Johnson & Johnson Bankruptcy Claim A Ruse To Limit Liability, Cancer Victims Say

By Dana DiFilippo | Pennsylvania Capital-Star

Juliet Gray has felt many things since she was first diagnosed with peritoneal mesothelioma two years ago.

Pain, which flares up when she’s stressed or tired. Fear, with every new doctor’s visit as she dreads the return of her rare, terminal cancer. Heartache, when she thinks of her 9-year-old son and how quickly her time with him is running out.

Mostly, though, she’s mad. She’s furious with New Jersey-based pharmaceutical giant Johnson & Johnson, whose talc products she blames for her incurable cancer. And her fury recently curdled into betrayal after Johnson & Johnson filed for bankruptcy in a controversial strategy company attorneys say will expedite the nearly 40,000 lawsuits against them.

Critics say the company — worth over $400 billion — is far from bankrupt and instead just wants to keep their cases from being heard by juries. Maryland-based attorney Jonathan Ruckdeschel, who has filed several lawsuits against J&J, said such a strategy forces plaintiffs into a collectively negotiated, judicially enforced settlement and removes their Seventh Amendment right to a jury trial.

“What they’re trying to do is cram everybody into a one-size-fits-all mandatory settlement that nobody has the choice to opt in or out of, and if you dissent, too bad. And they can bind all the future plaintiffs as well,” said Ruckdeschel.

Gray, an academic librarian who lives in Illinois, wants her day in court, both to secure a stable future for her son and husband and to put a face on what she calls a corporate coverup that sickened tens of thousands of people.

“There’s a moral component and an awareness component to this that I think it’s important for everybody to hear and understand,” Gray said. “You trust that if there’s something on the market, it’s not going to kill you. When you’re selling products to people for their health that they used to take care of themselves and those products are tainted with something so toxic you get a terminal cancer from it, that is not OK — especially if it becomes known that your product is tainted with asbestos, but you continue to sell that product and fight with the people who are harmed by your product.”

J&J has denied its products are harmful but quit selling talc-based baby powder in the U.S. and Canada in 2020 “because of changes in consumer habits” that were “fueled by misinformation.”

Erik Haas, J&J’s worldwide vice president of litigation, said in April the cancer claims “are specious and lack scientific merit.”

Haas told the New Jersey Monitor through a spokesman that the bankruptcy approach has the support of attorneys representing the vast majority of claimants and would allow them to be fairly compensated in a timely manner.

“We maintain our position that the scientific evidence does not support these claims,” Haas said. “However, litigating these claims in the tort system would take decades, impose significant costs on the company and the system, and based on the track record to date, most claimants would receive nothing.”

New Jersey is part of an ad hoc committee of 41 states that have asserted consumer protection claims against J&J on behalf of residents who blame their cancer on the company’s talc products. 

A jury dodge?

J&J has already tried the bankruptcy approach and failed.

In 2021, the company spun off its liabilities into a new entity called LTL Management under a strategy called the “Texas two-step.” That legal but controversial approach allows a solvent parent company to protect its assets by creating a subsidiary to hold its liabilities — and then having the new company declare bankruptcy, as LTL did just days after incorporating. Critics complain it’s an abuse of the bankruptcy system and allows companies facing massive litigation to dodge corporate responsibility.

The Third Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filing in January, finding LTL was not in financial distress and had “no valid bankruptcy purpose.”

But hours after that case was formally dismissed in April, LTL filed for bankruptcy protection again, this time with a higher settlement proposal of $8.9 billion.

Late last month, an army of attorneys crowded the courtroom of U.S. Bankruptcy Judge Michael B. Kaplan in Trenton for a hearing on another motion to dismiss. Kaplan is expected to issue a decision by early August.

Ruckdeschel was among the attorneys pushing for a dismissal.

“If there was not enough money to go around, then the bankruptcy code might be appropriate to make sure that current victims and future victims share relatively fairly in the pot of money that is there, that’s limited,” he said. “But there’s no limited money here, there’s no limited funds. There’s unlimited money. Johnson & Johnson gives away a billion dollars a month to its shareholders — gives it away! Dividends, voluntary dividends, a billion a month.”

During the bankruptcy proceedings, all cases against J&J are stayed.

“That’s why J&J is doing this, not only to combine everybody and get it all done in one fell, cheap swoop, but it’s also to stop all the jury trials,” said Clay Thompson, an attorney whose Illinois-based firm represents about 80 clients with mesothelioma claims against J&J. “They don’t want to have a jury decide these cases.”

The company has already been ordered to pay billions of dollars in lawsuit verdicts and settlements that date back a decade, but advocates expect many more claimants could step forward because mesothelioma and other asbestos-related cancers can develop slowly.

They should all get their day in court, Gray said.

“I might die way sooner than I imagined, and there’s nothing that’s going to give me the power for that not to be the case. I’m really focusing all of my energy on my health, on my son, and just managing this nightmare,” said Gray, who’s 48. “This is a corporation that had toxic chemicals in their product for years and didn’t do anything about it. And now, they want to claim that they’re bankrupt. That’s what’s spinning around in my head.”

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