"People are dying every day": Alleged victims of J&J's talc case speak out

Photo Illustration: Natalie Peeples/Axios, Photo: Justin Sullivan/Getty

Investors drove Johnson & Johnson's stock up earlier this week after the company announced a proposed settlement with people accusing its talc-based baby powder of causing cancer — but it's far from a done deal yet.

Why it matters: Tens of thousands of alleged victims and families — whose claims mostly involved ovarian cancer — are hoping for compensation for their suffering.

Driving the news: J&J said Tuesday it had secured support from more than 60,000 claimants for its $8.9 billion offer. Yet critics say it’s not enough money and argue that the company's legal route to shedding the liabilities flouts a court's order.

Catch up quick: In 2021, J&J pushed the division it created to house the liabilities — LTL Management — into Chapter 11 bankruptcy, and it offered $2 billion to settle the cases.

  • But the Third Circuit Court of Appeals dismissed the case earlier this year, noting that J&J's rock-solid finances mean it's not eligible for bankruptcy — a process that could allow the company to pay less than people would get outside of court.
  • On Tuesday, the company filed another LTL bankruptcy — with the main difference being the bigger war chest.

What they're saying: “It was a brazen disregard of the Third Circuit’s order that bankruptcy is not an appropriate place for one of the richest companies in the world to settle its legal disputes,” attorney Brian Glasser, who represented talc claimants in the original case, tells Axios.

  • University of North Carolina bankruptcy law professor Melissa Jacoby said an average consumer who attempts to refile for bankruptcy immediately after their original case was dismissed would risk sanctions.

The other side: J&J pulled the product from the shelves but continues to deny any wrongdoing. The pharma giant said continuing the legal fight outside of bankruptcy risks extending the brawl so long that alleged victims get nothing.

  • "The Third Circuit held that LTL was not in financial distress before it filed for bankruptcy because it had access, at that time, to a funding agreement from J&J," the company tells Axios in a statement explaining its thinking.
  • "At the time LTL re-filed for bankruptcy, it had no funding from J&J and, hence, is in financial distress. Now that LTL is in bankruptcy, it has access to the announced plan for $8.9 billion to satisfy claimants.”

Majed Nachawati, an attorney who helped negotiate the deal on behalf of the alleged victims, said the focus should be on whether the offer is sufficient — and he believes it is — rather than the refiled bankruptcy.

  • “People are dying every day. This litigation has been going on for over 10 years, so it's in our view in the best interests of the clients to get them their money as quickly as possible because they need it,” Nachawati tells Axios.
  • “It will never make it right but … this deal gives them the only thing that can provide any kind of recovery for their suffering — and that’s fair compensation.”

Be smart: A settlement of some kind is the only way this leads to meaningful compensation for most alleged victims. Still, the question is whether that settlement should take place within the confines of bankruptcy court or outside of it.

  • “When you have 40,000–60,000 plaintiffs, every one of those people [is] not going to have their day in court,” University of Richmond product liability expert Carl Tobias tells Axios. “You just can’t do it. The system would break down.”

How it works: To be finalized, the settlement needs the approval of a bankruptcy judge and the signoff from at least 75% of claimants.

  • If that happens, victims could receive an average of more than $100,000, Nachawati estimated, though the amount could vary considerably depending on the nature of each case, which will be assessed by a claims administrator to be appointed at a later date after the deal is approved.

What to watch: Whether the bankruptcy judge in charge of the new case — the same one assigned to the original case — allows it to proceed.

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