J&J CANCER SUITS MUST END, SAYS LAWYER FOR 20,000 CLAIMANTS

(Bloomberg) -- A lawyer representing about 20,000 women who claim Johnson & Johnson baby powder gave them cancer urged a bankruptcy judge to approve the company’s $9 billion settlement offer to end the years-long legal fight that’s delayed compensation for the alleged victims.

“Our clients are passing away,” attorney James Onder told US Bankruptcy Judge Christopher Lopez on Tuesday, the start of a nine-day trial to decide the fate of a proposal contested by some holdouts. “We need a prompt and fair resolution. With my clients, their biggest fear is that their daughter or granddaughter will get ovarian cancer, too.”

While most of the prominent personal-injury lawyers handing tens of thousands of baby powder cases favor the deal offered by the health care giant, a handful want Lopez to reject it. Opponents say J&J shouldn’t be allowed to use Chapter 11 to resolve the cases and questioned the company’s tactics in rounding up pre-bankruptcy support from victims.

During his testimony, Onder said none of his firm’s baby-powder clients, who have ovarian cancer, have been paid since he started trying cases against J&J about a decade ago.

The women who sued allege J&J sold baby powder and similar products made from talc contaminated with the cancerous substance asbestos. The company denies that the powder is harmful, but it stopped selling talc-based baby powder in the US in 2020.  

The settlement offer provides “unprecedented compensation” to talc claimants, providing women with a guaranteed payout rather than the uncertainty of going to court, where J&J has mostly prevailed, company attorney Alli Brown said. The law firms opposing the bankruptcy plan “have not recovered a dime for claimants,” Brown said.

The case is playing out in federal court in Houston, where the company is trying to use the bankruptcy process for a subsidiary to end all the lawsuits. Two earlier efforts failed in New Jersey. 

At the trial, the judge will navigate the intricacies of bankruptcy law, including whether J&J manipulated a vote on the settlement among 93,000 claimants and whether the company, which is profitable, is wrongly trying to benefit from Chapter 11 rules that should be reserved for financially distressed businesses.

Opponents of the settlement offer include the US Trustee, the Justice Department’s bankruptcy watchdog. It urged Lopez to follow the precedent set by a federal appeals court in Philadelphia, which stopped J&J’s two earlier talc bankruptcies.

“I would be standing here even if there was no coalition, even if there was 100% acceptance of this plan, because this debtor has still not filed a bankruptcy in good faith and this plan has not been submitted in good faith,” US Trustee lawyer Linda Richenderfer said.

If, however, Lopez agrees to allow J&J’s talc bankruptcy to move forward, the court should require the company’s talc subsidiary, Red River Talc, to hold a new vote among claimants, Richenderfer said.

Under the proposal, a bankrupt unit of J&J would establish a trust that would determine how much each cancer victim would get based on a set of detailed criteria. All lawsuits related to allegations that baby powder causes ovarian cancer and other gynecological diseases would be halted and instead resolved by the trust. 

For its latest bankruptcy, J&J organized a vote of claimants before filing the Chapter 11 case. After the company increased its settlement offer, more claimants were in favor of a deal, giving the company enough support to meet a 75% threshold set by the bankruptcy code.

“This wasn’t an example of trusting the process — it’s an example of busting the process,” said Adam Silverstein, a lawyer for talc victims who object to J&J using Chapter 11. He urged Lopez to focus on Red River’s efforts to subvert the pre-bankruptcy voting process when weighing whether to approve the plan. 

Red River has denied that voting was flawed and contends that lawyers opposed to the bankruptcy settlement are motivated by their own financial interests to defeat the deal. 

The bankruptcy case is Red River Talc LLC, 24-90505, US Bankruptcy Court for the Southern District of Texas (Houston). 

--With assistance from Jef Feeley.

(Updates with comment from lawyer opposing deal.)

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2025-02-18T23:18:13Z