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Johnson & Johnson is offering to pay nearly $9 billion to settle lawsuits. Tens of thousands of people said the company's baby powder gave them cancer. J&J says more than 60,000 plaintiffs now support the payments, which would come over decades in a process supervised by a bankruptcy court. So why are critics asserting the company is abusing the bankruptcy process? NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Johnson & Johnson insist its baby powder is safe, but the company is offering $8.9 billion to settle claims brought by people who say asbestos contamination in the talcum powder caused their cancers. This is J&J's second attempt at using the bankruptcy court to sidestep those lawsuits. The company's first try was thrown out by an appeals court back in January. Since then, J&J has sweetened its offer, putting more than four times as much money on the table as it did a year and a half ago. That helped persuade attorney Mikal Watts to support the deal. Watts represents more than 16,000 plaintiffs and says many of his clients can't afford to wait for a drawn-out legal process.
MIKAL WATTS: There are many, many, many women that never got their day in court because their life ended before the case was resolved. It's very much a balancing act. You want to get a fair amount, and you want a large amount on behalf of your clients, but you need it early enough that they can actually use it as opposed to it being some pie-in-the-sky goal for 20 years from now.
HORSLEY: The proposed settlement is not a done deal. Watts says it still needs approval from a bankruptcy judge and at least three-quarters of the top plaintiffs in the case.
WATTS: This'll be the first time since J&J went into bankruptcy where the victims have actually had a chance to vote on a proposed resolution. I think that's key because they've been waiting long enough to have that right.
HORSLEY: It's important to note here that Johnson & Johnson itself did not go into bankruptcy. Rather, a spinoff company called LTL Management did. LTL was spun off from Johnson & Johnson back in 2021 as part of a controversial legal tactic known as the Texas two-step. Step 1, J&J assigns the baby powder lawsuits to LTL. Step 2, the new company files for bankruptcy. The move brought tens of thousands of lawsuits to a standstill, in effect shielding Johnson & Johnson from the risk of jury verdicts without the company itself having to file for Chapter 11. Clay Thompson, another plaintiff's attorney, says the Texas two-step doesn't look any better the second time around.
CLAY THOMPSON: They want all the benefits of bankruptcy without taking on any of the burdens. And I think it's insulting to the system, and it's offensive to my clients.
HORSLEY: Thompson and some other plaintiffs' attorneys have promised to fight the proposed settlement. Critics say if J&J is successful, other big companies facing a flood of lawsuits could use their own Texas two-step to limit their liability. Meanwhile, J&J has reformulated its baby powder. It's no longer made with talc, which carries the potential for asbestos contamination. Today, the company's baby powder is made with cornstarch.
Scott Horsley, NPR News, Washington.
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