The bankruptcy hearing for Johnson & Johnson has started, and it may last a few weeks before a judge in Texas rules either in favor of the healthcare giant or with the victims of the company’s harmful approach to business.
According to numerous reports, including Reuters, the bankruptcy proposal of more than $8 billion to settle tens of thousands of cancer lawsuits hangs in the balance. The hearing to determine the validity of the bankruptcy plan, along with the opposition to it, began last week in Houston, Texas.
U.S. Bankruptcy Judge Christopher Lopez will preside over the hearing and decide on the Chapter 11 bankruptcy plan, which Johnson & Johnson is using to sidestep pending and future lawsuits. The company faces approximately 60,000 pending legal claims from people who developed cancer after using Johnson & Johnson Baby Powder.
The bankruptcy settlement applies to people, specifically women, with ovarian cancer who blame their cancer diagnosis on past use of Johnson & Johnson Baby Powder. Ovarian cancer makes up the majority of cancer cases connected to Johnson & Johnson Baby Powder.
The remaining small minority of cases are mesothelioma, which is a rare cancer that forms in the lining of the lungs, abdominal cavity and heart. This bankruptcy settlement proposal excludes mesothelioma cases.
Backstory of Johnson & Johnson Baby Powder and Cancer Lawsuits
Johnson & Johnson Baby Powder was made with the ingredient talc, which is a mineral capable of absorbing moisture and keeping skin healthy. Talc can be contaminated with asbestos, which is another mineral once prized for industrial use. Asbestos causes cancers like mesothelioma, lung cancer and ovarian cancer.
The presence of tiny asbestos particles in talcum powder used for Johnson & Johnson Baby Powder was overlooked or ignored for decades, which led to many consumers being exposed to asbestos and developing a deadly cancer.
Johnson & Johnson has created a subsidiary company, Red River Talc, to shoulder the legal liabilities associated with the company’s baby powder brand, which is no longer manufactured or sold. The subsidiary is filing for bankruptcy, which allows it to avoid facing lawsuits individually in the usual legal process and instead settles the claims in a bulk payment to victims.
Additionally, all future claims from victims will be paid from what’s called an asbestos trust fund. These trust funds pay victims a much smaller compensation amount than what they would receive from an individual lawsuit settlement, or a lawsuit verdict.
This maneuver of creating a subsidiary to then file for bankruptcy is called the Texas Two-Step. It’s a favorable tactic in Texas, which is why Johnson & Johnson filed the bankruptcy in the state after two previous attempts in other states were denied by judges.
Looking Ahead to Johnson & Johnson Bankruptcy Hearing
Johnson & Johnson representatives state the company has the necessary number of votes from plaintiffs in pending lawsuits to proceed with the bankruptcy plan. However, some attorneys opposing the plan believe the process was “rigged.”
According to a Reuters article, an attorney representing opposing plaintiffs said Johnson & Johnson challenged every vote of “no” for the bankruptcy while accepting votes in favor. Johnson & Johnson also allegedly allowed votes to change from “no” (opposing) to “yes” (in favor) yet ignored changing votes from “yes” to “no.”
Some groups, including federal government agencies, heavily oppose the plan. For instance, the U.S. Department of Veterans Affairs spoke out against Johnson & Johnson’s bankruptcy. The VA provides benefits to veterans with diseases such as mesothelioma and lung cancer.
According to Reuters, the hearing will last until the end of February. The judge will consider the validity of the voting process and whether a wealth company like Johnson & Johnson should even be allowed to use a bankrupt subsidiary as a shield from lawsuits.
Follow Mesothelioma Guide’s website for updates on the Johnson & Johnson hearing.
Sources & Author
- J&J begins crucial battle over $10 billion baby powder settlement. Reuters. Retrieved from: https://www.reuters.com/legal/jj-begins-crucial-battle-over-10-billion-baby-powder-settlement-2025-02-18/. Accessed: 02/21/2025.
