In denying Motion for Rehearing, Third Circuit
affirms J&J's 'Texas Two-Step' bankruptcy
was
not filed in good faith
PHILADELPHIA, March 22,
2023 /PRNewswire/ -- The U.S. Court of Appeals for
the Third Circuit has denied a request for a rehearing of the LTL
bankruptcy petition, signaling a move to reopen litigation against
Johnson & Johnson (NYSE:JNJ) based on claims that the company's
talcum powder products are linked to ovarian cancer and
mesothelioma.
Once the Third Circuit issues a mandate, likely within days,
attorneys anticipate swift action by state courts as well as the
federal court handling the multidistrict litigation involving talc
cases to resume litigation in more than 38,000 claims that have
been held up by an injunction issued by the bankruptcy court. A
significant number of new lawsuits – barred while the injunction
was in place – are also expected to be filed.
"Finally, our clients will have the opportunity to present
evidence to a jury that J&J knowingly exposed women to
asbestos, talc fibers, and other known carcinogens through its talc
products," says Leigh O'Dell, of the
Beasley Allen Law Firm, who co-chairs the plaintiffs steering
committee in the Talc MDL. "The evidence is strong and so is our
commitment to finally achieve justice."
A November 2021 injunction by U.S.
Bankruptcy Judge Michael B. Kaplan
paused all talc litigation based on J&J's use of a Texas bankruptcy process known as the Texas
Two-Step. By exploiting the Texas
statute, J&J attempted to consolidate all talc litigation
liabilities in a shell corporation that immediately filed for
bankruptcy. If successful, the ploy would have shielded billions of
dollars in assets of its consumer division and corporate parent
while severely limiting the ability of cancer victims to obtain
justice.
In January, a three-member panel of the Third Circuit ruled that
the bankruptcy of J&J's shell subsidiary, LTL, was not filed in
good faith, that LTL was not in financial distress deserving
bankruptcy protection, and that the bankruptcy petition should be
dismissed.
"The bankruptcy was a sham. So is the company's claim that it's
seeking a fair and equitable resolution of these claims," Ms.
O'Dell says. "At every step, Johnson & Johnson has tried to
intimidate women into accepting pennies on the dollar as
compensation for the harm they've suffered."
J&J's Texas Two-Step ploy immediately drew fire from legal
scholars and members of Congress. It also prompted an outpouring of
outrage from talc victims who were blocked from seeking their day
in court. Nearly 200 plaintiffs expressed their indignation on
video.
Earlier this year, Johnson & Johnson announced a halt to
future sales and distribution of talc-based products worldwide,
citing the 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 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.
About Beasley Allen Law Firm
Headquartered in
Montgomery, Alabama,
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:
Mike Androvett
800-559-4534
mike@androvett.com
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SOURCE Beasley Allen Law Firm