{"id":4104,"date":"2024-12-12T17:32:18","date_gmt":"2024-12-12T22:32:18","guid":{"rendered":"https:\/\/www2.law.temple.edu\/10q\/?p=4104"},"modified":"2024-12-12T17:32:18","modified_gmt":"2024-12-12T22:32:18","slug":"johnson-johnsons-talcum-two-step","status":"publish","type":"post","link":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/","title":{"rendered":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step"},"content":{"rendered":"

\"\"<\/p>\n

December 12, 2024<\/p>\n

Over the past few decades, talcum lawsuits against pharmaceutical giant Johnson & Johnson (\u201cJ&J\u201d) have emerged as a significant focal point at the intersection of consumer safety and corporate accountability. Allegations linking talc-based products to serious health concerns like ovarian cancer and mesothelioma have sparked widespread public concern and legal scrutiny.<\/p>\n

J&J has filed for bankruptcy in relation to talc lawsuits three times, most recently in September 2024, and the company\u2019s controversial legal strategy has drawn criticism. Amid ongoing lawsuits, settlement talks, significant media attention, and thousands of cancer-stricken claimants, J&J maintains that the suits against the company are meritless.<\/p>\n

A Brief History<\/strong><\/p>\n

The first successful talcum-related suit against J&J was filed in 2009, alleging its talc products caused ovarian cancer. In 2018, a court ordered J&J to pay $4.69 billion to cancer victims. This historic ruling ushered in a swell of lawsuits against the company, prompting its initial attempt to sidestep its liability for allegedly toxic baby powder through a controversial \u201cTexas two-step\u201d strategy<\/a>. This approach, permitted under U.S. bankruptcy law, involves a solvent parent company offloading its liabilities to a new subsidiary, setting the stage for the new company to then declare chapter 11 bankruptcy.<\/p>\n

Such a maneuver shields assets from litigants by leveraging the protections afforded to bankrupt organizations, effectively shifting legal liability to the newly established subsidiary while safeguarding the solvent parent company\u2019s assets. This is precisely what J&J attempted in 2021 when it restructured: creating LTL Management (\u201cLTL\u201d), assigning all of its talc liabilities to the subsidiary, and transferring operating assets to another new entity. Just a few days later, LTL filed for chapter 11 bankruptcy in the District of New Jersey.<\/p>\n

The Texas two-step has been widely criticized by legal scholars<\/a> and is, at times, disfavored by the courts. On appeal, the Third Circuit rejected J&J\u2019s first attempt at engaging the maneuver. The court found that, because J&J had agreed to a funding scheme to assist LTL with bankruptcy and talc-related costs (to the tune of up to $61.5 billion), LTL was simply not financially distressed and therefore ineligible for bankruptcy. This result was unusual in that it carved out a new \u201cfinancial distress\u201d component of evaluating whether a bankruptcy filing is legally in good faith, as required by U.S. bankruptcy law.<\/p>\n

This case was dismissed as a bad faith filing. LTL shortly thereafter filed a second case with some modifications to the funding scheme. In July 2023, this second case, too, was dismissed in the District of New Jersey.<\/p>\n

\u00a0<\/strong>Today\u2019s Two-Step<\/strong><\/p>\n

J&J remains loyal to its two-step strategy and, in September 2024, broached the dance floor again. This time, LTL reincorporated in Texas, likely in an attempt to secure a more sympathetic venue. The company proposed a prepackaged plan of reorganization, stating the plan would resolve all current and future ovarian cancer claims related to talc products by establishing a trust funded by more than $8 billion in payments over 25 years. Unlike the previous two-step attempts, this plan does not include several hundred mesothelioma claims arising from the same talc products.<\/p>\n

Under the proposed scheme, LTL would undergo another corporate restructuring and chapter 11 filing for a new entity, Red River Talc LLC (\u201cRed River\u201d). Red River\u2019s plan would create a personal injury trust payable to ovarian cancer claimants. The trust would be front-loaded with a $2 billion contribution, and Red River would supply a one-year $400 million note to the trust on the effective date. According to court filings, 83% of claimants gave the scheme a nod of approval, exceeding the 75% required threshold.<\/p>\n

