In this image illustration, a Johnson and Johnson baby powder container is on display on April 5, 2023 in San Anselmo, California.
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A federal bankruptcy judge on Thursday halted around 40,000 lawsuits that claimed Johnson&Johnson‘s baby powder and other talc products caused cancer.
The decision is part of J&J’s second attempt to settle thousands of Talk cases in bankruptcy.
J&J spun off its subsidiary LTL Management in 2021 to carry its talk-related liabilities and file for Chapter 11 bankruptcy protection.
Judge Michael Kaplan temporarily stayed the lawsuits, which will last until mid-June, during a hearing Thursday in the US Bankruptcy Court in Trenton, New Jersey.
J&J does not have to go to court over other talc claims during the hiatus, but new lawsuits may still be filed against the company.
Kaplan said during the hearing that J&J had a “uphill battle” ahead.
The hiatus will give J&J time to reach a permanent settlement with plaintiffs in the Talk cases. The company recently proposed an $8.9 billion settlement for current and future claims related to Talk and expects to take that plan to bankruptcy court in mid-May.
In a statement, J&J called Kaplan’s decision “a victory for plaintiffs” because it brings them “one step closer” to being able to vote on the proposed settlement.
The New Brunswick, NJ-based company also said it believes applicants would overwhelmingly support the proposal.
J&J previously said more than 60,000 applicants have already pledged to vote for the plan.
“We strongly believe that plaintiffs will approve the plan if they are given a clear and full explanation and an opportunity to make an informed decision,” said Erik Haas, J&J’s global vice president of litigation.
Kaplan’s decision is narrower than the one he made after LTL management first filed for Chapter 11 in 2021.
The judge ruled in February 2022 that J&J can use the bankruptcy system to resolve Talk allegations, allowing the company to avoid fighting thousands of individual lawsuits.
Kaplan essentially validated J&J’s use of a strategy known as the “Texas Two-Step,” which allows companies to separate valuable assets from liabilities through what is known as a divisive merger.
But in January, the US Court of Appeals for the 3rd Circuit overturned that decision. The appeals court said that neither LTL nor J&J had a legitimate need for bankruptcy protection as they were not in “financial distress”.
Amid ongoing litigation, J&J has continued to deny claims that its talc products cause cancer.
Chief Financial Officer Joseph Wolk said on Tuesday on a earnings call that it was “regrettable” that J&J “has to throw dollars at frankly unsubstantiated scientific claims.”
The lawsuits allege that J&J’s talc products are contaminated with the cancer-causing asbestos that has caused ovarian cancer in thousands of people.
Some lawsuits link multiple deaths to J&J talc products.
Correction: J&J recently proposed an $8.9 billion settlement for current and future talk-related claims.
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