JOHNSON & Johnson said on Wednesday (May 1) it is moving forward with a US$6.48 billion proposed settlement of tens of thousands of lawsuits alleging that its baby powder and other talc products contain asbestos and cause ovarian cancer.

The deal would allow it to resolve the lawsuits through a third bankruptcy filing of a subsidiary company.

It will begin a three-month voting period in hopes of reaching consensus on a settlement of all current and future ovarian cancer claims. Those claims account for 99 per cent of the talc-related lawsuits filed against J&J, including about 54,000 lawsuits that are centralised in a New Jersey federal court proceeding.

Courts have rebuffed J&J’s two previous efforts to resolve the lawsuits through the bankruptcy of the subsidiary created to absorb the company’s talc liability, LTL Management.

J&J, which says its products do not contain asbestos and do not cause cancer, said that its settlement is supported by lawyers representing the majority of plaintiffs who have filed cancer lawsuits against the company.

Erik Haas, J&J’s worldwide vice president of litigation, said gathering votes before a bankruptcy filing would allow the new plan would succeed where J&J’s past efforts faltered.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

“The claimants get to vote, and that’s the major difference here,” Haas said in a Wednesday call with investors.

J&J said it is confident that the deal will reach a 75 per cent support threshold needed for a bankruptcy settlement that would end the litigation entirely, shutting off future lawsuits and preventing people from opting out of the deal to pursue their separate claims.

Lawyers representing cancer victims seemed divided on the proposal on Wednesday.

“I believe J&J’s proposed plan announced today will bring peace and closure to our clients and the thousands of women who have fought by our side in the quest for justice,” said Jim Onder, who represents about 21,000 talc claimants and who supported J&J’s previous bankruptcy proposal.

Other lawyers said J&J is trying to “stuff the ballot box” by getting votes from lawyers who have not sued J&J or whose clients have types of cancers that do no have a strong scientific link to talc.

Mike Papantonio, an attorney opposed to the deal, said J&J has been “covertly soliciting law firms to accept their deal, promising a swift payday for some opportunistic lawyers”.

The proposed deal would build on J&J’s settlements with about 95 per cent of people who have sued the company after developing mesothelioma, a rare form of cancer linked to asbestos exposure, as well as its settlements with US states, which have alleged that the company failed to warn consumers about the dangers of its talc products.

US$11b in reserves

J&J said it set aside a total reserve of US$11 billion to account for all of its talc settlements, including the proposed ovarian cancer settlement, mesothelioma claims, states’ claims, and settlements with two bankrupt companies that supplied talc used in J&J’s products. J&J recorded an incremental charge of US$2.7 billion in the first quarter of 2024, added to its previous reserve for talc litigation.

In its second bankruptcy filing, LTL put forward an US$8.9 billion deal that would have dealt with all talc-related claims at once.

After that deal was rejected, Haas said it was more practical to settle mesothelioma claims outside of bankruptcy before addressing much larger group of 85,000 to 100,000 ovarian cancer claims. Haas said J&J faced hundreds of mesothelioma lawsuits, and it has settled all but 153 lawsuits.

The previous bankruptcy filings put the talc litigation on hold from 2021 to 2023, but trials have resumed after a federal judge ruled the latest bankruptcy case should be dismissed in July 2023.

In March, J&J received a new chance to contest the scientific evidence linking talc to ovarian cancer in the centralised litigation in New Jersey federal court. The judge overseeing the cases said that recent changes in the law and new scientific evidence require a fresh review, and he asked J&J to present new arguments on the science by late July.

J&J said it will continue to defend itself against the lawsuits while trying to gather votes on the settlement. The company said it has prevailed in 95 per cent of ovarian cases tried to date, including every ovarian case tried over the last six years.

The litigation has resulted in some large verdicts for plaintiffs, including a US$2.12 billion award in favour of 22 women who blamed their ovarian cancer on asbestos in J&J talc. In the past month, J&J was recently ordered to pay US$45 million in a mesothelioma case while winning an ovarian cancer case. REUTERS