U.S. court rejects J&J bankruptcy strategy for tens of thousands of talc lawsuits
Last edited Mon Jan 30, 2023, 09:12 PM - Edit history (1)
Source: Reuters
Jan 30 (Reuters) - A U.S. appeals court on Monday shot down Johnson & Johnson's (JNJ.N) attempt to offload tens of thousands of lawsuits over its talc products into bankruptcy court. The ruling marked the first major repudiation of an emerging legal strategy with the potential to upend U.S. corporate liability law.
J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.
The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.
Reuters last year detailed the secret planning of Texas two-steps by Johnson & Johnson and other major firms in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies. Monday's decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the J&J subsidiary in 2021. Before the filing, J&J had faced costs of $3.5 billion in verdicts and settlements.
Read more: https://www.reuters.com/legal/jjs-ltl-units-bankruptcy-dismissed-by-us-appeals-court-filing-2023-01-30/
Heard this on news radio this afternoon.
Article updated.
Original article -
The decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia on Monday dismissed a Chapter 11 petition filed by a recently created J&J subsidiary in October to address more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer.
Before the bankruptcy, J&J faced costs from $3.5 billion in verdicts and settlements, including one in which 22 women were eventually awarded a judgment of more than $2 billion, according to bankruptcy-court records.
Several major companies, including J&J and 3M Co (MMM.N), have turned to bankruptcy court to manage their mass tort liabilities. Plaintiff attorneys have called the cases an improper manipulation of the bankruptcy system, while the companies say the Chapter 11 filings are aimed at compensating claimants fairly and equitably.
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for example one that might be very familiar -
(the "medicated" version contains the talc where other versions are primarily using corn starch)
But what J&J did - whether with that particular product by calling it "baby powder" or with the shampoo that they dubbed "baby shampoo" (including "No more tears" ) that had some ingredients that produced small amounts of formaldehyde as a byproduct of the manufacturing process, was to use it's juggernaut of promotion to establish itself as a "trusted and wholesome brand", so they had the biggest marketshare.
The issue they are arguing in court has been how much asbestos may have been in the product that was sold and whether it was even at a consistent level from batch to batch given it was a natural contaminant, and if it was enough to cause the cancer.
The late 1800s had an explosion of products like those (and lots of snake oil ones too). And that eventually lead to the passage of the good old "Food, Drug, and Cosmetic Act" (1938) where those products used "externally" (topical) are usually considered "cosmetics" (unless they have certain ingredients that might make them drugs like some ointments used for treatment of certain medical conditions). 
Many bottles of meds would have a line on the bottle to refill when you reached this point. So many were addicted by virtue of the drug and dosage advice. The article I read stated that chances were, your grandparents (great?) were addicts.
Sorry to digress, but interesting from a historical perspective.
the FDA has an interesting history because of what are now class as "narcotics" that were common at one time, but then later dealing with regulating stuff like this (although most of the below came out before the FD&C Act 
) -
but very restricted like other opiate drugs and by prescription only. I don't even know how much if any is prescribed of it much anymore (although I expect under certain circumstances - perhaps for those who are hospitalized - a few might be taking it).
What I do miss is the codeine cough medicine (OTC). That stuff works way better than guaifenesin but oh well. 
