Johnson & Johnson has earned a big win as it attempts to settle thousands of talcum powder lawsuits against the company through its subsidiary’s bankruptcy.
According to Reuters, U.S. Bankruptcy Judge Christopher Lopez ruled on Thursday that the bankruptcy case can remain in Texas court instead of being moved back to the New Jersey court that has repeatedly shot down past J&J settlement attempts.
J&J is attempting to complete a Texas two-step bankruptcy, where a subsidiary is formed to take on the parent company’s lawsuit liabilities and file for bankruptcy in its place. The company’s Red River Talc Unit filed for bankruptcy in late September as part of an effort to complete a settlement worth around $8 billion.
The Texas two-step is a controversial practice that has received bipartisan pushback in the past. Pressure had mounted to force the case back to the New Jersey court under Judge Michael Kaplan, where J&J’s previous bankruptcy attempts had fallen short.
The Justice Department’s bankruptcy watchdog was among the groups pushing for Kaplan to oversee this new case.
But Kaplan said last month that he would not immediately move to take over the case. Additionally, Lopez affirmed this week that the latest bankruptcy try was different enough from past attempts to remain in Texas court.
Bankruptcy Could Settle Thousands of Talcum Powder Lawsuits Over Cancer Claims
J&J will now move forward in its attempt to achieve the bankruptcy necessary to fund its $8 billion settlement, which covers cases claiming the company’s baby powder is linked to the development of ovarian cancer.
The company is currently facing nearly 60,000 pending talcum powder lawsuits, with past research suggesting that talcum powder is a risk factor for ovarian cancer. J&J stopped selling its once-popular talc-based baby powder in the U.S. in 2020 before discontinuing sales worldwide in 2023. Its powder is now corn-starch-based.
J&J initially proposed a $6.5 billion settlement in May for the pending lawsuits but upped that offering to its current figure several months later. This was an attempt to increase plaintiff support and make the success of the settlement more likely.
The company says that it has the support of about 83% of all plaintiffs, well above the 75% threshold required by the U.S. Bankruptcy Code.
J&J is hopeful that the high plaintiff support, among other factors, will result in a different outcome from its past settlement attempts. The company’s previous tries through its subsidiary LTL Management had been denied.
The settlement, if approved, will not cover lawsuits blaming the development of mesothelioma on J&J’s baby powder. These cases make up a relatively small portion of the overall litigation.
Editor Lindsay Donaldson contributed to this article.