UPDATE 2-J&J sued by Oregon over "phantom" Motrin recall

* J&J alleged to wait too long before recalling painkiller

* Company sought to avoid negative publicity, Oregon says

* J&J shares close up 0.4 percent (Adds Oregon attorney general comments)

NEW YORK, Jan 12 (Reuters) - Johnson & Johnson JNJ.N was sued by Oregon over claims the healthcare company put consumers at risk by waiting more than a year to remove defective Motrin caplets from stores before conducting a public recall.

Oregon Attorney General John Kroger said on Wednesday that Johnson & Johnson instead sought to avoid bad publicity by quietly removing the suspect containers from stores.

He said this “phantom recall” of Motrin, which the company found did not dissolve properly, failed to notify consumers who bought the defective product and exposed other consumers to potential danger from its use.

In early 2009, Johnson & Johnson hired private contractors to quietly buy up Motrin bottles from convenience stores and gas stations.

It waited until February 2010 to announce a formal recall, one of several by its McNeil Consumer Healthcare unit that affected nearly 200 million bottles of over-the-counter medicines.

Kroger said at least 787 suspect containers of Motrin remain unaccounted for in Oregon.

“Part of our goal here is not just to hold Johnson & Johnson accountable, but to send a very strong message that if you have a defective health product, you cannot do a phantom recall,” the attorney general said in an interview.

“The thing that’s scary is that, if a company does a successful phantom recall, no one knows about it.”

Johnson & Johnson spokeswoman Bonnie Jacobs called McNeil’s actions “consistent with applicable law and there was no health or safety risk to consumers associated with this limited recall.”

The company will seek to dismiss the complaint, she added.

Kroger said it is too early to tell whether other U.S. states will pursue similar litigation.


Johnson & Johnson’s handling of the Motrin recall drew criticism last year from U.S. Food and Drug Administration Commissioner Margaret Hamburg, who called it a departure from the company’s history of responsible behavior relating to public health. [ID:nN09110568]

The New Brunswick, New Jersey-based company’s 1982 recall of the painkiller Tylenol in a tampering case in which seven people died after consuming cyanide-laced capsules, is widely considered a model for how to handle product recalls.

But last September, Chief Executive William Weldon told Congress that Johnson & Johnson had “let the public down.” He cited one recall covering millions of bottles of children’s medicines such as Children’s Tylenol. [ID:nN29281628]

According to Oregon’s Jan. 11 complaint filed in a Multnomah County, Oregon court, McNeil hired contractors to buy back suspect Motrin sold in 8- and 24-caplet containers.

The complaint said shoppers used by the contractors were told not to tell retailers why they were making the purchases.

“You should “simply ‘act’ like a regular customer while making these purchases,” one contractor instructed his shoppers, according to the complaint. “THERE MUST BE NO MENTION OF THIS BEING A RECALL OF THE PRODUCT!”

The lawsuit seeks restitution for Oregon purchasers of the suspect Motrin, a maximum $25,000 fine for each violation of a state law governing trade practices, and other remedies.

Johnson & Johnson makes many other familiar consumer products, including its namesake baby shampoo, Band-Aid adhesives, Listerine mouthwash and Reach toothbrushes.

The company’s shares rose 23 cents to close at $62.50 on the New York Stock Exchange.

The case is Oregon ex rel. Kroger v. Johnson & Johnson et al, Oregon Circuit Court, County of Multnomah. (Reporting by Jonathan Stempel in New York; additional reporting by Lewis Krauskopf; editing by Dave Zimmerman and Andre Grenon)