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NEW YORK (Reuters) – The lead negotiators for Johnson & Johnson (NYSE:JNJ)’s proposed $8.9 billion settlement of thousands of talc lawsuits faced intense questioning in U.S. bankruptcy court on Wednesday about how much support the company has for the deal.
During a multi-day court hearing in Trenton, New Jersey, attorneys for plaintiffs alleging that J&J’s baby powder and other talc products sometimes contained asbestos and caused ovarian cancer and mesothelioma drilled down on J&J’s public statements that it has “secured commitments from over 60,000 current claimants” for the settlement, and that the “majority” of talc claimants support it.
The deal has divided lawyers representing cancer victims, many of whom claim that J&J has created the illusion of widespread support for a settlement that would deny plaintiffs just compensation.
Johnson & Johnson is attempting to use the second bankruptcy of its subsidiary LTL Management to resolve all current and future claims stemming from its talc products.
LTL’s first attempt to do that was dismissed in April after a U.S. appeals court ruled that it was not in sufficient financial distress to be eligible for bankruptcy protection. LTL quickly filed for bankruptcy again, arguing that its second effort has won more support from plaintiffs.
J&J has said its talc products are safe and do not contain asbestos.
Attorneys representing cancer victims, along with the U.S. Justice Department’s bankruptcy watchdog, have called for LTL’s second bankruptcy to be dismissed as an abuse of U.S. bankruptcy law.
J&J faced 38,000 talc lawsuits before LTL’s first bankruptcy filing in October 2021, but the total number of claims will include many more individuals who have not yet sued J&J. The proposed settlement would resolve all of those unfiled claims, as well as any future claim alleging that a J&J talc product caused cancer.
Moshe Maimon, an attorney for cancer victims opposed to the settlement, said that four law firms represent a majority of the 60,000 claims counted by J&J, and he pointed out that none of those firms’ clients have yet agreed to support the deal.
Attorneys who support the settlement confirmed Maimon’s interpretation when questioned on Wednesday, saying they would recommend the deal, but their clients could make up their own minds.
Mikal Watts, an attorney who supports the deal and says he has 17,000 talc clients, said that he did not agree with J&J statements about “secured commitments.”
“I think the PR department didn’t consult with legal,” Watts said. “It’s sloppy.”
Watts, who led the plaintiffs’-side negotiations on the settlement, also said that he is still vetting many of his clients to ensure that they have valid claims against J&J.
Jim Murdica, J&J’s outside counsel and lead negotiator on the settlement, defended J&J’s public statements and disagreed when Maimon suggested that Watts’ clients should not be counted as supporters. Murdica also said that there are many more law firms that support the settlement than the ones that have publicly done so, but he would not identify any of them when asked.
U.S. Bankruptcy Judge Michael Kaplan, who is overseeing LTL’s bankruptcy, ordered Murdica to stop making certain claims about support for the settlement without backing them up.
Kaplan prevented Murdica from testifying that LTL has more support than it has disclosed, that LTL has the support of a “majority” of claims, and that plaintiffs’ lawyers would face threats or intimidation if they spoke up in favor of the deal.
The hearing is expected to last all week.
