Pharmaceutical giant Johnson & Johnson (J&J) has waged a years-long battle to avoid asbestos liabilities. The company’s third attempt at bankruptcy will move forward after more than 75% of the claimants voted in favor of the latest bankruptcy plan, according to Bloomberg.
The deadline to vote was July 26, 2024. A vote in favor would approve a plan to settle roughly 61,000 lawsuits for nearly $6.5 billion. These lawsuits allege the company’s use of asbestos-tainted talc led to cancers like mesothelioma.
The Vote’s Impact for Victims and J&J
The vote tally is not final, but once it is, it may bring J&J closer to ending its long legal battle. The company’s 75% vote meets a U.S. bankruptcy law provision. A vote in favor will allow J&J to advance its third bankruptcy claim.
Once the vote is finalized, a bankruptcy court will decide whether to enforce the settlement and stop all pending lawsuits. If the bankruptcy moves forward, it would mean the company would evade potentially expensive lawsuits. Experts estimate ovarian cancer lawsuits would settle for an average of $75,000 – $150,000.
For the claimants, the $6.5 billion settlement may be woefully low to support their needs. The cost of mesothelioma surgical treatment alone can total more than $50,000. Experts estimate that lung cancer patients without insurance may pay $140,000 a year.
An attorney for some of the plaintiffs also has taken issue with how J&J allegedly recruited people to take part in the vote. The company ran advertisements in newspapers, online media, radio and television. The attorney claims this was an attempt to “rig the vote” in favor of J&J.
J&J’s Never-Ending Asbestos Woes
J&J has failed to escape the consequences of its contaminated talc more than once. The $350 billion healthcare company has shelled out millions of dollars in settlements. It has also tried—and failed—to declare bankruptcy two other times.
Each one of these attempts has delayed many lawsuits. These delays impact families as medical bills pile up.
J&J’s First Attempt at Bankruptcy
The first attempt occurred in 2021. J&J used a controversial legal tactic known as the Texas Two-Step. This maneuver involves the main company creating a subsidiary. It then moves its liabilities into this new company, which declares bankruptcy.
J&J created and underfunded a company called LTL Management LLC. LTL then declared bankruptcy. But an appeals court dismissed the bankruptcy case in early 2023, reopening the doors for talc lawsuits.
The Second Attempt Also Falls Flat
J&J attempted the Texas Two-step again in 2023. With this maneuver, the company proposed funding a trust with $8.9 billion. The bankruptcy judge overseeing this case dismissed it. The company appealed the decision, but it failed when a U.S. appeals court agreed with the original ruling.
Company representatives have stated they will appeal the decision to the U.S. Supreme Court. During this part of the legal fight, J&J was starting its third attempt at bankruptcy.
For now, it seems as if things are going in J&J’s favor with the third bankruptcy attempt. The company still has hurdles to clear before it gets out from underneath its asbestos liabilities. In the meantime, victims of J&J’s contaminated talc continue to wait for a resolution.
