J&J Talc Unit Opposes Claimants’ 3rd Circuit Appeal Request



The bankrupt talc unit of Johnson & Johnson objected to requests from the two talc claimants committees in its Chapter 11 case to take their appeals of a New Jersey bankruptcy judge’s decision not to dismiss the case directly to the Third Circuit.

In the objection, LTL Management LLC argues there are no legal questions to be addressed by the Third Circuit because the issues involved in the bankruptcy court’s decision have been well settled in the jurisdiction over the past three decades, creating a situation where existing precedents can be applied to the facts of the LTL case.

In February 2022, U.S. Bankruptcy Judge Michael B. Kaplan denied motions from the two talc claimants committees — appointed to represent the interests of claimants with ovarian cancer and mesothelioma — seeking dismissal of LTL Management’s Chapter 11 case. The claimants argued the bankruptcy was filed in bad faith as a way to shield the assets of the larger J&J corporate organization from recovery by those alleging they were injured by asbestos-tainted talc products.

The two committees, along with some firms representing talc plaintiffs in the tort system, appealed Judge Kaplan’s ruling and are seeking his certification of their appeals so they can skip the district court level and move directly to the Third Circuit.

In the objection, LTL said Judge Kaplan’s opinion denying the dismissal was written after a five-day trial and was well-reasoned and consistent with existing precedent in the circuit.

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 liabilities arising from allegations its talc products contain cancer-causing asbestos.

The spinoff was achieved through a divisive merger transaction known as a “Texas two-step” that resulted in LTL being assigned all the talc liability of JJCI, and a new version of JJCI receiving the assets.

The case was originally filed in North Carolina bankruptcy court in October, but a judge there ruled that it should be transferred to New Jersey, where J&J’s corporate headquarters and most of LTL’s principals are. Before transferring the case, U.S. Bankruptcy Judge J. Craig Whitley enacted a preliminary injunction requested by LTL that paused the talc litigation against nondebtors J&J and other related entities. The injunction was designed to give Judge Kaplan time to get up to speed in the case and make his own ruling on the matter.

The company is facing nearly 40,000 claims that its talc products were tainted with asbestos and caused ovarian cancer and mesothelioma. Johnson & Johnson maintains that its products are safe.

After the failure of the dismissal motions, Judge Kaplan granted a request from LTL to appoint mediators to run negotiations among the parties in hopes of arriving at a settlement that results in a confirmable Chapter 11 plan addressing the talc claims. J&J has committed at least $2 billion in funding toward any talc settlement.

LAW360: https://www.law360.com/newjersey/articles/1477358/j-j-talc-unit-opposes-claimants-3rd-circuit-appeal-request

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