Johnson & Johnson (J&J) is facing a crucial legal test regarding its $10 billion proposal to settle thousands of lawsuits claiming its baby powder caused ovarian cancer. A judge will decide whether to approve J&J’s plan to use a subsidiary’s bankruptcy to resolve the cases.
U.S. Bankruptcy Judge Christopher Lopez in Houston will preside over a court hearing that could last for weeks. He will weigh arguments for and against the settlement.
J&J wants to use the bankruptcy of a subsidiary to settle lawsuits from over 62,000 people. These lawsuits allege that J&J’s baby powder and other talc products contained asbestos, leading to ovarian cancer and other cancers. J&J denies these claims.
Previously, courts rejected two attempts by J&J to settle the talc lawsuits through a subsidiary’s bankruptcy. However, J&J is trying again in a different bankruptcy court in Texas. The company argues that this third attempt is different because its subsidiary, Red River Talc, has received significant support for its settlement proposal.
An attorney for Red River Talc, Allison Brown, stated in court that there is “enormous support for a historic and unprecedented plan”.
However, opponents of the deal claim that the vote was manipulated to ensure J&J’s desired outcome. Adam Silverstein, an attorney representing plaintiffs opposing the bankruptcy deal, argued that J&J unfairly challenged votes against its plan while accepting votes in its favor.
Silverstein added that J&J allowed changes from “no” to “yes” votes but ignored a request to change votes from “yes” to “no.” He also claimed the company violated its voting rules by accepting “yes” votes from attorneys who couldn’t provide medical records or prove they had authority to vote for their clients.
Judge Lopez will consider evidence on the validity of the votes and whether a wealthy company should be allowed to use a subsidiary’s bankruptcy to shield itself from lawsuits.
J&J argues that bankruptcy is a faster and fairer way to compensate cancer victims. They claim that the current legal system is like a “lottery,” with some plaintiffs receiving large verdicts while others receive nothing.
Erik Haas, J&J’s vice president for litigation, stated that the bankruptcy proposal has “overwhelming support” from cancer victims and offers claimants a better recovery than they would likely receive at trial.
Opponents argue that the bankruptcy settlement shouldn’t apply to those who disagree with its terms and prefer to pursue their cases in court. They say that J&J is trying to force women with ovarian cancer to accept lower settlement payments based on a flawed vote.
The court hearing is expected to last until the end of February, and Judge Lopez will issue a written decision afterward.
Related topics:
