J&J Talc Supplier Imerys Files for Bankruptcy Over Cancer Lawsuits
February 14, 2019
Seeking protection from rapidly mounting litigation, Imerys Talc America and two of its subsidiaries filed for Chapter 11 bankruptcy protection Wednesday in Delaware.
Imerys is a major talc supplier for Johnson & Johnson consumer goods, including the company’s iconic baby powder and Shower to Shower line.
Litigants claim the talc-based products were contaminated with asbestos, leading to cases of mesothelioma and ovarian cancer.
The bankruptcy filing comes in the midst of an ongoing, high-profile trial in California in which a woman is blaming Imerys talc for her mesothelioma, a rare cancer caused almost exclusively from asbestos exposure.
“After carefully evaluating all possible options, we determined pursuing Chapter 11 protection is the best course of action to address our historic talc-related liabilities and position the companies for continued growth,” Imerys Talc America President Giorgio La Motta said in a statement.
Subsidiaries Imerys Talc Vermont and Imerys Talc Canada Inc. also filed for bankruptcy protection Wednesday.
Imerys Facing 14,000 Claims
According to court filings Wednesday, Imerys is facing more than 14,000 claims in courts across the U.S. regarding asbestos-contaminated talc.
Johnson & Johnson, a much-larger company, is facing even more claims but has the financial resources to withstand the onslaught. The majority of claims include both companies.
Most of the filings involve women who allege the talc caused their ovarian cancer. Only a small percentage involve mesothelioma, which only recently has been linked to contaminated talc.
Both companies have been saddled by claims for almost a decade, but the numbers have been rising steadily.
Lawsuits are expected to jump significantly in 2019, stemming from a December 2018 report from Reuters that detailed the most damaging collection of data to date.
The extensive report detailed internal documents that showed Johnson & Johnson knew for decades that its talc products could be contaminated with asbestos.
Business Will Continue
La Motta said Imerys and its subsidiaries would continue operating as usual through the bankruptcy process.
As part of the proceedings, Imerys is expected to set up a trust fund to handle current and future talc cases.
The trust would put all cases under a single judge. The judge will decide the monetary value of a trust to resolve pending and future cases, while still allowing Imerys to operate profitably.
“It is simply not in the best interest of our stakeholders to litigate these claims in perpetuity and incur millions of dollars in projected legal costs to defend these cases,” La Motta said.
Many Asbestos Trust Funds Exist
Imerys is just the latest company to file for bankruptcy protection against asbestos claims in the past three decades.
There are more than 60 trust funds today — holding close to $30 billion combined — stemming from companies seeking bankruptcy protection from future asbestos liabilities.
More than $20 billion has been paid to millions of claimants since the first trust was established in 1988, according to the RAND Corporation’s Institute for Civil Justice.
The U.S. Department of Justice has increased scrutiny of asbestos trusts recently, asking for more transparency and accountability.
Most talc-related cancer cases are settled before a trial begins. However, Johnson & Johnson and Imerys lost their first case together in April 2018.
It cost Johnson & Johnson $80 million in punitive and compensatory damages. Imerys was charged with $36 million.
In July 2018, Imerys paid more than $5 million to resolve claims by 22 women in one case before the trial began.
Johnson & Johnson, which opted to go to trial in the same case, was hit with a $4.69 billion verdict.
Imerys and Johnson & Johnson have been steadfast in their claims that their products are safe and do not contain anything that causes cancer.
The asbestos-talc mix stems from the mining of the products. Both naturally occurring minerals are often found in close proximity to each other near the earth’s surface.
Both sides have produced testing and experts that back their claims.