Judicial Decision Strengthens Johnson & Johnson in Talc Scandal

Johnson & Johnson (J&J) has achieved a significant legal victory after a U.S. federal judge confirmed that the company did not manipulate creditor disadvantage procedures by filing for bankruptcy in Texas instead of New Jersey. This increases the chances that the consumer goods giant might resolve ongoing lawsuits regarding cancer-causing baby powder products. Judge Christopher Lopez ruled that a J&J subsidiary can remain in his court in Houston, rejecting allegations that the company attempted to bypass a federal appeals court in New Jersey, which had already blocked J&J's attempts to end thousands of lawsuits twice. The decision is a significant advancement for J&J, although it still needs to be clarified whether creditor consent to the bankruptcy can be deemed legitimate. J&J is offering more than $8 billion to settle the lawsuits, a proposal supported by about 83% of the voting women. This settlement is being offered through a specially established corporate entity for the claims, Red River Talc LLC, based in Texas—a controversial legal maneuver known as the Texas Two Step. Mutual accusations suggest that J&J's actions are an attack on the integrity of the U.S. bankruptcy system. The U.S. Department of Justice, among other critics, demanded the case be returned to New Jersey, where J&J is headquartered, and the first two bankruptcy applications were dismissed. Andy Birchfield, attorney for the talc victims, also criticized the move as an abuse of the bankruptcy process. Gordon, the attorney for Red River, admitted that the choice of location was deliberate, but for a legitimate reason: the overwhelming support for the bankruptcy settlement from the creditors.