Article Image

IPFS News Link • Lawsuits

CRIMINAL: J&J tried to create a new subsidiary to take all the liability from talc powder...

•, by: Ethan Huff

The U.S. Third Circuit Court of Appeals in Philadelphia has dismissed a Chapter 11 petition filed by a recently created subsidiary of Johnson & Johnson (J&J) called LTL Management, which would have allowed the pharmaceutical giant to avoid having to pay out billions in trial awards for its cancer-causing talc baby powder.

J&J created LTL Management back in October to address the more than 38,000 talc baby powder lawsuits that resulted in $3.5 billion in verdicts and settlements, including one case in which 22 women were awarded a judgment of over $2 billion.

What would have happened, had the Third Circuit Court not struck down this little scheme, is that J&J would have shifted all liability for these verdicts and settlements onto LTL Management, which is just a shell holding company where all that liability would have gone to die.

"Applied here, while LTL faces substantial future talc liability, its funding backstop plainly mitigates any financial distress foreseen on its petition date," a three-judge panel wrote, further noting that "good intentions" such as protecting the "J&J brand or comprehensively resolve litigation … do not suffice alone."

J&J spokesperson Allison Fennell announced that the company plans to appeal this decision, adding that the talc products in question are safe and do not cause cancer as the lawsuits in question determined.