Good News For Talcum Powder Plaintiffs, Maybe…

On May 19, 2020 Johnson & Johnson stated that the company would stop marketing Johnson’s Baby Powder containing Talc, in the U.S. and Canada. The pharmaceutical giant cited a decline in customer demand amid publicity about safety concerns as their reason for deciding to pull their talc-containing products from the market.

Johnson & Johnson also stated that it will continue to sell a cornstarch-based version of Johnson’s Baby Powder in the U.S. and Canada. Talcum Powder Lawsuit Plaintiffs have long held that the cornstarch-based version was a safer alternative to talc as the active ingredient in baby powder and other similar products.

The maker of Shower to Shower powder, Bausch Health Cos. Inc. made the switch from Talc to Corn Starch in November of 2019. Bausch Health Cos. Inc. also faced product liability suits over its Talc products; however, the number of cases filed against Bausch pale in comparison to the number filed against Johnson and Johnson and Imerys (as co-defendants).

It is likely not mere coincidence that Johnson and Johnson announced its decision to make the switch of talc to corn starch on the heels of their Co-Defendant, Imerys, announcing that it would relinquish certain assets to the Bankruptcy Trustee in the companies’ Chapter 11 proceeding, for the purpose of paying plaintiffs’ claims in exchange for ending the hard-fought litigation against Imerys. The Imerys settlement would not relieve Johnson and Johnson of liability from Plaintiffs’ Talc claims unless the Imerys Bankruptcy Court allows Johnson and Johnson to contribute to the Imerys bankruptcy trust under a third party channeling injunction.

The U.S. Bankruptcy 11 U.S. Code § 524 (g)(2)(I) provides an opportunity for Johnson and Johnson to attempt to invoke the Bankruptcy Court to issue a “channeling injunction” which, if granted, would allow Johnson and Johnson to contribute to the Imerys bankruptcy trust and dispose of their portion of the liability arising from existing plaintiff cases as well as future cases.

The Plain Language of the Code pursuant to 11 under U.S. Code § 524 (g)(2)(IV)(bb) also requires that any third-party channeling injunction be approved by a 75% vote of the Plaintiffs addressed in § 524 (g)(2)(I).

11 U.S. Code § 524 (g) was passed by Congress in order to protect asbestos claimants who were exposed to asbestos, but had not yet manifested an asbestos related disease (future claimants), The Statute was enacted due to the number of asbestos defendants who sought bankruptcy protection. The primary purpose of the Statute was to protect “future claimants” in the various asbestos litigations.

Although 11 U.S. Code § 524 (g) arose from the asbestos litigation, there is nothing in the Statute that indicates that Congress intended to limit the applicability of the Statute to asbestos cases.

Notwithstanding the plain language of the Statute, there is a Federal Circuit split on numerous issues relevant to the applicability 11 U.S. Code § 524 (g) under a variety of scenarios, including whether the applicability of the Statute is limited to “asbestos defendants”.

The good news for Talcum Powder Plaintiffs is that we can now see light at the end of the tunnel however; if Johnson and Johnson tries to settle “on the cheap” via the Bankruptcy Court, we could be facing a new and different long and hard-fought battle in yet another court.

It is our hope that the Judge in the Imerys Bankruptcy Court will not ignore 11 U.S. Code § 524 (g)(2)(IV)(bb) and attempt to enforce a settlement agreement that includes a release of liability for Johnson and Johnson, absent Johnson and Johnson making a large enough contribution to the Imerys trust that at least 75% of the existing Talcum Powder Litigation Plaintiffs would find acceptable and agree to.

Stay tuned, the light at the end of the tunnel could show us the way to a satisfactory end to this litigation, or burn Plaintiffs, giving rise to appeals that might prolong the matter indefinitely.

One thing that is certain, Johnson and Johnson not only wants to end this litigation, the decision makers, being those executives with titles starting with a “C” and the Board Members need to see an end to this litigation, as another multi-billion dollar jury verdict could render these well-compensated executives out of a job. Most of Mass Tort Litigations have little impact on the stock value of the defendant, both the Talcum Powder Litigation and the Roundup litigation have been an exception to this general rule. Bayer and Johnson and Johnson stockholders and the market, in general, has reacted quickly and negatively to the large verdicts handed down by juries, thus far. There is nothing that causes more fear in Stockholders and the market than uncertainty, and both defendants are saddled with an elephantine uncertainty until such time as they can inform their Stockholders that these litigations are substantially behind them.

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