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Paxton says Kenvue ( KVUE ) should save money because of lawsuits

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Kenvue ( KVUE ), J&J, doctors say Tylenol is safe

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Paxton says 'wealth of evidence' suggests autism link

By Jonathan Stempel

Nov 14 (Reuters) - A Texas judge on Friday will consider

state Attorney General Ken Paxton's bid to block Kenvue ( KVUE )

from paying a $398 million dividend to shareholders and from

marketing Tylenol as safe for pregnant women.

Paxton, a Republican, sued Kenvue ( KVUE ) on October 28, accusing it

of concealing the risks to children when pregnant women use

Tylenol.

The lawsuit was filed five weeks after Republican President

Donald Trump and U.S. Health and Human Services Secretary Robert

F. Kennedy Jr. repeated the scientifically unproven claim that

using Tylenol during pregnancy can cause autism.

Kenvue ( KVUE ) has repeatedly said Tylenol is safe. The dividend

payout is scheduled for November 26.

Judge LeAnn Rafferty in the Panola County courthouse in

Carthage, Texas, near the Louisiana border, is expected to hold

a hearing at 9 a.m. CST (1500 GMT).

Paxton has aligned himself with Trump's agenda, and is

challenging incumbent John Cornyn in next year's Republican

primary for a U.S. Senate seat.

The attorney general is also suing Johnson & Johnson ( JNJ )

, which made Tylenol for six decades, accusing it of

spinning off Kenvue ( KVUE ) in 2023 to shield itself from liability.

Johnson & Johnson ( JNJ ) has also defended Tylenol's safety, and

doctors and medical societies view acetaminophen products such

as Tylenol as the best option for treating fever and pain during

pregnancy.

Concerns about Tylenol have been an overhang for

Kimberly-Clark's ( KMB ) planned $40 billion takeover of Kenvue ( KVUE ),

which was announced six days after Paxton sued.

That merger would let the maker of Kleenex and Huggies diapers

expand into higher-margin categories such as skin care and pain

relief, by acquiring Kenvue brands including Band-Aid, Johnson's

Baby shampoo, Listerine and Neutrogena.

'TSUNAMI OF ILLEGALITY' IF PAXTON WINS

In court papers, Paxton said Kenvue ( KVUE ) must conserve cash

because it risked insolvency if forced to pay billions of

dollars in Tylenol cases and international lawsuits claiming

that baby powder containing talc causes cancer.

Paxton said the public interest supports an injunction

because of "the wealth of evidence demonstrating that prenatal

Tylenol exposure causes autism and ADHD."

He also said the U.S. Constitution supports restricting

Kenvue ( KVUE ) from touting Tylenol's safety, because the First

Amendment lets states regulate "misleading" commercial speech.

In September, the U.S. Food and Drug Administration told doctors

to alert patients to what it said was growing evidence linking

Tylenol to autism. Medical societies dispute a Tylenol link to

autism.

The agency is considering new labels for Tylenol and generic

versions.

Kenvue ( KVUE ) and J&J contended in court filings that giving Paxton

what he wants "would constitute a tsunami of illegality that

would tarnish the credibility of Texas courts."

They said Rafferty has no jurisdiction over the spinoff

because it occurred outside Texas and involved two New Jersey

companies, and cited a May decision from the Texas Supreme Court

that said state laws generally don't apply elsewhere.

The companies also said paying a dividend would not

irreparably harm Texas because Kenvue ( KVUE ) is not insolvent.

Paxton, they added, cited no court that ever blocked

manufacturers from talking about and selling products the FDA

deemed safe, or blocked public companies from paying regular

dividends.

"The state's motion is a thinly veiled attempt to prop up a

politician's unfounded claims that lie well outside the

mainstream of scientific thought, resurrect the Tylenol product

liability litigation, generate headlines and ultimately enrich

private plaintiffs' lawyers," the companies said.

Kenvue ( KVUE ) and J&J were likely referring to Keller Postman, a

law firm helping Paxton in the Tylenol case.