ATLANTIC CITY, N.J.,
Sept. 2, 2021 /PRNewswire/ -- In a
new state court filing, women who hold Johnson & Johnson
(NYSE:JNJ) and the company's iconic talc baby powder responsible
for their ovarian cancer are seeking a temporary restraining order
and preliminary injunction to prevent J&J, or any of its
corporate affiliates, from fraudulently transferring assets to a
subsidiary and plunging it into bankruptcy.
Faced with more than 34,000 ovarian cancer lawsuits, many
consolidated in New Jersey federal
court, J&J has told attorneys for the victims that the company
is actively exploring options to transfer its potential
talc-related liabilities – valued at approximately $24 billion – to a stand-alone subsidiary and
seek bankruptcy protection for that business entity. Such a move
would limit compensation for victims to pennies on the dollar and
could bring an indefinite halt to all related trials scheduled in
state courts across the nation, as well as the federal
multidistrict litigation being heard in
Trenton.
In a motion filed in Superior Court of New Jersey, attorneys for the plaintiffs argue
that the bankruptcy strategy violates fraudulent conveyance laws in
New Jersey and most other states.
However, under a scheme known in legal circles as the "Texas
Two-Step," economically viable companies can incorporate in
Texas and then transfer
liabilities to another entity with limited or no assets. As a
result, a new company could be created by J&J to hold all legal
liabilities but with limited or no funds to pay litigation
claims.
In one recent case, In re DBMP LLC, U.S. Bankruptcy Judge
J. Craig Whitley, in the Western
District of North Carolina, was
critical of the "Two Step" practice. In recent years, other
companies such as Georgia-Pacific LLC have shifted asbestos
liabilities to a separate company - with few if any assets - before
placing it in bankruptcy.
"Plaintiffs deserve to have their day in court before a judge
and jury, not arbitrarily placed in bankruptcy court with little
hope of adequate compensation," says Andy
Birchfield, Mass Tort Section Head of the Beasley Allen law firm, which represents
thousands of ovarian cancer victims. "Bankruptcy should not be used
as a ploy to delay or deny justice for the victims of a dangerous
product produced by a company with hundreds of billions of dollars
in assets."
The filing in New Jersey
answers J&J complaints that a similar previous petition in
Missouri unfairly burdened the
company. "We'll take this cause to J&J's backyard where it
cannot hide and avoid what is obviously a need for judicial
oversight and intervention," says Michelle
Parfitt, co-lead counsel in the Talcum Powder MDL and Senior
Partner at Ashcraft and Gerel, who also represents the
plaintiffs.
Dozens of peer-reviewed medical studies published in the last 35
years have found a statistically significant correlation between
talcum powder use and ovarian cancer. Further research has
confirmed that talc particles, when applied to the perineal area,
can migrate to the ovaries, and result in inflammation and related
malignancies. In December 2018,
Reuters reported that J&J knew for decades that its talc
products were laced with asbestos but kept that information from
regulators and the public.
"Companies that are bursting at the seams with available cash
cannot be allowed to abuse the bankruptcy system this way," says
Alexandra Walsh, founder of
Walsh Law. "Make no mistake; this
case is a wake-up call to anyone who is concerned about the rights
of individuals, the right to trial by jury and the belief that huge
corporations must play by the rules and accept responsibility when
they commit wrong."
In May 2020, Johnson & Johnson
announced the company would no longer make nor market talc-based
powders for the North American market.
In June, the U.S. Supreme Court declined to hear an
appeal resulting from a $2.1
billion judgment against the company entered by the
Missouri Court of Appeals and
upheld by the Missouri Supreme Court. That appellate court
found that J&J had engaged in "reprehensible conduct" for
decades by repeatedly denying the presence of asbestos and the
known association between talc use and ovarian cancer.
Media Contact:
Mike
Androvett
214-507-5456
mike@androvett.com
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SOURCE Beasley Allen Law Firm