Johnson & Johnson reaches $8.9 bln talc settlement

Johnson & Johnson said on Tuesday that it had agreed to pay $8.9 billion to tens of thousands of people who claimed the company’s talcum powder products caused cancer, a proposal that lawyers for the plaintiffs called a “significant victory” in a legal fight that has lasted more than a decade.

The proposed settlement would be paid out over 25 years through a subsidiary, which filed for bankruptcy to enable the $8.9 billion trust, Johnson & Johnson said in a court filing. If a bankruptcy court approves it, the agreement will resolve all current and future claims involving Johnson & Johnson products that contain talc, such as baby powder, the company said.

In a statement, a group of lawyers who represent nearly 70,000 plaintiffs, including families of people who died of ovarian cancer and mesothelioma, described the deal as a “landmark” and a “significant victory for the tens of thousands of women suffering from gynecological cancers caused by J&J’s talc-based products.”

For the deal to become final, the court would first have to accept a new bankruptcy filing by the Johnson & Johnson subsidiary, LTL Management, and the settlement itself; the company also needs to persuade enough claimants to support the settlement plan. Johnson & Johnson created LTL in 2021 in a maneuver to shield itself from the talc litigation, but an earlier bankruptcy filing by the unit was challenged by the plaintiffs and dismissed this year by a U.S. appeals court, which ruled that bankruptcy wasn’t the right way to resolve the matter.

If approved, the settlement would end a long-running legal drama that has weighed on Johnson & Johnson’s image. Its baby powder, although not a top seller, is one of the company’s most recognizable brands, and many of the plaintiffs claimed that the talc used in the product was contaminated with asbestos, a known carcinogen.

Some lawyers involved in the cases opposed the settlement, although they acknowledged that approval by the court would apply to all plaintiffs.

Jason Itkin, whose law firm is handling 10,000 cases involving women claiming that talc-based powders made by Johnson & Johnson caused their ovarian cancer, said the settlement was “bad for victims” and would be blocked in court. Even if the company succeeds with its filing, Itkin said, it will have to persuade enough claimants to vote in favor of the settlement plan.

“Even though $8.9 billion sounds like a lot of money, when you spread it out it comes out to not very much at all for the people who suffered,” he said.

LTL’s first bankruptcy filing had set aside $2 billion for payouts to plaintiffs. With the new filing, Johnson & Johnson said it would set aside an additional $6.9 billion to cover the payouts.

The company said the settlement plan was not an admission of wrongdoing. Erik Haas, the company’s worldwide vice president of litigation, said in a statement on Tuesday that the plaintiffs’ claims “are specious and lack scientific merit” but would have taken decades and been extremely costly to resolve.

“Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity,” Haas said.

Johnson & Johnson executives knew for decades about the risk of asbestos exposure linked to its talc products, including the famous baby powder it began selling 129 years ago. After years of pushing back on researchers and scientists, the company began facing a flood of lawsuits in recent years, along with government investigations and lawmaker inquiries.

The cases resulted in a mixed bag of verdicts and mistrials. Johnson & Johnson said it had prevailed in the vast majority of jury trials related to cosmetic talc; it also faced spectacular losses in which it was ordered to pay billions of dollars to a small number of plaintiffs.

In 2020, the company said it would discontinue sales of its talc-based baby powder in the United States. It plans to stop selling the product globally this year, offering a cornstarch version instead.

It also plans to break off its consumer health business, which includes brands such as baby powder, Neutrogena, and Tylenol, into a stand-alone company, Kenvue. (Johnson & Johnson’s pharmaceutical and medical divisions will stay put.)

Johnson & Johnson created LTL as part of a corporate pirouette that involves splintering off liability in a new unit and using the bankruptcy system as a shield against legal exposure. The plaintiffs had fiercely opposed that effort, known as “the Texas Two-Step” because of its origins in the state’s bankruptcy law, and prevailed in blocking it.

Tuesday’s settlement plan, however, will “provide expeditious, substantial, and fair compensation to claimants who cannot afford to wait any longer for a resolution,” the plaintiffs’ lawyers said.

The new bankruptcy approval process will proceed in the coming weeks, lawyers said. In court filings on Tuesday, LTL said that “bankruptcy is the only forum” where it could permanently close the door on the talc litigation, and that it was “critical” that active talc cases be paused for the settlement to proceed.

This article originally appeared in The New York Times.