PEOPLE suing Johnson & Johnson (J&J) over the company's talc products urged an appeals court on Monday to revive their claims, saying the profitable company should not be allowed to use a bankrupt subsidiary to block lawsuits alleging the products cause cancer.
They asked a panel of the Philadelphia-based third US Circuit Court of Appeals to dismiss the bankruptcy of J&J's subsidiary LTL Management, saying that LTL is a "concocted" corporation set up solely to stop them from getting their day in court.
J&J, which maintains its talc products are safe, spun off LTL in October, assigned its talc liabilities to it and placed the newly created subsidiary into bankruptcy days later.
That restructuring strategy, known as the "Texas two-step", paused about 38,000 lawsuits J&J was facing alleging its baby powder and other talc-based products contain asbestos and caused mesothelioma and ovarian cancer.
Critics, including lawmakers and legal experts, say J&J's bankruptcy maneuver could provide a blueprint for other big companies to avoid juries in mass tort lawsuits.
Circuit Judge Julio Fuentes at Monday's arguments asked the cancer victims' attorney Jeffrey Lamken whether the bankruptcy court could provide a more efficient resolution of the claims than trying cases one at a time in other courts. Lamken said the court should not make a general ruling about whether bankruptcy is "better" because its protections should be reserved for companies that are in financial distress.
David Frederick, representing a separate group of cancer plaintiffs, said the bankruptcy allows LTL to pay "less money, more slowly". But J&J countered bankruptcy court allows all talc lawsuits to be settled together, which it says is the fastest and fairest way.
J&J has set aside $2bn (£1.7bn) to settle talc claims, which LTL executives describe as a starting point rather than a "cap". Before the bankruptcy filing, J&J faced costs from $3.5bn in verdicts and settlements.
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