Bankruptcy judge: J&J can spin talc powder into different company, potentially slowing plaintiffs' payouts
In July, word got out that J&J was looking to exercise a loophole that would allow the company to offload liabilities stemming from a lawsuit connected to asbestos in its baby powder. A federal judge has now allowed the company to make that move, in a decision that could lead the company to split off thousands of claims into a smaller company that files for bankruptcy.
US bankruptcy judge Laurie Selber Silverstein made the ruling Thursday in Delaware, Reuters reported. The company will now be able to use a Texas “divisive merger” law, which allows a company to split into two entities, and has been used by other companies that face asbestos litigation, Reuters said.
Tens of thousands of patients who say that its baby powder and other talc products had asbestos and caused cancer have sued J&J. Plaintiffs include women with ovarian cancer and others battling mesothelioma.
J&J knew about the asbestos all along, investigations have found. From 1972 to 1975, the company failed to tell the FDA that it had found the poisonous substance in its talc. That continued all the way through the early 2000s, a Reuters investigation found.
There is no safe level of exposure to asbestos acknowledged by the WHO. Even just a small amount of exposure could trigger cancer years down the line.
In 2018, plaintiffs in New Jersey, California and St. Louis won lawsuits against the drugmaker, and in the case of St. Louis, the award was nearly $4.7 billion. But their juries rejected cases as well.
In July, J&J said in a statement to Reuters that the company had not yet reached a decision on whether it will continue to split the company up into two.
“Johnson & Johnson Consumer Inc. has not decided on any particular course of action in this litigation other than to continue to defend the safety of talc and litigate these cases in the tort system, as the pending trials demonstrate,” the J&J subsidiary said to Reuters.
The company didn’t stop selling the talcum-based baby powder until May 2020, and did so while denying the allegations that its product caused cancer, instead attributing it to declining sales due to “changes in consumer habits and fueled by misinformation around the safety of the product.”