Lawyers representing tens of thousands of women — including 465 from Dallas/Fort Worth and a total of 2,558 from Texas — will face off with each other and against pharmaceutical giant Johnson & Johnson in a Houston courtroom this week to determine the legitimacy of an $8.2 billion settlement agreement proposed by J&J to end all lawsuits brought by women who claim the company’s talc powder caused their ovarian cancer.
Trial lawyers representing thousands of the women claim the settlement is a farce and a fraudulent attempt by one of America’s most iconic and profitable corporations to use the federal bankruptcy system to force victims to accept their proposal and shield itself and its shareholders from billions of dollars more in potential liability.
Opponents of J&J’s plan argue that the company’s settlement provides too little money for the women who have evidence that they have ovarian cancer as the result of using the company’s talc powder and that the company improperly “stuffed the ballot box” by cutting sweetheart deals with some plaintiffs lawyers who got their clients — an estimated 60,000 women who have no symptoms but fear that they could have future claims due to their use of talc powder — to vote to approve the bankruptcy settlement plan.
“If the Plan is confirmed, women with claims against J&J — based on J&J’s own independent conduct — would have no right to appear, to be heard, and to seek just compensation for their injuries from one of the wealthiest companies in the United States,” according to a brief filed Thursday by the Coalition of Counsel for Justice for Talc Claimants, which is the group opposing the J&J bankruptcy plan.
The U.S. Trustee, which is the bankruptcy watchdog of the U.S. Justice Department, is siding with the lawyers for the women, asking the judge in the case to either dismiss the bankruptcy outright or at allow lawyers opposing the forced settlement the ability to conduct a thorough investigation of the details behind the settlement agreement and the bankruptcy.
“This case seeks impermissible relief through impermissible means,” Jason Ruff of the U.S. Trustee’s office in Houston argues in court documents. “This case was filed not because of any financial need on the part of the debtor, but is instead for the sole benefit of a non-debtor, J&J, which seeks to leverage the chapter 11 process to obtain a discharge of its own liabilities and to force tort victims into a global settlement that many of them have so far been unwilling to enter into outside of bankruptcy.”
J&J, led by lawyers from Dallas and Houston, claim that the settlement through the bankruptcy of a newly created subsidiary, Red River Talc, LLC, is fair and legal and that a majority of the women with claims want the settlement that they are offering.
In a court document filed late Sunday, Gregory Gordon, a partner at Jones Day in Dallas, said opponents of the settlement are “dilatory and playing games” and are making arguments that are “misdirected and hypocritical.”
“Put bluntly, the [opponent’s] motion is the predictable outcome of the coalition’s delay-and-obfuscate strategy,” Gordon and John Higgins, a partner at Porter Hedges in Houston wrote in their 10-page brief filed Sunday night.
Gordon and Higgins argue that the Coalition’s opposition is “transparent in its true intent — to distract from the Coalition’s discovery abuses, attempt to bog down the court with frivolous motion practice and derail the schedule that the parties agreed to and were ordered to follow.”
But even many of J&J’s own insurance companies are now asking the judge to reject the proposed settlement plan “because the plan is doomed to fail unless it is modified in material respects.”
U.S. Bankruptcy Judge Christopher Lopez has scheduled a trial over the proposed settlement plan in January.
But this Tuesday, Judge Lopez will hear arguments from the U.S. Trustee and lawyers for many of the women that he reconsider his earlier decision to allow the bankruptcy to proceed.
At a court hearing just a few days after J&J filed the bankruptcy petition and the proposed settlement plan, Judge Lopez told the lawyers representing the ovarian cancer victims that he promised he would give them a fair and full hearing.
The lawyers for the women say Tuesday is the judge’s chance to prove it.
Plaintiffs’ lawyers have been suing Johnson & Johnson for more than 15 years. One group of lawyers has focused its lawsuits on claims that J&J’s talc powder contained asbestos that caused mesothelioma. A second group sued claiming the talc powder caused ovarian cancer in women.
J&J has disputed the claims that talc powder caused cancer but even so voluntarily removed the product from store shelves in May 2020.
Since 2016, there have been multiple jury verdicts that often came to conflicting results. But the plaintiffs have won verdicts of amounts ranging from $72 million to $4.69 billion.
Thousands of talc ovarian cancer cases were consolidated before a multidistrict litigation judge in New Jersey seven years ago.
In 2021, J&J shifted tactics and created a new subsidiary, LTL Management. It then transferred all its legal liabilities in the talc powder litigation to the entity — a legal maneuver that has come to be known as the “Texas Two-Step” — and immediately declared bankruptcy in New Jersey, where J&J is headquartered. But the U.S. Court of Appeals for the Third Circuit ordered the case dismissed because the company was not in financial distress when it filed the bankruptcy petition. J&J filed a second bankruptcy petition in New Jersey in 2023, but the court also rejected it. The case is on appeal to the U.S. Supreme Court.
