Johnson & Johnson will use Texas bankruptcy plan to fight two-state talc business (NYSE:JNJ)

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Johnson & Johnson (NYSE:JNJ) is seeking to use its Texas two-step bankruptcy program to block talc-related consumer protection claims New Mexico and Mississippi plan to file, alleging the pharmaceutical giant misrepresented safety of the product, The Financial Times reported on Monday.

The company used the controversial decision last year to treat 38,000 personal injury cases in which its talc-based baby powder caused cancer. As part of its legal maneuver called “Texas Two-Step”, JNJ created a subsidiary known as LTL to hold all of its talc liabilities and placed it under bankruptcy protection.

In addition to bodily injury claims, some states have filed lawsuits alleging the New Jersey company violated consumer protection laws by marketing and selling talc while knowing the products were sometimes contaminated with carcinogenic asbestos.

While forty US states and the District of Columbia are in settlement talks with LTL, New Mexico and Mississippi plan to seek lawsuits. On Tuesday, a New Jersey court is expected to consider the company’s offer to block its litigation plans in the respective state courts.

The company argued that the lawsuits would hinder the potential resolution of personal injury cases through the bankruptcy process and affect ongoing mediation with other states on similar cases.

JNJ no longer sells talcum powder in the United States and Canada, and a few days ago the company announced that the product would be discontinued globally in 2023.

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