In this photo illustration, a container of Johnson and Johnson baby powder is displayed on April 05, 2023 in San Anselmo, California.
Justin Sullivan | Getty Images
A federal bankruptcy judge on Thursday halted roughly 40,000 lawsuits alleging Johnson & Johnson‘s baby powder and other talc products caused cancer.
Judge Michael Kaplan put a temporary hold on the suits that will last through mid-June, The Wall Street Journal reported. J&J won’t have to go to trial over any other talc claims during the pause, but new lawsuits can still be filed against the company, according to the news report.
Kaplan said during a hearing in Trenton, New Jersey, that J&J has an “uphill battle” ahead, the Journal reported.
The decision is part of J&J’s second attempt to settle thousands of talc cases in bankruptcy proceedings. J&J in 2021 spun off its subsidiary, LTL Management, to carry its talc-related liabilities and file for Chapter 11 bankruptcy protections.
Kaplan’s hold will give J&J time to reach a permanent settlement with plaintiffs in the talc cases. The company recently proposed an $8.9 million settlement for current and future talc-related claims and said it expects to bring the plan to bankruptcy court in mid-May.
J&J called Kaplan’s Thursday decision “a win for claimants” because it brings them “one step closer” to being able to vote on the proposed settlement.
The New Brunswick, New Jersey-based company also said in a statement it believes claimants will overwhelmingly support the proposal. J&J has previously said more than 60,000 claimants have already committed to voting in favor of the plan.
“When presented with a clear and complete explanation and the opportunity to make an informed choice, we firmly believe the claimants will approve the plan,” Erik Haas, J&J’s worldwide vice president of litigation, said in a statement.
Kaplan’s decision is narrower than the one he made after LTL Management first filed for Chapter 11 in 2021.
The judge ruled in February 2022 that J&J can use the bankruptcy system to resolve talc allegations, enabling the company to avoid fighting thousands of individual lawsuits.
Kaplan essentially affirmed J&J’s use of a strategy known as the “Texas two-step,” which allows companies to split valuable assets from liabilities through a so-called divisive merger.
But the U.S. Court of Appeals for the 3rd Circuit overturned that ruling in January, saying neither LTL nor J&J had a legitimate need for bankruptcy protection because they were not in “financial distress.”
Amid the ongoing legal fights, J&J has continued to deny the talc allegations. Chief Financial Officer Joseph Wolk said on an earnings call Tuesday that it was “unfortunate” that J&J has to “put dollars towards quite frankly baseless scientific claims.”
The suits allege J&J’s talc products were contaminated with the carcinogen asbestos, which caused ovarian cancer in thousands of individuals. Some lawsuits link several deaths to J&J’s talc products.