In a recent turn of events, Johnson & Johnson (J&J) has earmarked $400 million to resolve US state consumer protection actions. This action is part of a more extensive $8.9 billion effort by the multinational corporation to settle claims suggesting that its talc-based Baby Powder and other products have caused cancer in consumers. J&J's subsidiary, LTL Management, filed a detailed bankruptcy plan late on Monday, outlining the proposed settlement structure for various cancer victims.
Despite facing more than 38,000 lawsuits, J&J continues to affirm that its talc products are safe and non-carcinogenic. After its first bankruptcy attempt failed, the company is now making a second attempt to resolve these lawsuits and prevent any new cases from emerging in the future.
According to the new bankruptcy plan, LTL would establish a separate trust with the proposed $400 million, aimed at settling claims filed by state attorneys general. These claims accuse J&J of violating state unfair business practices and consumer protection laws by not adequately informing consumers about potential risks associated with its talc products. This development comes after several states initiated consumer protection actions against J&J in 2021.
The states of New Mexico and Mississippi were amongst the first to take legal action against J&J. Other states, including Arizona, Maryland, North Carolina, Texas, and Washington, followed suit, issuing civil investigative demands or subpoenas according to court documents filed by LTL.
Critics of LTL's bankruptcy include the states of New Mexico and Mississippi, cancer victims, and the US Justice Department's bankruptcy watchdog. They argue that a profitable company like J&J should not exploit bankruptcy protections intended for struggling debtors. LTL's initial attempt at resolving lawsuits through bankruptcy was dismissed due to similar objections. A US appeals court deemed LTL as not being in "financial distress," thereby making it ineligible for bankruptcy protection.