Victims Sue Johnson & Johnson Over "Bankruptcy Scheme"

If you’ve watched television any time in the past couple of years, you’ve probably seen commercials calling for people who have used Johnson & Johnson’s talcum powder to reach out for a free attorney consultation if they’ve been diagnosed with cancer.

Allegedly, some of the company’s talcum powder was contaminated by asbestos, resulting in dangerous health consequences, including mesothelioma and ovarian cancer.

Johnson & Johnson Lawsuit

Last week, Johnson & Johnson found itself dealing with another legal battle, as a group of five individuals has filed a proposed class action suit in New Jersey federal court, alleging that Johnson & Johnson is taking steps to defraud victims out of the money they’re owed by filing for bankruptcy protection.

The suit, filed on May 22, 2024, offers representation to anyone who pending litigation surrounding Johnson & Johnson’s talcum powder as of Augusta 11, 2023.

Between August 2023 and May 2024, Johnson & Johnson has allegedly filed for bankruptcy protection on multiple occasions in different states in an effort to avoid paying at least some of the tens of thousands of plaintiffs that they’ve been ordered to pay.

In May 2024, Johnson & Johnson announced its most recent bankruptcy filing, its third, which would allow them to move forward with a proposed settlement of $6.475 billion for victims.

There’s currently a three-month voting period underway, during which plaintiffs will try to come to a consensus regarding the settlement that should be made available to current and future victims.

Roughly 99% of the claims against Johnson & Johnson involve ovarian cancer caused by baby powder, which has led to only people with talcum-related claims being involved in the voting process.

Johnson & Johnson claims that the same small group of plaintiffs lawyers who have signed the most recent class action suit have fought the settlement process along the way instead of allowing claimants to decide what’s in their best interest on their own.

Erik Hass, the worldwide vice president of litigation for Johnson & Johnson, considers last week’s filing “more of the same.”

Meanwhile, court records indicate that the latest filings call Johnson & Johnson’s most recent bankruptcy filing an “unfulfilled scheme.”

How Did the Alleged Scheme Happen?

According to court records, Johnson & Johnson allegedly utilized a “Texas two-step” maneuver to stop the victims’ claims and to commit fraud.

Allegedly, Johnson & Johnson put some of its valuable assets and talcum liabilities into a new subsidiary, only to file for bankruptcy protection two days after forming the new company.

According to the suit, this alleged scheme took place in 2021. The bankruptcy filing stopped the suits from moving ahead, leaving victims in a holding pattern as they waited for the money they contended that Johnson & Johnson owed to them.

Ultimately, the courts who heard the claims said that Johnson & Johnson, nor its subsidiaries, were facing imminent financial issues, which led to them denying the request for bankruptcy protection.

The recent suit alleges that this denial didn’t stop Johnson & Johnson from utilizing two other forms of fraud, “asset stripping fraud” and “bait-and-switch fraud.”

Both of these forms of fraud, the suit alleges, involved Johnson & Johnson cutting or dumping assets and funds.

The May 2024 filing alleges that Johnson & Johnson used “three connected fraudulent transfers” to “hinder or delay tort victims from recovery against Johnson & Johnson and its operating subsidiaries.”

Johnson & Johnson’s Response

Haas contends that Johnson & Johnson is laser-focused on settling the claims that have been brought against the company. Haas continues to say that the facts of the case are clear and that Johnson & Johnson has offered one of the largest resolutions in the history of mass tort claims.

Moreover, Haas points to the company’s success in the 17 ovarian cancer cases that have made their way to trial. Johnson & Johnson won 16 of those court battles, including every trial that it’s been involved in over the last six years.

According to Reuters, Johnson & Johnson has reached settlements with law firms representing mesothelioma patients and with multiple U.S. states that allege that the company failed to warn customers about how dangerous its talcum powders are.

Recently, a judge ordered Johnson & Johnson to pay $45 million in a mesothelioma case while Johnson & Johnson won an ovarian cancer case.

Haas, speaking on behalf of Johnson & Johnson said, “Our focus has been and will remain reaching a full, fair, and final resolution of this litigation, and allowing the claimants to speak for themselves,” before vowing that the company will file a motion to have this latest filing, which Haas referred to as a “hail Mary” and “frivolous.”

Whether you’re involved in the ongoing litigation against Johnson & Johnson, or you’re simply following along with the ongoing events surrounding the trial, this most recent filing looks like the next step in a long, nasty legal battle.

It will be interesting to see how these latest filings shake out in court and how judges handle the latest set of motions filed by both sides.