US Bankruptcy Court Allows J&J To Pursue Talc Product’s Matter In Texas

US Bankruptcy Court Allows J&J To Pursue Talc Product’s Matter In Texas

The opponents had demanded the case to be sent to New Jersey

The US Bankruptcy Court in Houston, Texas, has rejected the arguments raised by the Department of Justice (DoJ), the office of the US Trustee, its bankruptcy watchdog, and attorneys representing women suing Johnson & Johnson (J&J) subsidiary, Red River Talc.

Judge Christopher Lopez ruled that the company could pursue its third attempt to resolve thousands of lawsuits alleging its talc products caused cancer. It was allowed to avoid a venue that shot down its two previous efforts.

The opponents had demanded the case to be sent to a bankruptcy court in New Jersey, which oversaw and dismissed two previous bankruptcies meant to resolve the same talc lawsuits.

However, Judge Lopez said that J&J's latest effort should be treated as a new case because it gathered votes from claimants supporting the settlement. "I think this bankruptcy case is different," he said.

New Jersey-headquartered J&J faces lawsuits from over 62,000 plaintiffs alleging its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers.

However, the company, while refuting the claims stated that bankruptcy was the best way to equitably compensate the plaintiffs, who would have to wait years for their cases to be heard in a ‘lottery-like’ system that often results in no recovery for the plaintiffs.

Erik Haas, the worldwide vice president of litigation at J&J stated that the court’s ruling would aid the company's settlement efforts. "Today's decision is another step closer to full-and-final resolution of the talc litigation for the benefit of all stakeholders.”

Recently, Red River filed for bankruptcy protection in Houston, seeking advantage of the court’s ability to enforce global settlements that permanently halt all related lawsuits and forbid new ones. It proposed a $9 billion settlement to resolve claims by women alleging they developed gynecological cancers after using J&J talc products.

Meanwhile, outside of bankruptcy, any settlement that the company reached with some claimants would leave holdouts or future plaintiffs with the right to sue and expose the company to potential multibillion-dollar verdicts.

The adversaries stated that J&J should not be allowed to choose a new bankruptcy court after previous rulings that its subsidiary was not eligible for bankruptcy protection.

Earlier, after J&J and its subsidiary filed for bankruptcy a second time, a federal appeals court ruled that none of the companies were in ‘financial distress’ that bankruptcy was meant to resolve.

At the hearing, Linda Richenderfer, an attorney for the US Trustee remarked that if companies could seek out new bankruptcy courts to escape a ruling, the entire system would be undermined.

Similarly, law firms opposing the settlement pointed out that since 2021, J&J's forum shopping led to three bankruptcies filed in three courts.

Attorney Sunni Beville told the judge, "If that isn't abusive forum shopping, I don't know what is."

Bankruptcy reform advocate, and former head of the US Trustee program, Cliff White said the court’s decision highlighted the need for new rules to prevent bankruptcy forum shopping. "There are no rules anymore."

The proposed bankruptcy settlement has divided attorneys representing cancer victims. While some supported the deal as the best way to get compensation for their clients, others opposed stating the settlement value was very low. They felt that wealthy companies like J&J should not be allowed to use the legal system to gain bankruptcy protection meant for people and companies that cannot afford to pay their debts.