J&J Talc Unit’s Ch. 11 Case Allowed To Go Forward

The bankrupt talc unit of Johnson & Johnson survived motions to dismiss its Chapter 11 case after a New Jersey judge said the bankruptcy presents the best way for talc injury claimants to receive recoveries.

In a 56-page opinion, U.S. Bankruptcy Judge Michael B. Kaplan said LTL Management LLC’s Chapter 11 case was filed in good faith and served a valid bankruptcy purpose, namely to address the more than 38,000 ovarian cancer and mesothelioma claims the debtor and its parent companies are facing in the tort system.

LTL Management filed for Chapter 11 protection in October two days after it was split off from J&J subsidiary Johnson & Johnson Consumer Inc. and saddled with billions of dollars in liability arising from allegations its talc products contain cancer-causing asbestos.

The official committees of talc claimants and a law firm representing 7,000 claimants all moved to dismiss the case as a bad faith filing that served only to shield the assets of J&J from recovery and provide the debtor with a tactical advantage in the talc litigation.

The dismissal motions were the subject of a five-day trial that commenced Feb. 14 before Judge Kaplan, where LTL Management argued that J&J and JJCI were facing up to $190 billion in defense costs to deal with the current amount of talc claims. The company said the defense costs incurred over the last few years, when combined with adverse verdicts in cases that went to trial, had resulted in JJCI sustaining operational losses in 2020 for the first time.

Judge Kaplan said the pace of litigation had so far allowed only 49 talc claims to go to trial and, despite JJCI settling more than 6,700 prior to the LTL Management bankruptcy, the tort system is not equipped to efficiently administer the tens of thousands existing claims in addition to future claims that will arise over the next few decades.

The mesothelioma claimants committee disagreed with the court’s ruling and would be exploring any and all avenues for appealing the decision.

The ovarian cancer claimants committee likewise said the court’s decision is not the last word on the matter and that it intends to pursue an appeal of the ruling.

J&J maintains that its talc products are safe and do not contain asbestos or cause cancer.

LAW360: https://www.law360.com/newjersey/articles/1468464

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