Talcum Powder Litigation Update: U.S. Court Rejects Johnson & Johnson’s Bankruptcy Filing Strategy

Updated February 28, 2023.

The adverse effects of talcum powder have been widely reported for several years. A December 2018 Reuters investigation revealed that Johnson & Johnson (J&J) officials knew for decades that the company’s talc sometimes contained traces of asbestos, a carcinogen, but kept that information from regulators and the public. Consumers across the country have filed thousands of lawsuits alleging they were injured due to talcum powder usage. The lawsuits allege that suppliers and distributors such as J&J, Gold Bond, and Shower to Shower knowingly failed to disclose to the public that excessive levels of dangerous chemicals were used in their talcum powder products. As a result, users developed deadly diseases such as ovarian cancer and mesothelioma. J&J contends its talc does not contain asbestos and does not cause cancer.

Facing over 38,000 lawsuits, J&J began a corporate restructuring in the fall of 2021 with the intent of filing Chapter 11 bankruptcy for one of the newly formed entities. J&J’s restructuring resulted in splitting its original Johnson & Johnson Consumer Inc. into two new entities: Legacy Talc Litigation (LTL Management) and Johnson & Johnson Consumer Inc. (New JJCI). The new LTL entity assumed all cosmetic talc-related liability and filed for Chapter 11 bankruptcy in the Western District of North Carolina on October 14, 2021.

If successful, the restructuring and bankruptcy filing would force thousands of lawsuits over the talc products into bankruptcy court. Bankruptcy filings typically suspend litigation in trial courts, cause significant delay, and force plaintiffs into often time-consuming settlement negotiations while leaving them unable to pursue their cases in the courts where they originally sued. 

Talc claimants opposed the bankruptcy filing, arguing that the company had not acted in good faith. Further, that the move was an unfair manipulation of the bankruptcy system which is intended to protect insolvent companies. Johnson & Johnson, valued at over $400 billion, claimed that the bankruptcy was initiated in good faith. J&J initially pledged $2 billion to the subsidiary company to resolve talc claims.

On January 30, 2023, an appellate court of the Third Circuit ruled that J&J improperly placed its subsidiary into bankruptcy even though it faced no financial distress. A three-judge panel rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection and had no legitimate need to file. The Court noted that J&J had given assurances that it would give LTL plenty of money to pay talc claimants. However, the Court determined that good intentions were not enough. The Court ruled that only a debtor actually in financial distress can seek the protections of bankruptcy.

The Court’s ruling revives the pending lawsuits and allows them to proceed outside of Bankruptcy Court. J&J has indicated it will seek an appeal before the U.S. Supreme Court. Plaintiff’s attorneys argue that permitting such bankruptcy filings could set a dangerous precedent and provide a roadmap for any corporation to easily avoid being held accountable for negligence. Hopefully, the decision will cause companies considering the strategy to think twice. 

If you have used a talcum powder product and later developed ovarian cancer or mesothelioma, you may be entitled to bring a claim for compensation. Please be advised that in cases of ovarian cancer, women must have used talc-containing products around the genitals frequently (daily or almost daily), for a significant amount of time before developing ovarian cancer. Please also note that cornstarch-based powders do not contain talc. 

If you or a loved one used talc-based powder products before developing ovarian cancer or mesothelioma, it is important to contact an attorney as soon as possible. Please contact attorney Jacqueline M. Thomas for assistance. 

** If you would like to read previously published articles regarding talc linked to cancer and mesothelioma, please click on the links below:

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