J&J offers $8.9B to settle talc lawsuits

April 5, 2023

Johnson & Johnson has agreed to contribute up to $8.9 billion, payable over 25 years, to resolve all current and future talc claims alleging that its baby powders cause cancer.

In order to obtain approval of this reorganization plan to resolve all claims arising from cosmetic talc litigation, J&J's subsidiary, LTL Management, has re-filed for voluntary Chapter 11 bankruptcy protection. 

In Oct. 2021, J&J announced that it would be establishing a separate subsidiary — LTL Management — in Texas which would inherit most of the baby powder lawsuits. The legal maneuver, dubbed "Texas two-step bankruptcy" is a controversial restructuring strategy often used to help drive a settlement of personal injury claims. Under Texas law, the J&J business split in two, forming LTL Management, through a divisional merger.

LTL was then converted into a North Carolina LLC, and promptly filed for Chapter 11. North Carolina has notoriously been a friendly venue for this bankruptcy strategy, which temporarily halts litigation. Critics said the move was an attempt to hide behind bankruptcy and limit payouts.

According to a J&J press release, the move was made in order to "equitably resolve all current and future talc claims." J&J is facing tens of thousands of legal cases from people who allege its cosmetic talc caused cancer — one of which resulted in a $2.12 billion verdict against the drugmaker.

Earlier this year, a U.S. court of appeals rejected LTL’s bankruptcy filing.

Now, J&J says that resolving this matter through the proposed reorganization plan "allows claimants to be compensated in a timely manner."

According to J&J, "neither LTL’s original filing nor this re-filing is an admission of wrongdoing, nor an indication that the company has changed its longstanding position that its talcum powder products are safe."