Cancer Patients Ask The Court To Remove The J&J Bankruptcy Obstacle To Lawsuits

On Monday, plaintiffs suing Johnson & Johnson over the firm’s talc products petitioned an appeals court to reinstate their claims. They argued that the lucrative business should not be permitted to exploit a bankrupt subsidiary to prevent cancer-related cases.

They petitioned a panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia to dismiss the bankruptcy of J&J’s subsidiary LTL Management, claiming that LTL is a “sham” organization created exclusively to prevent them from having their day in court.

J&J (JNJ.N), which maintains that its talc products are safe, split out LTL in October, allocated its talc liabilities to it, and filed for bankruptcy a few days later.

Approximately 38,000 lawsuits alleging that J&J’s baby powder and other talc-based goods contained asbestos and caused mesothelioma and ovarian cancer was halted by the “Texas two-step” method.

Critics, including legislators and legal experts, assert that J&J’s bankruptcy tactic might serve as a model for other large corporations seeking to avoid significant tort jury trials.

During Monday’s arguments, Circuit Judge Julio Fuentes questioned the counsel for cancer patients, Jeffrey Lamken, whether the bankruptcy court might provide a more practical resolution of the claims than hearing each case individually in other courts.

Because its safeguards should be reserved for enterprises in financial crisis and need of reorganization, according to Lamken, the court should not issue a blanket judgment on whether bankruptcy is “better.”

Cancer patients ask the court to remove the J&J bankruptcy obstacle to lawsuits

He claimed that cancer patients should be permitted to sue since bankruptcy requires a lengthy judicial procedure to obtain a broad settlement before any individual case can be handled. Lamken stated that LTL is under no obligation to act swiftly because it has no operations and is not penalized for lingering in bankruptcy.

David Frederick, who represents the second group of litigants with cancer, stated that the bankruptcy enables LTL to pay “less money, more slowly.”

Frederick stated, “No payment will be made until the last appeal of the last objector is settled.”

J&J replied that the bankruptcy court permits all pending and prospective talc litigation to be resolved concurrently, arguing that this is the most suitable and equitable solution.

The outcomes of litigation in different courts are extraordinarily diverse. Some plaintiffs may hit home runs and receive enormous verdicts, but “the majority of individuals won’t even get a turn at bat,” and some will die before their claims reach trial, according to LTL attorney Neal Katyal.

Katyal stated that perpetual litigation generates considerable “dead weight” in the form of attorney fees and court expenditures.

The business has put aside $2 billion to resolve talc lawsuits, which LTL officials characterize as a “floor” instead of a “ceiling.”

According to bankruptcy court papers, J&J faced liabilities from $3.5 billion in judgments and settlements before filing for bankruptcy, including one in which 22 women were granted a review of more than $2 billion.

According to LTL’s court filings, more than 1,500 talc claims have been dismissed without J&J paying anything. Most trials have ended in defense verdicts, mistrials, or judgments for the business on appeal.

The people with cancer requested that the appeals court reverse a New Jersey bankruptcy judge’s decision to allow LTL’s bankruptcy to proceed. LTL’s bankruptcy filing immediately halted pending litigation against it. In February, U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey, determined that LTL’s bankruptcy should also stop talc cases against parent firm J&J.

In refusing to dismiss the lawsuit, Kaplan stated that the bankruptcy court is more qualified than other courts to handle significant tort action.

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