Class Action Suit Claims J&J Bankruptcy Filings Are Fraudulent

Legislation & Litigation

A group of cancer patients are bringing a class action lawsuit against Johnson & Johnson. The suit alleges J&J’s Chapter 11 attempts are calculated tactics to avoid thousands of pending talcum powder lawsuits. 

The five plaintiffs filed their suit – Murphy et al. v. LTL Management Inc. et al., Case No.3:24-CV-06320 – in the U.S. District Court for the District of New Jersey. The lawsuit aims to represent any or all of the more than 50,000 people with pending J&J claims.

Defendants include LTL Management Inc., the subsidiary created to hold and manage asbestos-contaminated talc legal claims against J&J. Additionally J&J corporate entities are named, as are J&J Chief Executive Officer Joaquin Duato. 

Kenvue Chief Executive Officer Thibaut Mongon is also named as a defendant. Kenvue is a consumer health company J&J launched in 2022 as a new corporate identity for brands including Tylenol, Neutrogena, Listerine, and Band-Aid.

Lawyers representing the plaintiffs released a statement arguing J&J has been sidestepping its obligations to people exposed to asbestos from its products. Asbestos is the primary cause of mesothelioma. And recent National Institutes of Health research links asbestos in talc to ovarian cancer.

Andy Birchfield, representing the plaintiffs argued: “The bad faith that the courts found in ruling against J&J in the two previous bankruptcies applies to every action the company has taken during the past three years. The individuals bringing this class action are shining a bright light on the entire series of dubious, unlawful and hypocritical ploys J&J has been following, and they’re saying enough is enough.”

J&J’s Recent Proposed Settlement Part of Third Bankruptcy Effort

The plaintiffs’ asbestos lawyers argue J&J’s latest move to settle pending litigation is “a dark game of chess with this country’s financial and judicial systems.” However, Erik Haas, J&J’s global vice president of litigation, asserted in a statement to USA Today the class action lawsuit is a “Hail Mary pass.”

Haas claims the lawsuit is an attempt to block J&J’s latest proposed bankruptcy settlement. Earlier this month, the company agreed to pay $6.475 billion to settle all current and future claims that its talc-based products cause cancer. 

The proposal could be the first step toward a potential bankruptcy attempt No. 3 for the company. A judge denied both previous bankruptcy attempts, ruling J&J wasn’t in financial distress.

Haas said in his statement: “Why are they so desperate to stop the [settlement] vote? Our focus has been and will remain reaching a full, fair and final resolution of this litigation, and allowing the claimants to speak for themselves.”

The Texas Two-Step 

The class action lawsuit alleges J&J used a practice known as the “Texas Two-Step” solely to protect its assets from talc litigation. The Texas Two-Step describes when companies facing litigation relocate to Texas and split in two. One company houses the original company’s assets and the spinoff company holds its litigation and liabilities.

Other tactics the class action lawsuit alleges J&J is using include “asset stripping fraud” and “bait-and-switch fraud.” Both allegedly involve the company dumping or cutting funds and assets named in lawsuits. 

J&J’s spinoff Kenvue is accused of being fraudulent. The class action lawsuit seeks compensatory and punitive damages.

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