J&J talc judge says legal shield dispute is for bankruptcy court

A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. REUTERS/Shannon Stapleton/Illustration
  • Bankruptcy judge must now rule on J&J legal protection
  • Temporary shield expires on Jan. 28

(Reuters) - A New Jersey federal judge on Tuesday said a dispute over Johnson & Johnson’s legal protections against talc-related litigation must be decided by a bankruptcy judge.

Chief U.S. District Judge Freda Wolfson, who oversees a large chunk of the talc-related litigation against J&J, denied a request from people who have sued J&J alleging that its talc products cause cancer to decide whether the pharmaceutical giant is entitled to protection against such lawsuits while its subsidiary, LTL Management LLC, goes through bankruptcy.

J&J, which maintains that its talc products are safe, shifted its talc liabilities to LTL and then placed the subsidiary into bankruptcy in October. It plans to use the LTL bankruptcy to negotiate a potential deal to resolve about 38,000 talc-related claims.

U.S. Bankruptcy Judge Michael Kaplan, who oversees the LTL bankruptcy issued a temporary order shielding J&J from litigation, which expires on Jan. 28.

A lawyer for the committee did not immediately respond to a request for comment, nor did a representative for J&J.

Chapter 11 debtors automatically receive protection against litigation. However, because J&J itself is not in bankruptcy, it needs permission from a judge if it wants to pause the talc lawsuits so it can focus on the negotiations through its subsidiary's bankruptcy. Typically, the bankruptcy judge would make that call.

A committee that represents individuals who say J&J’s talc products cause ovarian cancer and mesothelioma asked that Wolfson decide whether J&J is entitled to longer-term protection. The committee argued in court papers that since she oversees the multidistrict litigation where many of the talc cases are consolidated, she would be better suited to say whether J&J should be allowed to put all of those lawsuits on hold in light of her familiarity with the talc claims.

J&J disagreed, saying that the underlying tort claims are not relevant to whether the litigation should be paused during the bankruptcy.

Wolfson did not say why she declined to decide the matter, but said she would issue a decision with her reasons in the next 20 days.

Kaplan will hear arguments on the matter on Jan. 21.

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

For LTL Management: Gregory Gordon, Dan Prieto, Amanda Rush and Brad Erens of Jones Day

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

Read more:

U.S. judge temporarily halts Johnson & Johnson talc cases, moves them to New Jersey

J&J puts talc liabilities into bankruptcy

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.