Bankruptcy judge considers independent valuation of J&J cancer claims

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A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. REUTERS/Shannon Stapleton

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  • Judge weighing options to reignite stalled settlement talks Kaplan "troubled" by proposals to re-open talc lawsuits
  • July 26 hearing will be a "turning point" in the case

(Reuters) - A U.S. bankruptcy judge said on Wednesday that he may appoint an independent expert to assess the value of lawsuits alleging that Johnson & Johnson's talc products caused ovarian cancer and mesothelioma.

U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey said during a court hearing that mediation talks have thus far failed to produce a viable framework for settling the cancer claims, threatening to engulf the bankruptcy case of J&J subsidiary, LTL Management LLC, in protracted litigation.

An independent valuation opinion might be a faster way to break that impasse than either of the two paths proposed by talc plaintiffs or LTL Management, Kaplan said.

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The company has proposed a one-year process to estimate the number and value of talc claims in bankruptcy court, while plaintiffs in the talc lawsuits have asked the court to allow some of the lawsuits to resume outside of the bankruptcy court.

J&J, which maintains that its Baby Powder and other talc products are safe, assigned its talc liabilities to a new subsidiary, LTL Management, and placed it in bankruptcy in October, pausing 38,000 lawsuits that had been filed against J&J.

The talc plaintiffs have argued that J&J's move was a "sham" designed to protect J&J. They have appealed Kaplan's decision to allow the bankruptcy case to block their lawsuits, and the U.S. Department of Justice's bankruptcy watchdog has backed their position on appeal.

Kaplan will choose a path forward at a July 26 hearing which he views as a "turning point" in the bankruptcy case.

He promised to hear both sides then, but expressed "serious reservations" about the plaintiffs' proposal. The judge said he was "troubled" by the possibility that re-opening some lawsuits would lead to duplicative litigation in multiple courts.

LTL's attorney said that he was open to Kaplan's valuation proposal and remained confident that the mediation could still lead to a settlement.

"We haven't lost faith in the mediation at all," LTL attorney Greg Gordon of Jones Day said.

An attorney for the talc plaintiffs, David Molton of Brown Rudnick, said he was disappointed by the lack of progress in mediation, and that he believed the talks could benefit from a "reset."

Before the bankruptcy filing, J&J spent nearly $1 billion defending itself against talc lawsuits, and settlements and verdicts cost the company about $3.5 billion more. One verdict awarded a judgment of more than $2 billion to 22 women, according to court records.

The case is LTL Management LLC, U.S. Bankruptcy Court for the District of New Jersey, No. 21-30589.

For LTL: Greg Gordon of Jones Day

For Talc Claimants Committee: David Molton of Brown Rudnick; Melanie Cyganowski of Otterbourg; Daniel Stolz of Genova Burns; Brian Glasser of Bailey & Glasser; Lenard Parkins of Parkins & Rubio; and Jonathan Massey of Massey & Gail

Read more:

Justice Dept. bankruptcy watchdog sides with cancer plaintiffs in J&J talc appeal

Judge allows expedited appeal of J&J's talc bankruptcy strategy

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