Today Judge Michael Kaplan dismissed J&J’s second bankruptcy filing relating to the company’s talc asbestos cancer liabilities. J&J’s first bankruptcy filing was ordered dismissed on January 30, 2023 by the United States Court of Appeals for the Third Circuit. J&J delayed the first dismissal by filing motions to reconsider and claiming that it intended to appeal to the United States Supreme Court. Behind the scenes though, J&J was secretly planning its second bankruptcy filing. At 1:49 pm on April 4, 2023, J&J’s first bankruptcy filing was officially dismissed. But, at 4:00pm on the same day, J&J directed its Legacy Talc Litigation (“LTL”) subsidiary to file for bankruptcy again in the same court.
The committee of claimants (creditors) including a Levy Konigsberg client living with mesothelioma immediately asked the bankruptcy court to dismiss the second bankruptcy filing. After all, the Third Circuit had already told J&J and the bankruptcy court that the shell subsidiary, LTL, did not belong in bankruptcy and that the cases needed to be litigated in the jury system. The bankruptcy judge, Michael Kaplan, initially declined to dismiss the second bankruptcy but held a 4-day hearing from June 27 through June 30, 2023. At that hearing, the attorneys for cancer victims, including Levy Konigsberg partner Moshe Maimon, cross-examined J&J’s witnesses and presented arguments to Judge Kaplan in support of dismissal.
In his Order dismissing the case today, Judge Kaplan emphasized that J&J’s subsidiary LTL was not in any “immediate financial distress” and the bankruptcy was filed in “bad faith”.
Now that that courts have dismissed J&J’s talc bankruptcies twice, will the company try a third bankruptcy filing? In the recently aired documentary film “Shaken: Baby Powder on Trial”, CNN Chief Investigative Correspondent and Anchor Pamela Brown asked a representative of J&J this very question:
“Pamela Brown [CNN]: If Johnson & Johnson loses on this second bankruptcy filing, will it just continue to go down this route?
[J&J Representative]: So I don't want to get ahead of ourselves. Our singular focus right now is getting this plan finalized. And what will never change is our resolve to find a way to reach finality in this litigation that has really not served anybody.”
J&J did not answer CNN’s question. Now that the second bankruptcy has been dismissed, the question remains: will J&J defy another Court order and continue to abuse the bankruptcy system and cause additional delay to thousands of court cases alleging cancer from Johnson’s Baby Powder? It would be hard to believe that one of the wealthiest companies in the world would try to wrongfully and unconstitutionally access the bankruptcy court system for a third time. Then again, it’s hard to believe that J&J has now attempted this twice only to be told “NO” by the court system both times. It’s time for J&J to live up to its credo which it says challenges the company to “put the needs and well-being of the people we serve first.” In the case of the talc baby powder lawsuits, this means that people have the constitutional right to a trial by jury and this right must not be infringed by unlawful and abusive bankruptcy filings.
Juries in 8 consecutive mesothelioma cases have determined that there was asbestos in Johnson’s Baby Powder which caused the plaintiffs to develop mesothelioma, a cancer caused by asbestos. Some of these juries have determined that J&J’s conduct was so egregious that it needed to be punished with punitive damages. J&J may not like these results, but Courts have now told J&J twice that it doesn’t have an “exit ramp” into the bankruptcy system. Let’s hope J&J listens this time so that thousands of people can move forward with their court cases after nearly 2 years of delay in bankruptcy court.
-Jerome Block
Partner, Levy Konigsberg LLP
