Johnson & Johnson proposes $6.5B settlement to resolve talc cancer claims

Johnson & Johnson hopes to move forward with a $6.48 billion settlement of more than 50,000 lawsuits claiming the company’s talcum-based baby powder caused ovarian cancer.

Under the terms of the proposal announced May 1, the New Brunswick-based pharmaceutical and medical technologies company would resolve the cases through a third bankruptcy filing of LTL Management, a subsidiary company previously created to absorb talc liability.

It will soon begin a three-month voting period in hopes of reaching a consensus on a settlement of all current and future claims related to ovarian cancer. According to J&J, those claims make up 99.7% of all talc suits, including about 54,000 cases that are centralized in a federal court proceeding in New Jersey.

If 75% of claimants support the new plan, J&J will pay out $6.475 billion over 25 years, which, the company said, “is a far better recovery than the claimants stand to recover at trial.”

It would also end litigation entirely, shutting off future lawsuits and preventing individuals from opting out of the deal to pursue their claims separately.

J&J maintains its products are safe and do not cause cancer. The company said the new deal is supported by attorneys representing the majority of plaintiffs who have filed cancer lawsuits against it. J&J pulled its talc-based baby powders off the market in the U.S. and Canada three years ago, replacing them with a cornstarch-based version. It also vowed to stop selling all talc-based baby powders worldwide by the end of 2023.

Third times a charm?

In a statement, Erik Haas, the J&J’s worldwide vice president of litigation, said, “Unlike the prior cases, it is the vote of the claimantsand not the conflicting financial incentives of the small minority of plaintiff lawyers who stand to receive excessive legal fees outside of a reorganizationthat decides whether the plan may proceed.”

Two prior attempts to resolve the lawsuits through bankruptcy of LTL have been nixed by federal judges. Both times, the case was rejected with courts ruling the parent company was financially capable of paying claims without bankruptcy protection.

The latest move comes about a year after LTL’s second bankruptcy filing. At the time of its Chapter 11 motion in April 2023, the company proposed an $8.9 billion settlement to resolve current and future claims related to mesothelioma, a rare form of cancer liked to asbestos exposure.

After that deal was rejected, the company determined it was more practical to settle those claims outside of bankruptcy before addressing the much larger group of 85,000 to 100,000 ovarian cancer claims, Haas said during a May 1 call with investors.

He also said that J&J has faced hundreds of mesothelioma cases and has settled all but 153 lawsuits. Additionally, the company has prevailed in about 95% of ovarian cancer cases tried to date.

In Wednesday’s announcement, J&J noted, “Based upon the historical run rate, it would take decades to litigate the remaining cases, and therefore, most claimants will never have ‘their day in court.’”

$11 billion

Moving forward, the company will continue to defend itself against the lawsuits while trying to gather votes for the settlement, according to Haas.

The company said it has set aside $11 billion to resolve all cancer claims, including a new charge of $2.7 billion in the first quarter of 2024.

Haas commented, “The talc claims asserted against the Company exemplify the egregious impact on U.S. businesses from meritless litigation and extreme judgments obtained by the plaintiffs’ bar through forum shopping, the distortion of scientific literature with junk science, and the unregulated and surreptitious financing of product litigation by financial institutions, including private equity and sovereign wealth funds.”

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Talc-related lawsuits have had a mixed record.

Major plaintiff wins include a $2.1 billion judgment in 2021 awarded to 22 women with ovarian cancer and a $45 million judgment last month to the family of an Illinois woman who blamed the talc baby powder for giving her a fatal cancer.

However, J&J has also won reversals of some cases such as a $117 million verdict in the same New Jersey appeals court and a $120 million verdict in New York.

In October 2023, a federal appeals court tossed out a $223 million jury award to four mesothelioma patients from New Jersey, finding the testimony of the plaintiffs’ expert unsound.

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