U.S. Bankruptcy Judge Christopher Lopez said Thursday that he is keeping a Johnson & Johnson-related bankruptcy in Texas and not transferring the case back to New Jersey where J&J is headquartered.
Judge Lopez rejected arguments by the U.S. Trustee and some of the plaintiffs’ lawyers involved in the multibillion-dollar talc baby powder litigation that J&J improperly went venue shopping when the company filed for bankruptcy for its newly created subsidiary, Red River Talc, in the Southern District of Texas on Sept. 20.
J&J had previously filed for Chapter 11 protection for its subsidiary in New Jersey in an effort to settle an estimated 62,000 legal claims brought by women who argue that its talc-based powder caused ovarian and gynecological-related cancer. J&J has denied that its product causes cancer but still withdrew the product from the market last year.
But the U.S. Court of Appeals for the Third Circuit, which is based in Philadelphia, rejected J&J’s efforts to deal with the litigation via bankruptcy twice.
Those plaintiffs’ lawyers argued that Judge Lopez should transfer the case back to New Jersey.
Jones Day partner Gregory Gordon, a Dallas lawyer who is lead debtor’s counsel for J&J, argued that the company has a legal right to file for bankruptcy in the jurisdiction where it thinks is most favorable.
The company claims that 83 percent of the 62,000 plaintiffs suing the company have agreed to support the $8 billion global settlement agreement that is part of the prepackaged bankruptcy filing.
Andy Birchfield, a lawyer at the Beasley Allen Law Firm opposing J&J’s bankruptcy, said the Texas Chapter 11 “remains a flawed bankruptcy that abuses the bankruptcy system, one that demonstrates J&J’s bad faith no matter where it is heard.”
“Going forward, we will provide evidence to the court illustrating many examples of deceit, deficiencies and discrepancies of the vote administered by J&J and the precedent rulings against such a third-party liability release,” Birchfield said. “Together with other members of the opposing coalition, we believe this third attempt at bankruptcy again fails to meet the standards of the bankruptcy code.”
The case is Red River Talc LLC, 24-90505, Southern District of Texas.