Johnson & Johnson is offering to settle all claims for $8.9 billion, up from its original offer of $2 billion
The legal broadside challenged the company’s latest gambit as an unlawful abuse of the Chapter 11 system, echoing earlier objections to its first effort to resolve the lawsuits.
The plaintiffs’ attorneys filed their brief on the eve of a bankruptcy hearing that kicks off its attempt to revive the gambit after the appeals court rejection. The 3rd U.S. Circuit Court of Appeals in Philadelphia shot down the tactic on the grounds that J&J’s subsidiary, LTL Management, could not justify its need for bankruptcy protection because it had no financial distress. The court cited J&J’s promise to give the companies an unlimited amount of money to settle lawsuits.
The company said in a statement that it remained confident the settlement would win approval. Erik Haas, J&J’s worldwide vice president of litigation, cited “significant support from multiple law firms representing more than 60,000 claimants for LTL’s reorganization plan.” J&J has argued that bankruptcy provides the only forum to permanently resolve current and future talc lawsuits. J&J and its subsidiary have argued bankruptcy serves the greater good for all parties, including plaintiffs, by delivering settlement payouts more fairly, efficiently and equitably than in trial courts, where some litigants get large awards and others get nothing.
Eliminating a previous funding agreement that guaranteed money to the J&J subsidiary and replacing it with different financing arrangements unlawfully harmed creditors, the cancer victims’ attorneys said. Jim Onder, who represents 21,000 talc claimants and supports J&J’s settlement offer, said that it is not unusual for law firms to represent many clients whose cases have not been filed. That’s especially true for J&J talc cases, because LTL’s first bankruptcy stopped new lawsuits from being filed after October 2021, he said.
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