In September, J&J tried bankruptcy a third time, but this time in the Southern District of Texas and under a new subsidiary called Red River Talc.
Opponents of the bankruptcy settlement plan note that Red River is a “debtor entity that J&J manufactured to have no operating business, no employees, and nothing other than liability for certain talc claims, exists solely to obtain a discharge of J&J’s own independent and direct talc liability.”
In its filing, Red River Talc claimed that it had received approval for a proposed $8.2 billion settlement from 83.4 percent of the 93,500 women who potentially have ovarian cancer claims.
And that is where the dispute begins.
Opponents of the plan argue that only 35,707 women — including 2,558 from Texas — have filed claims and that J&J solicited other plaintiffs’ lawyers to recruit potential claimants who may have used talc powder only once and have shown no symptoms but who claim they have a fear of getting ovarian cancer.
The U.S. Trustee and lawyers for the Coalition argue that J&J’s numbers are false and unreliable and have told Judge Lopez that they should be rejected because the company seeking bankruptcy protection, Red River Talc, did not even exist when J&J sent claimants its disclosure statement and asked the women to support the settlement plan.
“The disclosure statement was circulated to various parties beginning on June 6, 2024, with a voting deadline on July 26, 2024,” the U.S. Trustee states in court documents filed Friday. “However, it was not until August 19, 2024 — nearly four weeks after the conclusion of the voting period—that the debtor was created through the 2024 corporate restructuring.”
“The pre-petition solicitation conducted by J&J was ineffective under Bankruptcy Rule 3018 because it was conducted on behalf of a non-existent debtor, and the plan solicited by J&J differs materially from the proposed plan for which the debtor now seeks approval, including allowing J&J and the debtor to walk away from their obligations under the proposed plan while keeping claimants bound to the third-party releases,” the U.S. Trustee argues.
The trustee states that J&J made amendments to the settlement plan since getting the approval of the alleged victims that “are both material and potentially highly detrimental to the majority of the talc claimants who voted on the proposed plan.”
In addition, lawyers for the Coalition claim that J&J “effectively bought votes” by agreeing to pay the legal fees of plaintiffs’ lawyers who convinced their clients — most of whom have no symptoms — to agree to the settlement plan. They argue that Judge Lopez needs to audit J&J’s numbers before accepting them as legitimate.
“Ovarian cancer is a rare disease and only a fraction of the women who are diagnosed with ovarian cancer each year claim to have consistently used J&J’s talc products,” lawyers for the Coalition state in court documents filed last Thursday. “Law firms that voted over ten thousand claims in support of the plan have, prior to J&J’s bankruptcy cases, never filed a single talc lawsuit against J&J or any other party. Some have not filed a single talc lawsuit against J&J or the debtor or any of the protected parties to this day. Counting un-vetted and un-filed claims here would inequitably dilute the votes of women who hold compensable ovarian cancer claims and deny them the opportunity to appear and object to non-compensable claims.”
“Someone who has no illness, but merely alleges fear from exposure to J&J’s talc products cannot be given equal voting power as a woman who trusted J&J’s talc products as part of her personal care regime and is now dying of ovarian cancer,” the Coalition argues. “Certifying the vote here is not just a question of ensuring that only those who hold compensable claims have their votes counted, it is also a question of how votes should be weighed for the purposes of determining class acceptance.”
Finally, opponents of settlement plan claim that J&J is wrongly counting more than 11,000 votes that the Alabama law firm Beasley Allen originally filed as being against the proposed plan. J&J claims that the Smith law firm in Mississippi is co-counsel to Beasley Allen in those cases and filed paperwork reversing the 11,000 votes from being against to being in favor of the plan.
Even the U.S. Trustee agrees this raises red flags.
“The Smith Firm’s master ballot changed the votes of women who continue to reject the plan and did so without their consent. On this basis alone, the vote is suspect and cannot be certified,” the Trustee wrote.
Lawyers for the Coalition go further.
“The debtor fails to address the fact that the Smith Firm did not have authority to submit a master ballot in the first instance,” the Coalition argues. “The issue is that the Smith Firm provided claimants with two days’ (or less) negative notice and then changed the votes of nearly 12,000 voters from ‘reject’ to ‘accept.’ The nature of the claims at issue in this case is driving the bitter discord among parties, providing a prime example of why mass tort claims should not be addressed by a pre-packaged plan process.”
The case is In re: Red River Talc, SDTX, No. 24-90505.