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J&J proposal would end lawsuits linking its baby powder to

ovarian cancer

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J&J's two previous attempts at a bankruptcy deal failed in

other

courts

By Dietrich Knauth

NEW YORK, March 31 (Reuters) - A U.S. bankruptcy judge

on Monday rejected Johnson & Johnson's ( JNJ ) $10 billion

proposal to end tens of thousands of lawsuits alleging that its

baby powder and other talc products cause ovarian cancer,

marking the third time the company's bankruptcy strategy has

failed in court.

J&J has been attempting to resolve the lawsuits through a

subsidiary company's bankruptcy, after two previous bankruptcy

attempts failed in other courts. But the judge overseeing its

case, U.S. Bankruptcy Judge Christopher Lopez, said that the

company did not belong in bankruptcy.

"While the Court's decision is not an easy one, it is the

right one," Lopez wrote. "The Court hopes something gets done

for J&J, Red River, and claimants who also want finality on

their cases."

J&J did not immediately respond to a request for comment late

Monday.

Andy Birchfield, an attorney who represents plaintiffs'

opposed to the bankruptcy settlement, said that J&J's bankruptcy

strategy was a "nothing more than a bad-faith maneuver to avoid

full accountability."

"With this ruling, we are now moving forward without delay

to trial, where our clients will finally have the chance to

present their cases before a jury and obtain the justice they

deserve," Birchfield said.

J&J had argued that the third proposal, in Texas bankruptcy

court, should succeed because there was more money on the table

and the deal was supported by a majority of cancer victims who

voted on it.

Opponents of the deal, including attorneys for some cancer

victims and a government bankruptcy watchdog, had argued that

the third bankruptcy, like the first two, should be dismissed

because the company is not in "financial distress." A wealthy

company like J&J should not use bankruptcy to prevent cancer

victims from having their day in court, opponents said.

J&J faces lawsuits from over 60,000 claimants alleging that its

baby powder and other talc products contained asbestos and

caused ovarian cancer. The settlement would have ended those

lawsuits and prevented similar lawsuits from being filed in the

future.

J&J, which began selling Johnson's baby powder in 1894, says

that its products are safe, do not contain asbestos, and do not

cause cancer. J&J stopped selling talc-based baby powder in the

U.S. in 2020, switching to a cornstarch product.

Before seeking approval of its ovarian cancer settlement in

a third bankruptcy, J&J separately settled lawsuits alleging

that its talc products cause mesothelioma, a rare form of cancer

associated with asbestos exposure.

J&J had estimated that ovarian cancer patients would

receive between $75,000 and $150,000 under the settlement,

although the exact amounts depended on the severity of a

patient's injury and the number of current and future claims

that were ultimately covered by the settlement.