Johnson & Johnson (J&J) is one of the best-known brand names in the health and beauty industry. For decades, J&J has provided consumer goods and also medical supplies directly to hospitals and other care providers. People have come to trust the J&J name because of those beneficial products, but the company has also come under intense scrutiny for ignoring the presence of deadly asbestos fibers in its baby powder products. J&J is trying to use the US bankruptcy system to avoid paying for its liability. It created a unit called “LTL Management” to settle lawsuits over its talc-based baby powder, funding it with $8.9 billion. J&J is seeking to have LTL Management be deemed insolvent. The money J&J has set aside will wrongfully force settlements for current claimants and will effectively foreclose any future cancer victims from being able to lawfully file a lawsuit against the company for their damages.
For the second time now, mesothelioma lawyers are asking the federal US Bankruptcy Judge Michael Kaplan in New Jersey to throw out J&J’s sham bankruptcy filing. Last year, Judge Kaplan sided with J&J, but was ultimately overruled by a federal appeals court in Philadelphia, which ordered the judge to dismiss the bankruptcy petition.
Hours after losing the appeal, J&J slightly changed its legal strategy and raised its settlement offer to try to attract more support. Judge Kaplan agreed to hold a hearing, going on this week, to decide if the new case fixed the legal flaws of its original filing.
The bankruptcy filing was created to circumvent the US civil justice system
LTL Management was created solely to benefit J&J. LTL has no operations of its own, it was created as an offshoot of J&J to incur all of J&J’s civil liabilities for causing harm with its asbestos-contaminated powder products. This is not a valid use of bankruptcy.
When it comes to big businesses that endanger public health and welfare, it is often only financial consequences that lead to meaningful reform. Being able to pursue a talc-related asbestos claim against a company like Johnson & Johnson will not only provide financial compensation for the people harmed by dangerous business practices but may also inspire that company and others in the same industry to put consumer safety first in the future.