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Johnson & Johnson has been in the business for a very long time. From skincare to Band-Aids, they’ve got quite the reach. However, recent events have associated the company’s name with a different clientele altogether. J&J has been mired in a series of lawsuits and hefty settlements with customers claiming to have developed diseases from the use of J&J’s baby powder. This week, there was a big development in determining how the issues will be resolved.
An attorney for Johnson and Johnson faced probing questions Monday over the corporation’s use of a controversial bankruptcy maneuver that has frozen tens of thousands of lawsuits linked to Johnson’s baby powder.
During the hearing, members of a three-judge panel of the United States Court of Appeals for the Third Circuit in Philadelphia asked whether J&J had used the legal strategy to gain “a litigation advantage” over roughly 40,000 cancer patients who have sued the company.
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Attorney Neal Katyal, representing the company, responded by arguing that the bankruptcy maneuver — known as the “Texas two-step” — would benefit victims by producing a faster settlement, possibly worth as much as $61 billion…'[I]f the tsunami of baby powder-related cases were allowed to play out in civil courts it would create legal chaos and “reduce the number of dollars available to claimants.”‘
Though tragic, the point of issue here isn’t really the fact pattern of the case. The chain of events that could have connected changing pampers to ovarian cancer doesn’t look too unrealistic. The FDA warns that asbestos-tainted talc isn’t unheard of and ought to be watched for.
The interesting matter to resolve — interesting to the legal nerds at least — is which court should handle this case: Bankruptcy or Civil?
Attorneys representing cancer patients say the civil court system, not the bankruptcy court, is the proper venue for establishing the corporation’s liability.
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On Monday, a DOJ attorney argued that if this legal strategy is upheld by the courts, it would open the door to other non-bankrupt companies and wealthy individuals using similar maneuvers to avoid liability.
“If Johnson and Johnson can get away with this bankruptcy, what’s to stop any other company in America from doing the same thing?” asked Sean Janda, an attorney representing the U.S. Trustee, a division of DOJ that oversees bankruptcy cases.
In the meantime, the Third Circuit’s ruling will determine the fate of the several thousand lawsuits linked to the “allegedly” tainted talcum. Depending on the success of J&J’s counsel at the Third Circuit — or the Supreme Court if it comes down to it — you should expect to see many more companies using the “Texas Two-Step” when it comes to dealing with product liabilities.
J&J Tried To Block Lawsuits From 40,000 Cancer Patients. A Court Wants Answers [NPR]
Chris Williams became a social media manager and assistant editor for Above the Law in June 2021. Prior to joining the staff, he moonlighted as a minor Memelord™ in the Facebook group Law School Memes for Edgy T14s. He endured Missouri long enough to graduate from Washington University in St. Louis School of Law. He is a former boatbuilder who cannot swim, a published author on critical race theory, philosophy, and humor, and has a love for cycling that occasionally annoys his peers. You can reach him by email at cwilliams@abovethelaw.com and by tweet at @WritesForRent.
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