain asbestos and cause ovarian cancer.
The deal would allow it to resolve the lawsuits through a third bankruptcy filing of a subsidiary company, J&J said.
J&J will begin a three-month voting period in hopes of reaching consensus on a settlement of all current and future ovarian cancer claims. Those claims account for 99 percent of the talc-related lawsuits filed against J&J, including about 54,000 centralised in a New Jersey federal court proceeding.
Courts have rebuffed J&J's two previous efforts to resolve the lawsuits through the bankruptcy of the subsidiary created to absorb the company's talc liability, ruling that the company was not eligible for bankruptcy protection because it was not in "financial distress".
J&J, which says its products do not contain asbestos and do not cause cancer, said its settlement was supported by attorneys representing the majority of plaintiffs who had filed cancer lawsuits against the company.
Erik Haas, J&J's worldwide vice president of litigation, said gathering votes before a bankruptcy filing would allow the new plan to succeed where J&J's past efforts faltered.
"The claimants get to vote, and that's the major difference here," Haas said in a Wednesday call with investors, referring to legal challenges that resulted in courts dismissing J&J's previous subsidiary bankruptcy filings before the ballot stage.
J&J said it was confident the deal will garner support from the 75 percent of outstanding claimants needed for a bankruptcy settlement that would end the litigation entirely, including future lawsuits, and prevent people from opting out of the deal to pursue separate claims.
Attorneys representing cancer victims seemed divided on the proposal.
"I believe J&J's proposed plan announced today will bring peace and closure to our clients and the thousands of women who have fought by our side in the quest for justice," said Jim Onder, who represents about 21,000 talc claimants and who supported J&J's previous bankruptcy proposal.
Other lawyers said J&J was trying to "stuff the ballot box" by getting votes from lawyers who had not sued J&J or whose clients had types of gynecological cancers lacking a strong scientific link to talc.
Mike Papantonio, an attorney opposed to the deal, said J&J had been "covertly soliciting law firms to accept their deal, promising a swift payday for some opportunistic lawyers".
J&J's Haas rejected the assertions about padding the vote with non-ovarian cancer cases, saying they were "baseless and no more than a red herring".
The proposed deal would build on J&J's settlements with about 95 percent of people who have sued the company after developing mesothelioma, a rare form of cancer linked to asbestos exposure, as well as its settlements with U.S. states that alleged the company failed to warn consumers about the dangers of its talc products.
$11 billion in reserves
J&J said it reserved $11 billion to account for all of its talc settlements, which included resolving claims outside of bankruptcy proceedings from state attorneys general and people alleging asbestos-tainted talc caused their mesothelioma. The company also resolved claims in the bankruptcies of its talc suppliers.
In its second subsidiary bankruptcy filing, J&J proposed paying $8.9 billion to resolve ovarian cancer, mesothelioma and state claims. This time, J&J opted to address what Haas estimated were up to 100,000 ovarian cancer claims in bankruptcy while resolving others in traditional settlements.
The previous bankruptcy filings put the talc litigation on hold from 2021 to 2023, but trials have resumed after a federal judge ruled the latest bankruptcy case should be dismissed in July 2023.
In March, J&J received a new chance to contest the scientific evidence linking talc to ovarian cancer in the centralized litigation in New Jersey federal court. The judge overseeing the cases said recent changes in the law and new scientific evidence require a fresh review, and asked J&J to present new arguments on the science by late July.
J&J said it would continue to defend itself against the lawsuits while trying to gather votes on the settlement. The company said it had prevailed in 95 percent of ovarian cases tried to date, including every one tried over the last six years.
The litigation has resulted in some large verdicts for plaintiffs, including a $2.12 billion award in favour of 22 women who blamed their ovarian cancer on asbestos in J&J talc. In the past month, J&J was ordered to pay $45 million in a mesothelioma case while winning an ovarian cancer case.
J&J has stopped selling talc-based baby powder in favour of cornstarch-based products, citing an increase in lawsuits and "misinformation" about the talc product's safety.
- Reuters