A lot of criticism has been hurled at Johnson & Johnson due to the discovery of asbestos in their Baby Powder product spurring a massive class action lawsuit. In October of last year NPR reported that “The health products giant used a quirk of Texas state law to spin off a new company called LTL, then dumped all its asbestos-related liabilities — including the avalanche of lawsuits — into the new firm. LTL filed for bankruptcy last week in a federal court in Charlotte, N.C., a move designed to sharply limit efforts to recover damages for those who say they were harmed by J&J’s baby powder.”
The article highlighted with the University of Georgia School of Law bankruptcy expert Lindsey Simon that “Johnson & Johnson doesn’t have this liability anymore. They pushed all of it into the company they created just to file for bankruptcy,” what is important to take away from this is that according to Simon “consumers can’t recover [damages] against a big solvent company. They have to recover against this smaller fictional company created [by J&J].”
The decision to file bankruptcy will be heard in court this February as Reuters reports that Judge Michael Kaplan who is overseeing the Chapter 11 case that he plans to “block off four days beginning on Feb. 15 for a hearing on a motion to dismiss the bankruptcy. The motion will be filed soon by the talc claimants’ committee, which represents people who have sued J&J alleging that its talc products cause mesothelioma and ovarian cancer.” The article says that the talc claimants committee alleges “J&J is trying to use it to gain an upper hand in existing talc litigation by preventing plaintiffs from having their day in court.”