J&J near disclosing support for talc settlement, sources say
By Mike Spector
NEW YORK, Aug 14 (Reuters) -Johnson & Johnson JNJ.N is preparing to unveil widespread support in coming days for a $6.48 billion offer to settle tens of thousands of legal actions alleging its Baby Powder and other talc products caused cancer, two people familiar with the matter said.
The healthcare giant plans as soon as Friday to disclose that 75% or more of claimants alleging J&J talc sickened them have voted in favor of a bankruptcy settlement that would halt current and future cases, the people said.
J&J is preparing to have a subsidiary seek bankruptcy protection as soon as next week to execute the settlement, the people said. Support from 75% of claimants is the legally required threshold for a judge to approve the kind of bankruptcy settlement J&J has proposed. The deadline for casting votes was July 26.
The company maintains its talc products are safe and do not cause cancer. J&J's timetable for both disclosing claimants' settlement support and initiating a bankruptcy filing, which have not been previously reported, remains in flux and could change, one of the people said.
Earlier this week, J&J was still in the process of sifting through claimants' votes, though it expected to receive the necessary support to put the proposed settlement before a bankruptcy judge for approval, this person said.
"We cannot comment until the vote is certified," a J&J spokesperson told Reuters.
J&J faces talc lawsuits from more than 62,000 plaintiffs, according to a company filing. But the figure swells as high as 100,000 when counting claimants who haven't sued, Erik Haas, J&J's global vice president of litigation, has said.
After being rebuffed twice by federal courts, J&J is attempting again to end the talc litigation in a so-called "Texas two-step" bankruptcy.
The two-step maneuver involves offloading its talc liability onto a newly created subsidiary, which then declares Chapter 11. The goal is to use the proceeding to force all claimants into one settlement without requiring J&J to file bankruptcy itself.
Some lawyers representing tens of thousands of cancer victims oppose J&J's plan to attempt the legal maneuver a third time and are locked in a bitter battle with the company.
Courts rejected J&J's previous two-step bankruptcies in New Jersey, where the company is headquartered, on the grounds that its subsidiary lacked the "financial distress" required for Chapter 11 protection. J&J plans to have its subsidiary file bankruptcy in Texas this time, where some legal experts have said it could get a different opinion on the financial-distress standard.
J&J's current plan differs from the previous two in several key respects. The latest settlement offer addresses allegations talc caused ovarian and other gynecological cancers, which are the bulk of the claims J&J faces.
It excludes other claims, including those from plaintiffs alleging asbestos-laced talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc does not contain asbestos.
The company has settled nearly all mesothelioma cases outside of bankruptcy court, as well as claims from states alleging J&J misled consumers about the safety of its talc. Those agreements removed opposition that helped derail its previous two-step bankruptcies.
J&J also this time solicited settlement votes before a bankruptcy filing. The previous Chapter 11 cases contemplated claimants voting after the filing.
J&J wants to use Chapter 11 proceedings because bankruptcy judges can enforce global settlements that permanently halt all related lawsuits and forbid new ones, all for a capped payout.
In the trial-court system, instead of in bankruptcy court, any settlement J&J reached with some clients would still leave holdouts or future plaintiffs with the right to sue, potentially exposing the company to the kind of multibillion-dollar verdicts that spurred it to pursue the two-step strategy in the first place.
J&J has won most cases that have gone to trial. But its losses include a Missouri verdict for ovarian-cancer victims that ultimately cost J&J $2.1 billion.
Reporting by Mike Spector; Editing by Leigh Jones and Daniel Wallis
Ultime news
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