Courts continue to scrutinize J&J's
controversial bankruptcy ploy to avoid liability
MONTGOMERY, Ala., Aug. 12,
2022 /PRNewswire/ -- Legal experts say the decision
by Johnson & Johnson (NYSE: JNJ) to halt future sales and
distribution of talc-based products worldwide, including its iconic
Johnson's Baby Powder, points to mounting pressure on the company
to resolve tens of thousands of legal claims brought by ovarian
cancer and mesothelioma victims.
Numerous scientific studies spanning decades have established
the carcinogenic effects of cosmetic talc, while U.S. and Canadian
governmental regulators have called for enhanced testing techniques
for products containing the mineral, particularly after independent
testing by the U.S. Food & Drug Administration revealed
asbestos in consumer samples of talc-based powders. Meanwhile,
internal corporate documents presented in trials during the past
several years have shown that J&J and its consultants knew of
the dangers of the company's products and took steps to deny or
otherwise cover up those findings to avoid legal liability.
"J&J has finally done the right thing. Throughout decades of
selling talc-based products, the company knew talc could cause
deadly cancers to unsuspecting women and men around the world,"
says Leigh O'Dell of the Beasley
Allen Law Firm in Montgomery.
"They stopped sales in North
America more than two years ago and blamed that move on the
litigation. The delay in taking this step is inexcusable. I can
only hope J&J will now do the next right: take responsibility
and adequately compensate the victims they have needlessly
harmed."
The vast majority of the more than 38,000 cases filed by ovarian
cancer victims against J&J were consolidated in multidistrict
litigation in New Jersey federal
court, and bellwether trials had been scheduled to begin last
spring. Those proceedings were put on hold in late 2021 when the
company chose to pursue a controversial "Texas Two-Step"
bankruptcy.
That scheme involved creating a new corporate shell company to
hold all talc-related liabilities before taking that entity into
bankruptcy. If successful, the tactic would allow Johnson &
Johnson to avoid paying cancer victims and protect a market
capitalization of approximately a half-trillion dollars. Because of
the bankruptcy, all trials in the MDL and others filed in state
courts are currently suspended.
The two-step move has raised eyebrows in Congress, where
representatives have begun discussing potential changes to the
bankruptcy laws that would prevent this sort of consumer harm in
future cases.
"The potential loss of a jury trial is not a mere by-product of
the filing; the sole purpose of the bankruptcy is to remove tort
claimants from the tort system and strip them of their rights
against extraordinarily wealthy and highly solvent entities," wrote
Erwin Chemerinsky, Dean of the
University of California's Berkeley
School of Law, in a brief filed with the bankruptcy court.
"The Debtor is a newly created shell, with no business to
restructure, no operations to rehabilitate, and no customers or
genuine employees to serve. In short, the Debtor has no
reorganizational purpose," he noted in the brief, one of many filed
by constitutional scholars raising concerns about the
"Two-Step."
The propriety of the bankruptcy and accompanying halt to
litigation imposed by the bankruptcy court will be reviewed by the
U.S. Court of Appeals for the Third Circuit in a hearing
Sept. 19.
About Beasley Allen Law Firm
Headquartered in Montgomery,
Ala., Beasley Allen is
comprised of more than 70 attorneys and 200 support staff. One of
the largest Plaintiffs law firms in the country, Beasley Allen is a national leader in civil
litigation, with verdicts and settlements in excess of $26 billion. Beasley
Allen was one of only 12 firms in the nation named by Law360
to its Most Feared Plaintiffs Firms list in 2015, and the firm was
included on the National Law Journal Midsize Law Firm Hot List and
the NLJ Elite Trial Lawyers List in 2014. For more information
about our firm, please visit our website at
www.beasleyallen.com.
Media Contact:
Barry Pound
800-559-4534
Barry@androvett.com
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SOURCE Beasley Allen Law Firm