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Johnson & Johnson Talc Bankruptcy Petition Dismissal is a Win for Mesothelioma and Ovarian Cancer Victims

mesothelioma attorney Dave Butler

By Dave Butler

In a significant victory for injured consumers, the Third Circuit Court of Appeals dismissed the bankruptcy petition of a Johnson & Johnson subsidiary that holds the company’s liabilities for claims brought by thousands of consumers injured by exposure to asbestos-contaminated talc in Johnson & Johnson products.  The dismissal, on January 30, 2023, ends for now J&J’s efforts to avoid full responsibility for the claims of those suffering from mesothelioma, ovarian, and other cancers caused by its asbestos-contaminated products.

Through a series of corporate transactions under a unique Texas law, Johnson & Johnson created two new entities with the intention to funnel its liabilities for claims brought by thousands of injured talc claimants into a new entity which it named LTL Management; while simultaneously funneling all of its profitable business into another entity.  Two days after its formation and freshly saddled with J&J’s talc liabilities, LTL Management filed a petition under Chapter 11 of the U.S. Bankruptcy Code claiming that its talc liabilities placed it in financial distress sufficient to allow it to seek the protections afforded by U.S. bankruptcy laws.

Injured talc victims sought dismissal of the bankruptcy petition, but were denied by a federal court in New Jersey.  Victims appealed that denial to the Third Circuit Court of Appeals, which ruled that the J&J subsidiary had not demonstrated that its petition was filed in good faith and should be dismissed.

In its opinion the court found that “At base level, LTL, whose employees are all J&J employees, is essentially a shell company “formed,” almost exclusively, “to manage and defend thousands of talc-related claims” while insulating at least the assets in a non-bankrupt entity.  The court went on to find that “Because LTL was not in financial distress, it cannot show its petition served a valid bankruptcy purpose and was filed in good faith under” the United States Bankruptcy Code.  In conclusion, the court held that:

Our decision dismisses the bankruptcy filing of a company created to file for bankruptcy. It restricts J&J’s ability to move thousands of claims out of trial courts and into bankruptcy court so they may be resolved, in J&J’s words, “equitably” and “efficiently.” But given Chapter 11’s ability to redefine fundamental rights of third parties, only those facing financial distress can call on bankruptcy’s tools to do so. Applied here, while LTL faces substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date.

Read the court’s full opinion here.

RPWB continues to seek justice for victims of exposure to Johnson & Johnson talc products. If you or a loved one has been diagnosed with mesothelioma after exposure to Johnson & Johnson talc products, please call us at u 1-866-594-8765 or fill out the form on this page to begin your case review.

Dave Butler has 30 years of experience representing mesothelioma victims and their families in cases throughout the United States. He can be reached at 1-866-594-8765 or by emailing dbutler@rpwb.com.

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    FDA pushes for more testing amid asbestos exposure concern

    Current asbestos testing standards for industries that use talc are fairly loose. As recent reports have shown that many products contain this toxic substance, the U.S. Food and Drug Administration is pushing for new testing standards. If implemented, it could possibly lower the risk of asbestos exposure for people in South Carolina and across the country.

    The FDA allowed the cosmetics talc industry to basically self-police when it comes to asbestos and testing. The last time the FDA held a hearing focusing on asbestos and testing methods in cosmetics was in 1971, meaning the industry has been handling these issues on its own for several decades. The FDA did not test any cosmetic products from then until 2018, when it discovered that many popular cosmetic products were contaminated with asbestos.

    In addition to stronger standards for testing talc, the FDA wants to take things one step further. Minerals that resemble asbestos are also frequently found in talc, but there are currently no testing requirements for those minerals. Experts agree that look-alike minerals quite often cause very similar health problems which are nearly indistinguishable from those related to asbestos.

    Both the FDA and the World Health Organization agree that there is no safe level for asbestos exposure. People can easily inhale tiny particles that then make their way to the lungs. Mesothelioma and ovarian cancer have both been linked to asbestos, and thousands of people — some in South Carolina — have already filed lawsuits against companies that sold tainted products. Many of these individuals are seeking compensation for things like medical care, loss of income and even physical and emotional trauma.

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