This week Rep. Katie Porter tweeted about Johnson & Johnson’s (J&J) latest attempt at indemnifying itself against the repercussions it is facing for covering the fact that its talcum powder contained asbestos, a known carcinogen, for decades.
J&J was slapped with a $4.69B verdict in a Missouri state court on behalf of 22 women who claimed to have used J&J’s baby powder products and gotten ovarian cancer as a result. Nine of the 22 women had already died. On appeal, the verdict was cut by more than half to $2.12B, and two women were removed from the case, however, the appeal still favored the women.
Johnson & Johnson filed in court last week to split its Baby Powder from the rest of the company. Why? J&J knew asbestos laced some bottles but kept it a secret for decades. Tens of thousands of women with ovarian cancer are suing, and the company wants to shield its assets.
— Rep. Katie Porter (@RepKatiePorter) October 19, 2021
In his verdict, Judge Rex M. Burllison wrote that the evidence displayed “particularly reprehensible conduct on the part of Defendants,” and that J&J not only knew of the dangers of their talc products, but “misrepresented the safety of these products for decades.”
In August, San Jose, CA resident Christina Prudencio was awarded more than $26M in her case against J&J. The 35 year old was diagnosed with mesothelioma attributed to the talc last year. Her attorney, Joseph Satterley, said that the jurors “saw through all the lies” that J&J was peddling.
Will any of these women, who have suffered greatly at the hands of J&J, ever get their money? Sadly, it does not appear so.
Now that the cases have soared to over 40,000 suits, J&J is scrambling to protect it’s over $400B in assets from what it describes as an “unprecedented assault” by greedy lawyers. To do this, J&J has taken advantage of a Texas loophole, known as the Texas Two-Step.
To use this loophole, J&J becomes a Texas corporate entity, and splits it’s company, allocating assets and liabilities as it sees fit. One company gets all of the torte liabilities, and one company receives all of the companies assets. J&J then declares bankruptcy for the company with all of the lawsuits, and the victims are left as mere creditors, receiving little to nothing, and the other company is released of any liability against future lawsuits.
This is exactly what J&J has done, creating LTL Management LLC. Despite attempts to stop J&J, it filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Western District of North Carolina on October 14.
A win-win for J&J, and a devastating loss for all of its victims.
NYC attorney, Daniel Wasserberg condemned the move, saying, “This is crazy. What’s happening here is a corporate crime, the likes of which we have never seen. I love the United States of America, but it is a sad day in this country when a megacorporation like Johnson & Johnson can take the liabilities for thousands of cancer and death cases, stick them in a brand new ‘spin-off’ in Texas, and then bankrupt it a few weeks later, simply because the litigation is a nuisance to their hundreds of billions in profits every year.”