J&J states the deal is fair and equitable to all parties, and some lawyers agree\u2014if it proceeds, the settlement will be one of the largest mass tort litigation settlements in history, and the vast majority of claims will be resolved. Further, proponents argue claimants are much more likely to receive payments through the chapter 11 strategy than they would be through non-bankruptcy litigation. Opponents of the two-step, however, argue that J&J is forum shopping and attempting to shirk adequate tort liability by hiding out in bankruptcy court. Some have also questioned the voting methods used to secure the 83% approval touted by J&J.<\/p>\n

What\u2019s Next for J&J and the Texas Two-Step<\/strong><\/p>\n

On September 30, the U.S. Trustee\u2014a Department of Justice official who oversees bankruptcy cases to bolster transparency and fairness in the process\u2014accused the company of attempting to secure an advantageous venue by filing through Red River in Texas. U.S. Bankruptcy Judge Christopher Lopez, in the Southern District of Texas, imposed a stay on all talc litigation until the venue issue is decided.<\/p>\n

The venue dispute may not be the only remaining hurdle for J&J. A June SCOTUS decision, Harrington v. Purdue Pharma L.P<\/em>., in which SCOTUS overturned Purdue Pharma\u2019s oxycontin-related chapter 11 bankruptcy scheme<\/a>, could have an impact on J&J\u2019s legal battle. Following the Purdue<\/em> ruling, Senators introduced a bipartisan bill aimed at killing the Texas two-step, and politicians in both chambers and across the political spectrum have signaled that they would like the maneuver\u2019s days to be numbered.<\/p>\n

A trial is scheduled for late January, during which Judge Lopez will rule on the bankruptcy plan. In the meantime, the baby powder suits are on hold until at least mid-March.<\/p>\n

Allegra Abramson, Esq. (LAW \u201924) is the Postdoctoral Fellow at Temple Law\u2019s Center for Compliance and Ethics.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

