J&J to seek U.S. Supreme Court review on unit's bankruptcy

Johnson & Johnson company offices are shown in Irvine, California
Johnson & Johnson company offices are shown in Irvine, California, U.S., October 14, 2020. REUTERS/Mike Blake/

March 22 (Reuters) - Johnson & Johnson (JNJ.N) said on Wednesday that it would ask the U.S. Supreme Court to revive its effort to resolve tens of thousands of lawsuits over its talc products through the bankruptcy of a subsidiary, after an appeals court refused to reconsider its ruling that the bankruptcy was improper.

J&J sought to use the bankruptcy of its subsidiary company, LTL Management, to halt more than 38,000 lawsuits alleging the company’s Baby Powder and other talc products are contaminated with asbestos, which J&J denies.

J&J maintains its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free.

The bankruptcy strategy stumbled in January, when the 3rd U.S. Circuit Court of Appeals based in Philadelphia ruled that LTL's bankruptcy should be dismissed because neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in "financial distress."

LTL Management asked the 3rd Circuit to reconsider its decision, a request the court unanimously rejected in a two-page ruling on Wednesday.

Leigh O'Dell, one of the lead attorneys representing plaintiffs in the lawsuits, said the 3rd Circuit's ruling is another step toward ending Johnson & Johnson's "attempted abuse of the bankruptcy system."

J&J said Wednesday that it would ask the 3rd Circuit to pause the ruling from taking effect to allow the company time to appeal to the Supreme Court.

The judge overseeing LTL's bankruptcy case, U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey, said in February that he was prepared to end the bankruptcy and allow talc lawsuits to resume once the 3rd Circuit issues a formal mandate of its January decision.

Before the bankruptcy filing, the company faced costs from $3.5 billion in verdicts and settlements, including one in which 22 women were awarded a judgment of more than $2 billion, according to bankruptcy court records.

J&J announced in 2020 that it would stop selling its talc Baby Powder in the United States and Canada due to what it called "misinformation" about the product's safety and later announced its intent to discontinue the product worldwide in 2023.

Reporting by Manas Mishra in Bengaluru; Editing by Anil D'Silva, Jonathan Oatis, Alexia Garamfalvi, Elaine Hardcastle

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