Johnson & Johnson faces additional $1.1bn payout in talc lawsuit settlement

Johnson & Johnson is set to pay an additional $1.1 billion to settle tens of thousands of lawsuits claiming its baby powder and other talc-based products caused cancer. This increase brings the total settlement amount to over $9 billion, marking a significant development in the years-long legal battle over allegations that the company’s talc products are linked to cancer, including ovarian and gynecological cancers.

Key Details of the Settlement Offer

Johnson & Johnson’s revised settlement proposal is part of its broader strategy to address the 62,000 personal injury claims from plaintiffs alleging that their cancers were caused by using the company’s talc-based products. The settlement offer could potentially rise to account for as many as 100,000 claimants when including individuals who have not formally sued the company. The additional $1.1 billion comes after Johnson & Johnson’s initial efforts to settle these claims faced resistance from various plaintiffs’ groups, leading the company to bolster its offer.

The proposed settlement is part of a “Texas two-step” bankruptcy strategy, where Johnson & Johnson aims to offload its talc liabilities onto a newly created subsidiary, which would then declare Chapter 11 bankruptcy. This legal maneuver is designed to consolidate all talc-related claims into a single settlement without requiring Johnson & Johnson to file for bankruptcy itself. The company has faced multiple setbacks in its efforts to gain court approval for this approach but remains committed to resolving the litigation through this pathway.

Legal Challenges and Controversies

Despite the increased offer, there remains significant opposition to Johnson & Johnson’s settlement proposal. Some lawyers representing cancer victims argue that the company’s bankruptcy strategy is a legal tactic to minimize its liability and avoid full accountability for the alleged harm caused by its talc products. One of the prominent opponents, attorney Andy Birchfield, stated that his law firm, representing a substantial number of claimants, overwhelmingly rejected the settlement offer and intends to continue challenging Johnson & Johnson’s plan in court. This ongoing legal resistance suggests that the path to finalizing the settlement could be prolonged and contentious.

Johnson & Johnson has argued that its settlement offer is the “best and most realistic option” for claimants to recover compensation in a timely manner. The company expects to gain the necessary support from over 75% of claimants to secure court approval for the bankruptcy settlement, a legal threshold required to finalize such agreements. Johnson & Johnson has reiterated that its talc products do not contain asbestos, a claim that has been central to some of the lawsuits, particularly those involving allegations of mesothelioma, a rare form of cancer caused by asbestos exposure.

Broader Implications and Future Outlook

The decision to add $1.1 billion to the settlement pot reflects Johnson & Johnson’s recognition of the significant legal and financial risks associated with the talc litigation. With more than 75% of claimant support, the company is hopeful that it can finally put an end to the litigation and move forward. However, the ongoing legal disputes and challenges from various plaintiff groups underscore the complexities and potential delays that could still affect the settlement’s final approval and implementation.

If approved, the settlement would be one of the largest of its kind in U.S. history and would signal a significant resolution in a long-running saga that has impacted Johnson & Johnson’s reputation and financial standing. For claimants, the settlement provides a path to compensation, though the legal battles ahead may still shape the final outcome of this landmark case.