Cancer Victims Seek to Block Johnson & Johnson's Controversial Bankruptcy Plan

A group of cancer victims have requested a federal judge to halt Johnson & Johnson's proposed bankruptcy settlement, arguing it violates claimants' rights. J&J aims to secure approval from 75% of claimants for a $6.48 billion settlement, but faces opposition from those claiming the plan prioritizes financial interests over justice.

A group of cancer victims asked a federal judge to block Johnson & Johnson's proposed bankruptcy settlement of tens of thousands of lawsuits alleging the company's baby powder and other talc products caused their illnesses, according to a court filing.

The plaintiffs filed a motion late on Tuesday in a New Jersey court seeking a temporary restraining order to stop a J&J subsidiary from filing bankruptcy in Texas or another jurisdiction outside New Jersey. The plaintiffs contend they will suffer "irreparable harm" absent a court order blocking such a filing. J&J intends to have a subsidiary declare bankruptcy following claimants' vote on a $6.48 billion settlement offer.

The company hopes to garner support from 75% of claimants as part of the prepackaged bankruptcy plan. J&J set a July 26 voting deadline. "This is yet another meritless pleading by the same small group of plaintiff law firms who have fought every single effort to resolve this litigation to date," Erik Haas, J&J's worldwide vice president of litigation, said in a statement.

He repeated longstanding contentions that opposing plaintiffs' lawyers are holding out for an additional fees "windfall" unavailable in bankruptcy and putting their economic interests before that of their clients, a charge those attorneys deny. "We therefore will immediately ask the Court to reject this frivolous filing," Haas added.

The company faces lawsuits from more than 61,000 plaintiffs alleging its talc caused ovarian cancer or mesothelioma, a deadly cancer linked to asbestos exposure. J&J maintains its talc is safe, asbestos-free and does not cause cancer. The company contends a bankruptcy settlement pays claimants fairly and equitably as opposed to the civil justice system in which most plaintiffs receive nothing while some win outsize awards.

Haas earlier this week cited growing support for J&J's proposed bankruptcy settlement, including from lawyers representing more than 70,000 claimants. That figure includes claimants who have not yet sued J&J. The healthcare conglomerate has tried and failed twice to execute a Texas two-step bankruptcy maneuver aimed at ending current and future talc lawsuits.

The strategy involves creating a subsidiary to absorb J&J's talc liability, which then declares bankruptcy to resolve cases while the company continues operating free from its own Chapter 11 filing. Two courts previously found J&J's subsidiary lacked the "financial distress" necessary to legitimize a bankruptcy filing. J&J's plan is focused on resolving claims in bankruptcy from women with ovarian and other gynecological cancers allegedly linked to talc. J&J has settled most mesothelioma cases outside of bankruptcy. The company this week finalized a separate $700 million agreement to resolve claims from state attorneys general.

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