(Reuters) – Johnson & Johnson has agreed to pay $8.9 billion to settle tens of thousands of lawsuits alleging that talc in its iconic Baby Powder and other products caused cancer, the company said.
The amount exceeds J&J’s original bid of $2 billion.
The deal follows an appeals court ruling in January invalidating J&J’s controversial “Texas two-step” bankruptcy maneuver, in which it sought to transfer talc liability to a subsidiary that immediately filed for Chapter 11.
J&J subsidiary LTL Management filed for bankruptcy protection late Tuesday for the second time with the intention of presenting a restructuring plan containing the proposed settlement to a judge as soon as May 1
4, the subsidiary said in a court filing. J&J said in a statement that about 60,000 talk applicants had agreed to the proposal.The J&J subsidiary filed for bankruptcy in New Jersey, the same jurisdiction where it faced appellate court defeat. J&J created new financing arrangements with its subsidiary to avoid conflicting with the appeals decision, the subsidiary said in a court filing. The judgment held that LTL Management had no legitimate claim in bankruptcy because it was not in financial distress.
The appeals court’s rejection effectively raised the price tag for J&J to get rid of the sprawling talk dispute, after the plaintiffs’ lawyers had challenged the company’s tactics and prevailed. J&J’s board met this weekend and approved paying the significantly larger settlement to current and future plaintiffs with various gynecologic cancers and mesothelioma, according to Mikal Watts, one of the plaintiffs’ attorneys who negotiated the settlement.
J&J on Tuesday reiterated its claim that its talc products are safe and do not cause cancer. The company’s lawyers said the talc claims lacked scientific merit and accused plaintiffs’ lawyers of continuing to advertise for clients in the hope of extracting large financial sums.
The company still faces a significant risk that other plaintiffs could continue to oppose the settlement and re-appeal the case to the same court that has already dismissed the subsidiary’s bankruptcy — the 3rd U.S. Circuit Court of Appeals in Philadelphia.
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