How Johnson & Johnson is Texas Two-Stepping its Way Out of Paying Injured Victims
October 15, 2022
Back in 1989, it was the Texas legislature that made it legal for a single corporation to divide into two or more entities in a move many call the “Texas two-step” today. And the Texas two-step is exactly what Johnson & Johnson, a company worth nearly half a trillion dollars, did last year. It declared bankruptcy in order to secure the majority of its financial assets and to limit its liability in tens of thousands of pending ovarian cancer lawsuits that injured victims have filed against the cosmetic and healthcare product megacorporation.
In the last 136 years, Johnson & Johnson has made itself a household name across numerous industries, including medical products, pharmaceutical products, skin and hair care products, and over-the-counter products. Just over two decades ago, an internal marketing document hailed the company’s baby division as its “#1 asset”, saying that they needed to prioritize maintaining a “deep personal trust” with consumers to promote overall brand strength and popularity. But the truth is, Johnson & Johnson already knew just how dangerous one of its best-selling products, baby powder, really was.
As a powder, talc reduces friction, helps keep the skin dry and can aid in preventing rashes. Despite the fact that talcum powder is used in an array of cosmetic products, like baby and adult body powders, in its natural form it often contains asbestos. The U.S. Department of Health and Human Services (HHS), the Environmental Protection Agency (EPA) and the International Agency for Research on Cancer (IARC) have each classified asbestos as a human carcinogen, or a substance that causes cancer.
Studies dating back to the 1980s have found that women who use talcum powder face nearly two-times as high a risk for developing ovarian cancer as non-users. Many medical experts say that there are increased risk factors when consumers apply baby powder that contains talc to the genital area, on sanitary napkins, diaphragms or on condoms, since the particles from the powder may travel through the vagina, uterus, and fallopian tubes to the ovaries. Notwithstanding the wealth of information indicating the many dangers of using talcum powder that contains asbestos, Johnson & Johnson continued marketing its baby powder to women, promoting it as safe to use as a feminine powder.
Although as a company Johnson & Johnson is valued at nearly half a trillion dollars and has a higher credit rating than the United States government itself, it has successfully maneuvered its bankruptcy claim so far. The fate of the company’s claim – along with the claims of tens of thousands of victims injured by J&J’s products that contain talcum powder– now rests on the decision of a single bankruptcy judge in the state of New Jersey. Here is why the decision is so important: if Johnson & Johnson is allowed to declare bankruptcy, it will create a precedent for other multi-million, billion and trillion-dollar companies to do the exact same.
By filing for bankruptcy, Johnson & Johnson hopes to be able to force a settlement with thousands of injured consumers instead of allowing different juries around the country to hear the plaintiffs’ claims and determine individual amounts for damages. Although in the past Johnson & Johnson has been fairly successful in triumphing their legal claims, they have still been involved in some significant payouts. For example, in 2016 a jury awarded the family of a woman who died from ovarian cancer 72 million dollars. Juries awarded two other women with ovarian cancer 55 and 70-million-dollars that same year. Four years later, Johnson & Johnson settled approximately 1,000 cases for roughly 100 million dollars and another 22 women received more than four billion dollars in total damages from the Court. But if Johnson & Johnson successfully pursues its bankruptcy angle, it will effectively be able to avoid doling out large-scale payouts like these, leaving sick and injured victims and grieving families high and dry when it comes to achieving legal justice for their injuries and trauma.
Navigating a products liability claim is already a complicated, long and highly technical process, and J & J’s current legal strategy has the potential to even further compromise a plaintiff’s chance of obtaining what they justly deserve. An average of one woman dies per day while waiting to pursue justice against Johnson & Johnson with a pending legal claim. In the meantime, the corporation continues to rake in an enormous amount of money; for example, their most recent quarterly earnings report showed 24 billion dollars in sales. Now is the time for the Court to show that it values the safety of consumers over the finances of megacorporations.
Our firm will give further updates on this story as it continues to develop. If you have a legal question or concern, someone can help. To learn more, contact a representative online now.
Philadelphia Products Liability Lawyers at Galfand Berger, LLP, Representing Injured Victims Since 1947
If you have a question about filing a legal claim, contact the Philadelphia products liability lawyers at Galfand Berger LLP today. Call us at 800-222-USWA (8792) or fill out our online form for a free consultation. Located in Philadelphia, Bethlehem, Lancaster, and Reading, we serve clients throughout New Jersey and Pennsylvania, including Allentown and Harrisburg.