Jan 30 (Reuters) – A U.S. appeals court docket on Monday shot down Johnson & Johnson’s (JNJ.N) try to dump tens of hundreds of lawsuits over its talc merchandise into chapter 11 court docket. The ruling marked the primary main repudiation of an rising authorized technique with the potential to upend U.S. company legal responsibility legislation.
J&J is amongst 4 main corporations which have filed so-called Texas two-step bankruptcies to keep away from doubtlessly huge lawsuit publicity. The tactic includes making a subsidiary to soak up the liabilities and to instantly file for Chapter 11.
The court docket dominated the healthcare conglomerate improperly positioned its subsidiary into chapter 11 though it confronted no monetary misery. J&J’s two-step sought to halt greater than 38,000 lawsuits from plaintiffs alleging the corporate’s child powder and different talc merchandise prompted most cancers. The appeals court docket ruling revives these lawsuits.
Reuters final 12 months detailed the key planning of Texas two-steps by Johnson & Johnson and different main companies in a sequence of experiences exploring company makes an attempt to evade lawsuits by way of bankruptcies.
Monday’s choice by the U.S. third Circuit Court docket of Appeals in Philadelphia dismissed the chapter filed by the J&J subsidiary in 2021. Earlier than the submitting, J&J had confronted prices of $3.5 billion in verdicts and settlements.
J&J shares closed down 3.7% – the largest one-day share decline in two years. The corporate stated in a press release that it will problem the ruling and that its talc merchandise are secure.
https://www.reuters.com/authorized/jjs-ltl-units-bankruptcy-dismissed-by-us-appeals-court-filing-2023-01-30/
