Current:Home > StocksAppeals court clears the way for more lawsuits over Johnson's Baby Powder -MoneyBase
Appeals court clears the way for more lawsuits over Johnson's Baby Powder
View
Date:2025-04-15 15:01:23
Tens of thousands of people who say they were sickened by Johnson's Baby Powder are once again free to sue the manufacturer, after a federal appeals court rejected Johnson & Johnson's effort to block those lawsuits through bankruptcy.
The 3rd U.S. Circuit Court of Appeals dismissed a bankruptcy filing by a Johnson & Johnson spinoff company, ruling that the company was not in genuine financial distress. The court noted that the spinoff company still has access to Johnson & Johnson's assets, worth an estimated $61.5 billion.
Plaintiffs attorneys cheered the decision, accusing Johnson & Johnson of trying to "twist and pervert" the bankruptcy code.
"Bankruptcy courts aren't a menu option for rich companies to decide that they get to opt out of their responsibility for harming people," said attorney Jon Ruckdeschel. "And that's what was happening here."
Johnson & Johnson promised to appeal the decision.
"Our objective has always been to equitably resolve claims related to the Company's cosmetic talc litigation," the company said in a statement. "Resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders."
Johnson & Johnson was facing some 38,000 lawsuits from people who allege its iconic baby powder was tainted with asbestos — a substance known to cause cancer and other illnesses. The company insists its baby powder is safe and does not contain asbestos. In recent years, the company has reformulated its baby powder, replacing talc with corn starch.
The company tried to short-circuit the lawsuits in 2021, using a controversial legal tactic known as the "Texas Two Step." It first assigned liability for the baby powder complaints to a spin-off company, called LTL Management, then immediately put that company into bankruptcy.
A bankruptcy judge upheld the maneuver, but the appeals court disagreed.
Other big companies including Georgia Pacific and 3M have tried similar tactics to limit their exposure to widespread lawsuits. Legal experts and policymakers are watching the cases closely.
"We need to close this loophole for good," Sen. Dick Durbin, D-Ill., said last year. "Bankruptcy is supposed to be a good-faith way to accept responsibility, pay one's debts as best you can, and then receive a second chance, not a Texas two-step, get-0ut-of-jail-free card for some of the wealthiest corporations on earth."
A similar case is now pending before a different federal appeals court in New York. Federal judges there are reviewing a provision of drug maker Purdue Pharma's bankruptcy deal that would allow members of the Sackler family, who are not bankrupt, to pay roughly $6 billion into a settlement.
In exchange, the Sacklers would receive immunity from lawsuits linked to their private company's marketing and sales of opioids, including OxyContin.
veryGood! (9934)
Related
- Retirement planning: 3 crucial moves everyone should make before 2025
- Nobody Wants This Creator Erin Foster Reveals Heartwarming True Story That Inspired the Netflix Series
- 'I hate Las Vegas': Green Day canceled on at least 2 radio stations after trash talk
- Reveal Old Navy’s Mystery Deals & Save 60% – Score $18 Jeans, $4 Tank Tops, $10 Leggings & More
- Stamford Road collision sends motorcyclist flying; driver arrested
- Braves vs. Mets doubleheader live updates: How to watch, pitching matchups, MLB playoffs
- See Dancing with the Stars' Brooks Nader and Gleb Savchenko Confirm Romance With a Kiss
- A Black man says a trucking company fired him because he couldn’t cut off his dreadlocks
- Opinion: Gianni Infantino, FIFA sell souls and 2034 World Cup for Saudi Arabia's billions
- Pregnant Brittany Mahomes Shares Why She’s “Always Proud” of Patrick Mahomes
Ranking
- Former Danish minister for Greenland discusses Trump's push to acquire island
- Helene death toll climbs to 90 | The Excerpt
- Sing Sing Actor JJ Velazquez Exonerated of Murder Conviction After Serving Nearly 24 Years in Prison
- Is 'The Simpsons' ending? Why the show aired its 'series finale' Sunday
- Why members of two of EPA's influential science advisory committees were let go
- Fed Chair Powell says the US economy is in ‘solid shape’ with more rate cuts coming
- Lizzo Details Day That Made Her Feel Really Bad Amid Weight Loss Journey
- Murders, mayhem and officer’s gunfire lead to charges at Brooklyn jail where ‘Diddy’ is held
Recommendation
This was the average Social Security benefit in 2004, and here's what it is now
'It's time for him to pay': Families of Texas serial killer's victims welcome execution
Repair and Prevent Hair Damage With Our Picks From Oribe, Olaplex, & More
How to get your share of Oracle's $115 million class-action settlement; deadline is coming
Who's hosting 'Saturday Night Live' tonight? Musical guest, how to watch Dec. 14 episode
Las Vegas memorial to mass shooting victims should be complete by 10th anniversary
North Carolina town bands together after Helene wreaked havoc: 'That's what we do'
The stock market's as strong as it's ever been, but there's a catch