J&J Close to $6.5 Billion Settlement for Talc Lawsuits

Johnson & Johnson (J&J) has reportedly gained significant support for its proposed $6.5 billion settlement aimed at resolving thousands of lawsuits from individuals claiming that the company's baby powder caused cancer. According to sources familiar with the situation, over 75% of claimants voted in favor of the proposal in a secret ballot that concluded in late July. This development marks a crucial step for J&J as it seeks to confine its liability to a subsidiary created specifically for this purpose, following two previous rejections by federal courts. The healthcare giant faces approximately 61,000 lawsuits alleging that its talc products were contaminated with asbestos, leading to ovarian and other cancers. J&J's current strategy involves a "Texas two-step" bankruptcy maneuver, which entails transferring its talc liabilities to a newly formed subsidiary that would then file for Chapter 11 bankruptcy. This approach aims to facilitate a global settlement that would halt all related lawsuits and prevent new claims from arising. Legal experts have expressed skepticism about the effectiveness of this strategy, particularly in light of a recent Supreme Court ruling that limits the ability of courts to block lawsuits against non-bankrupt entities without the consent of the plaintiffs. J&J maintains that its settlement proposal is unaffected by this ruling, citing specific legal protections for asbestos defendants under U.S. bankruptcy law. However, the company must still address concerns regarding the financial distress of its subsidiary, which was a key factor in the rejection of its earlier bankruptcy attempts. As Congress considers legislation to restrict companies from using bankruptcy as a shield against lawsuits, J&J's ongoing legal battles and settlement efforts remain under scrutiny. The outcome of this latest proposal could have significant implications for the company and the claimants involved.