Johnson & Johnson’s Secret Plan to Avoid Talc Lawsuit Payouts?
Johnson & Johnson once had a squeaky-clean image. Propelled by its baby-powder-fresh facade, the company diversified, growing to one of the world’s largest pharmaceutical and consumer packaged goods companies. In 2021, Johnson & Johnson generated more than $93.7 billion in revenue. But over the last decade, there’s been nowhere to go but down, and things keep getting worse for litigation-embroiled Johnson & Johnson. In addition to recently settling opioid-related litigation for $26 billion, the company also faces more than 38,000 lawsuits alleging that its talc-based products were contaminated with asbestos, causing ovarian cancer in tens of thousands of its customers.
The Secret Payout-Limiting Plan
After agreeing to settle some of the pending lawsuits for $100 million, Johnson & Johnson may have had a secret plan to avoid paying significant amounts of court awards to plaintiffs. The “Texas Two-Step” is a divisive product of Texas law, allowing companies to split into two entities. After splitting, the company then passes pending lawsuits to the new company. This smaller subsidiary can then file for Chapter 11 bankruptcy. Because bankruptcy proceedings halt all litigation against a company, Johnson & Johnson’s “subsidiary” could force tens of thousands of plaintiffs to compete for a much smaller settlement fund from a billion-dollar company.Reuters recently reported that Johnson & Johnson used a covert internal team to develop this lawsuit-avoiding tactic and warned its employees to tell no one, including their spouses. The plaintiffs in the talc litigation asked the court to block the bankruptcy procedure, arguing that Johnson & Johnson filed the bankruptcy action in bad faith. But after the Texas court allowed the bankruptcy proceeding to continue, some federal legislators are calling for legislation to end this corporate loophole.
You Need Experienced Legal Advice
If you or someone you love is facing ovarian cancer and you believe it may be caused by using asbestos-contaminated products, you need legal guidance. You may be entitled to file suit, and you’ll need a skilled legal team to guide you along the way. The lawyers at the Madeksho Law Firm can help. Give us a call at 1-888-910-6376 or contact us online. Your first consultation is always free, and you don’t pay a fee unless we recover compensation on your behalf.
