Johnson & Johnson Baby Powder Talc Lawsuit Overview:
- Who: A debtor created by Johnson & Johnson is asking for a Chapter 11 stay to extend onto its predecessor company and its parent company.
- Why: Johnson & Johnson created the debtor in response to tens of thousands of lawsuits alleging it sold baby powder containing talc contaminated with asbestos.
- Where: The case is being heard in a North Carolina bankruptcy court.
A debtor recently created by Johnson & Johnson has asked a North Carolina bankruptcy judge to extend a Chapter 11 stay — which automatically pauses litigation — to its parent company.
Johnson & Johnson created the new entity, named LTL Management LLC, in response to thousands of lawsuits alleging it sold baby powder and talcum powder containing talc contaminated with asbestos, a known carcinogen.
LTL argued in a motion filed this week that a Chapter 11 stay granted to the debtor should apply to both Johnson & Johnson Consumer Inc. — its predecessor company — and Johnson & Johnson.
The new entity said in its motion that neither its predecessor company nor its parent company had filed for bankruptcy protection, and yet the claims against both were the same.
“This is because either the non-debtor parties share such an identity of interest with the debtor that the debtor is, in effect, the real-party defendant, or the claims are property of the debtor’s estate,” LTL said.
LTL filed for Chapter 11 last week after Johnson & Johnson — which is facing tens of thousands of class action lawsuits from plaintiffs who are seeking a total of $30 million over talc injury claims — created the debtor and moved all of its liability from the talc lawsuits onto it.
Johnson & Johnson gave LTL around $350 million worth of the company’s product royalty streams to help it cover administrative costs of the bankruptcy proceedings, Law360 reports.
The company has been spending $20 million a month defending itself from the claims, has lost multiple verdicts already, and is currently on the hook for $2.1 billion resulting from a damages award in a Missouri federal court, according to LTL’s motion.
Johnson & Johnson Pulled Baby Powder Containing Cancer-Causing Talc Off Store Shelves Last Year
Johnson & Johnson took its baby powder off store shelves last year amid the scourge of lawsuits, but has maintained that it has done nothing wrong and that there is no scientific evidence that its products put consumers in harm’s way.
Imerys Talc America, which supplied Johnson & Johnson with its talc, filed for bankruptcy in 2019 in the face of having to defend itself from talc injury claims, Law360 reports.
LTL is arguing that, since it now holds all of the liability, plaintiffs are thus liquidating their complaints against Johnson & Johnson by continuing to go after them, claiming bankruptcy code stipulates you cannot go after a debtor to recover claims that are still in a pre-petition stage.
“Permitting the continued piecemeal litigation of such claims in the tort system notwithstanding the automatic stay would undoubtedly interfere with, and potentially end, the debtor’s reorganization case,” LTL said.
Plaintiffs have said they won’t respect LTL’s argument that the Chapter 11 stay be extended to its predecessor and Johnson & Johnson.
Do you believe the Chapter 11 stay should extend to Johnson & Johnson and LTL’s predecessor company? Let us know in the comments!
The Johnson & Johnson Talc Bankruptcy Case is In re: LTL Management LLC, case number 21-30589, in the U.S. Bankruptcy Court for the Western District of North Carolina.
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