Johnson & Johnson has cleared a key hurdle for advancing a $6.5 billion plan to resolve thousands of lawsuits by people who say its baby powder gave them cancer, according to people familiar with the matter.
More than 75% of the group signed off on J&J’s proposal through secret balloting that ended in late July, said the people, who asked not to be identified discussing the results that haven’t yet been announced as certified. Such a result would boost the company’s latest bid to confine liability to a unit it set up as part of an effort to resolve the lawsuits.
Clare Boyle, a J&J spokesperson, declined to comment on the tally. With lawsuits piling up, the company hired a consulting firm to organize the vote on the settlement and tabulate the results. The litigation is ongoing and J&J’s efforts to resolve the lawsuits still face significant hurdles.
The settlement offer includes claims that the talc-based version caused ovarian and other gynecological cancers. Separately, the company said in May it has resolved 95% of claims its baby powder was tainted with asbestos and caused mesothelioma, a type of cancer that forms in tissues around the heart and lungs.
J&J has said its talc-based powders never caused cancer and that it appropriately marketed its baby powder for more than 100 years. Last year, the company discontinued the talc-based version of the product and replaced it with a cornstarch-based substitute.
Although the settlement plan likely still faces significant legal challenges from plaintiffs opposing the terms, the voting milestone would lay the groundwork for the J&J unit to again ask a judge to grant it bankruptcy protection. A federal appeals court ultimately rebuffed two previous bids to get that sign-off in New Jersey, where the health-care company is based.
When three-quarters of plaintiffs favor a settlement, companies can seek to fast-track Chapter 11 bankruptcy cases. With that level of support favoring J&J’s plan, the unit could ask to expedite a “pre-packaged” filing in its home state of Texas, which is perceived as being more business-friendly than New Jersey.
Outstanding Claims
Under J&J’s current offer, it would pay $6.5 billion over 25 years to resolve current and future claims for ovarian and other types of gynecological cancers. Separately, the company has already had to pay about $5 billion over talc-based powder claims, including cases related to mesothelioma, other cancers and allegations of illegal marketing by US states. J&J has said there may be thousands of cases yet to be filed.
Most of the outstanding cases are consolidated before a federal judge in New Jersey for pre-trial information exchanges.
The consolidated case is In Re Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, 16-md-2738, US District Court, District of New Jersey (Trenton).
Photo: Photographer: Gabby Jones/Bloomberg
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