When a plaintiff’s lawyer in the Johnson & Johnson talc litigation became flustered in a federal appeals hearing on Monday, presiding Judge Thomas Ambro stepped in.
“I think that was a softball (question),” Ambro said, drawing laughs and momentarily decompressing an intense hearing.
Levity was in short supply when a three-judge panel heard arguments in the third circuit court, where plaintiffs are trying to overturn a ruling that would allow J&J to use a controversial Texas Two Step—creating a company called LTL Limited in which to funnel talc litigation and then declaring it bankrupt.
On Monday, plaintiffs argued that a powerhouse company such as J&J—which generated more revenue than any other firm in the biopharma sector last year at $93.8 billion—should not be afforded the protections provided by Chapter 11. In a statement, attorney Leigh O’Dell of Beasley Allen, who represents thousands of plaintiffs, said the filing “was built on a foundation of bad faith.”
With more than 38,000 cases outstanding, J&J faces what lawyer Neal Katyal called a “tsunami of litigation,” from those who claim the company’s iconic baby powder contains asbestos and causes cancer. J&J took the product off the market in the U.S. and Canada in 2020 and recently said it would do the same worldwide in 2023.
J&J argued on Monday that it’s not practical to litigate all the cases and that the traditional tort system has produced what Katyal called “wild, lottery-style judgements.”
More than 1,500 cases have been dismissed by courts. But others have produced outsized judgements, such as a $2.1 billion award in Missouri to 20 women who blamed J&J for their ovarian cancer. When the U.S. Supreme Court declined to review the case last year, J&J turned to its bankruptcy ploy.
“Our argument is each of their tort lawsuits has tunnel vision that examines only their individual case and delays future ones,” Katyal said. “It’s a home run or a strikeout and precious few get up to bat.”
Katyal said that the only way to get a resolution that’s comprehensive, expedient and “protects” claimants is through bankruptcy.