Okay, so you probably already know that “the legal system” is not always a “ justice system.” A real justice system would consistently ensure that that people are held accountable for harms they do to others. That goes for corporations, too. But our legal system, with its many “loopholes,” can create oodles of un-accountability, especially when high-powered lawyers enter the picture. And they surely have.
People notice this more in criminal cases, such as when a guilty defendant escapes accountability through some legal technicality or by hiring a well-funded defense machine, as in O.J. Simpson’s case. A New Yorker cartoon in 2020 summed it up perfectly: the jury foreman rises slowly and says loudly, “We find the guilty defendant not guilty.”
The non-criminal legal system –– the “civil legal system” –– also provides numerous opportunities to evade accountability. Johnson and Johnson’s lawyers have found a way to avoid accountability to mothers who have alleged that they got ovarian cancer or mesothelioma by using asbestos contaminated baby powder.
Before getting into J&J’s inventive and legal evasion –– the “Texas two-step bankruptcy” ––let’s look at the tort claims. J&J’s baby powder has been an iconic brand for many years. But, some of the company’s baby powder could have been tainted with carcinogenic asbestos, and J&J kept that information from regulators and the public for many years. Talc is often mined near asbestos, and trace amounts have been found in talc.
The “Onder Law” website, from a law firm that pursues ovarian cancer claims against J & J, claims that:
“The talcum powder ovarian cancer risk has been documented through numerous studies dating back to 1982. When talc products such as baby powder are applied to the genital region, talc particles can travel through the female reproductive system to the ovaries. Talc particles may remain in the ovaries for many years, causing inflammation and creating an environment conducive to the growth of cancer cells. One expert estimates that roughly 10,000 women each year develop ovarian cancer as a result of using baby powder or body powder.”
Did you think that “baby powder” was just for babies? So did I. But, to increase profits, J&J also marketed its baby powder to women, along with its Shower to Shower product; in the ‘80s it told The New York Times Magazine that 70 percent of baby-powder users were adults.
A 1988 ad for Shower to Shower said “just a sprinkle a day keeps odor away.” Others reminded women: “Your body perspires in more places than just under your arms.” (It is also “legal but wrong” to market products to women that make them feel embarrassed about their own natural body odors, but that’s a whole different blog topic.”)
By 2021, J&J was facing over 25,000 lawsuits and set aside nearly 4 billion in litigation expenses.
That number rose in 2021 to the point where some 38,000 claims had been made.
The plaintiffs include women suffering from ovarian cancer and others battling mesothelioma.
By summer of 2021, J&J badly needed a strategy to preserve its profits, rather than pay large damage awards to woman with ovarian cancer and the lawyers that represent them. In fairness to J&J, proof of causation for anyone’s ovarian cancer could be argued on the basis of science, and plaintiffs must bear the “burden of proof” in any products liability tort case that the company’s product was the primary cause of the injuries. That’s how our legal system works, and J&J has succeeded in defending quite a few of these lawsuits. J&J’s website claims that their talc, or any other company’s talc, is entirely safe for human skin.
“Our talc is safe and asbestos free, and these 150-plus tests, and the tests we routinely do to ensure the quality and safety of our talc-based products, are consistent with the results from renowned independent research labs over the past 40 years.”
https://www.jnj.com/company-investigation-confirms-no-asbestos-in-johnsons-baby-powder
Defending against all these “frivolous” lawsuits has cost the company nearly $1 billion, according to bankruptcy-court filings in October, 2021. Settlements and verdicts have cost J&J about $3.5 billion more.
To shield its assets legally, “J&J put the talc claims into an entity called LTL Management LLC, which filed for bankruptcy protection on Thursday in North Carolina, according to the company and court records. J&J and its affiliates were not part of the bankruptcy filing.”
https://www.reuters.com/article/johnson-johnson-talc-idTRNIKBN2H42OD
J&J executed its corporate reshuffling through a legal maneuver known as a Texas two-step bankruptcy, a strategy other companies facing asbestos litigation have used. In that process, a J&J business split in two through a so-called divisional merger under Texas law. That transaction created LTL, the new entity saddled with J&J’s talc liabilities.
The company remains one of the wealthiest corporations in the world, with more than $25 billion in cash reserves, and it has not filed for bankruptcy. J&J, with a market value exceeding $400 billion, said the talc cases would be halted while LTL goes through the bankruptcy proceedings. In bankruptcy-court papers, lawyers for the newly created J&J subsidiary said the Chapter 11 filing was “necessitated by an unrelenting assault by the plaintiff trial bar, premised on the false allegations that the … talc products contain asbestos and cause cancer.” But in the courts, where judges and juries try to weigh the evidence objectively, at least some of the plaintiffs’ allegations were deemed to be true. (It is also “legal but wrong” to lie about established facts, but legal counsel for J&J clearly needed a good PR “spin” to justify the corporate re-shuffling.)
“We are taking these actions to bring certainty to all parties involved in the cosmetic talc cases,” J&J General Counsel Michael Ullmann said in a statement.
What will happen in bankruptcy court under Chapter 11 is that “unsecured creditors” like these plaintiffs will receive greatly reduced amounts for their claims and that litigation will cease. There is at least that much “certainty” in J&J’s legal maneuvering.
Similar legal strategies have been used in bankruptcy courts by members of the Sackler family who own OxyContin-maker Purdue Pharma, as well as by the U.S. Olympic Committee and the Boy Scouts of America, which face a barrage of sex abuse-related claims. A critic of J&J’s move, Lindsey Simon, a bankruptcy expert at the University of Georgia School of Law, noted that this bankruptcy maneuver offers J&J significant advantages in negotiations that are likely to follow over a final settlement.
Finally, it’s important to recall J&J has operated profitably for many years in a nation with a legal system where plaintiffs bear the burden of proving causation, and the company has been successful in defending a many of these cases. That is the right way for a true system of justice to operate; not in legal maneuvers to significantly cut down valid claims in the name of preserve profits.