December 12, 2024
\nAllegra Abramson, postdoctoral fellow at Temple Law\u2019s Center for Compliance & Ethics, explores the most recent talcum lawsuit against Johnson & Johnson.<\/p>\n","protected":false},"author":33,"featured_media":4105,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,47,13,52],"tags":[2436,77,1569,106,2891,2892,2597,625,110,2893],"coauthors":[2890],"class_list":["post-4104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-alumni-authored","category-bankruptcy","category-business-law-practice","category-compliance","tag-assets","tag-bankruptcy","tag-cancer","tag-compliance","tag-consumer-safety","tag-corporate-accountability","tag-johnson-johnson","tag-liability","tag-litigation","tag-talc","masonry-post","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"yoast_head":"\nJohnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q\" \/>\n<meta property=\"og:description\" content=\"December 12, 2024 Allegra Abramson, postdoctoral fellow at Temple Law\u2019s Center for Compliance & Ethics, explores the most recent talcum lawsuit against Johnson & Johnson.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\" \/>\n<meta property=\"og:site_name\" content=\"The Temple 10-Q\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-12T22:32:18+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"789\" \/>\n\t<meta property=\"og:image:height\" content=\"791\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Allegra Abramson (LAW \u201924)\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Allegra Abramson (LAW \u201924)\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\"},\"author\":{\"name\":\"Erica Maier\",\"@id\":\"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a\"},\"headline\":\"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step\",\"datePublished\":\"2024-12-12T22:32:18+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\"},\"wordCount\":924,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg\",\"keywords\":[\"Assets\",\"Bankruptcy\",\"Cancer\",\"Compliance\",\"Consumer Safety\",\"Corporate Accountability\",\"Johnson & Johnson\",\"Liability\",\"Litigation\",\"Talc\"],\"articleSection\":[\"Alumni Authored\",\"Bankruptcy\",\"Business Law Practice\",\"Compliance\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\",\"url\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\",\"name\":\"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q\",\"isPartOf\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg\",\"datePublished\":\"2024-12-12T22:32:18+00:00\",\"author\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a\"},\"breadcrumb\":{\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage\",\"url\":\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg\",\"contentUrl\":\"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg\",\"width\":789,\"height\":791},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/law.temple.edu\/10q\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/law.temple.edu\/10q\/#website\",\"url\":\"https:\/\/law.temple.edu\/10q\/\",\"name\":\"The Temple 10-Q\",\"description\":\"Temple's Business Law Magazine\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/law.temple.edu\/10q\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a\",\"name\":\"Erica Maier\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g5e523333d61dc7fabb86b49c5ffcbaee\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g\",\"caption\":\"Erica Maier\"},\"url\":\"https:\/\/law.temple.edu\/10q\/author\/emaier\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/","og_locale":"en_US","og_type":"article","og_title":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q","og_description":"December 12, 2024 Allegra Abramson, postdoctoral fellow at Temple Law\u2019s Center for Compliance & Ethics, explores the most recent talcum lawsuit against Johnson & Johnson.","og_url":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/","og_site_name":"The Temple 10-Q","article_published_time":"2024-12-12T22:32:18+00:00","og_image":[{"width":789,"height":791,"url":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","type":"image\/jpeg"}],"author":"Allegra Abramson (LAW \u201924)","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Allegra Abramson (LAW \u201924)","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#article","isPartOf":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/"},"author":{"name":"Erica Maier","@id":"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a"},"headline":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step","datePublished":"2024-12-12T22:32:18+00:00","mainEntityOfPage":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/"},"wordCount":924,"commentCount":0,"image":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage"},"thumbnailUrl":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","keywords":["Assets","Bankruptcy","Cancer","Compliance","Consumer Safety","Corporate Accountability","Johnson & Johnson","Liability","Litigation","Talc"],"articleSection":["Alumni Authored","Bankruptcy","Business Law Practice","Compliance"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/","url":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/","name":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step - The Temple 10-Q","isPartOf":{"@id":"https:\/\/law.temple.edu\/10q\/#website"},"primaryImageOfPage":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage"},"image":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage"},"thumbnailUrl":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","datePublished":"2024-12-12T22:32:18+00:00","author":{"@id":"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a"},"breadcrumb":{"@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#primaryimage","url":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","contentUrl":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","width":789,"height":791},{"@type":"BreadcrumbList","@id":"https:\/\/law.temple.edu\/10q\/johnson-johnsons-talcum-two-step\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/law.temple.edu\/10q\/"},{"@type":"ListItem","position":2,"name":"Johnson & Johnson\u2019s \u201cTalcum\u201d Two-Step"}]},{"@type":"WebSite","@id":"https:\/\/law.temple.edu\/10q\/#website","url":"https:\/\/law.temple.edu\/10q\/","name":"The Temple 10-Q","description":"Temple's Business Law Magazine","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/law.temple.edu\/10q\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/law.temple.edu\/10q\/#\/schema\/person\/d88f9d6c1e573914b328a9fc287d495a","name":"Erica Maier","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g5e523333d61dc7fabb86b49c5ffcbaee","url":"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/287d6d70b5641c5fca2014a2642c81f4173a498c7b1d1dafac589e1a9dc74e18?s=96&d=mm&r=g","caption":"Erica Maier"},"url":"https:\/\/law.temple.edu\/10q\/author\/emaier\/"}]}},"jetpack_featured_media_url":"https:\/\/law.temple.edu\/10q\/wp-content\/uploads\/sites\/12\/2024\/12\/Abramson_Talcum-Two-Step.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/posts\/4104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/comments?post=4104"}],"version-history":[{"count":0,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/posts\/4104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/media\/4105"}],"wp:attachment":[{"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/media?parent=4104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/categories?post=4104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/tags?post=4104"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/law.temple.edu\/10q\/wp-json\/wp\/v2\/coauthors?post=4104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}