By George Woolston ·
Law360 — Cancer patients who have sued Johnson & Johnson alleging that its talcum powder caused their illness alleged Wednesday that the company has tried to intentionally prevent tort victims from getting their day in court through a scheme of fraudulent corporate transactions.
A group of five plaintiffs represented by their attorneys argued in a proposed class action filed in New Jersey federal court that a series of corporate transfers stemming from the company’s 2021 “Texas two-step” maneuver, in which it formed its subsidiary LTL Management to hold its cosmetic talc liability, should be undone.
The plaintiffs are seeking a declaratory judgment finding that the 2021 move — along with the 2022 transfer of corporate assets from an existing consumer health division into a new entity known as Kenvue and the 2023 replacement of a $61.5 billion funding agreement provided to LTL with a $29.9 billion funding agreement — were fraudulent. They ask that those transfers be voided and for a finding that J&J is liable for the full $61.5 billion provided in the original funding agreement to LTL.
They argue the maneuvers have allowed the company to use the bankruptcy courts to limit its liability for talc claims and delay trials and other forms of resolution for the proposed class for more than two years.
They are also asking for compensatory and punitive damages from J&J, its subsidiaries and individual executives such as J&J CEO Joaquin Duato and Kenvue CEO Thibaut Mongon for malicious abuse and malicious use of process.
The plaintiffs are also asking the court to stop a prepackaged reorganization plan for its talc unit announced by J&J earlier this month that would pay out $6.5 billion to resolve claims if a supermajority of claimants agrees to the plan.
“It is time that J&J be held accountable for its tortured abuse of the bankruptcy process, and as much as the company seems to disdain the tort system, it is in fact the constitutionally appropriate forum for our complaint,” counsel for the plaintiffs Richard M. Golomb of Golomb Legal PC said in a statement to Law360 on Wednesday. “We believe a jury will be very interested in all the company has done to sidestep its responsibility and further harm women and families who have already suffered tremendously.”
Erik Haas, worldwide vice president of litigation for J&J, called the suit a “Hail Mary frivolous filing” and said it was the latest effort by a small group of the plaintiffs’ lawyers to continue fighting “every single effort to resolve this litigation to date” and putting their own financial interests ahead of their clients.
“The question remains: Why won’t they let claimants decide for themselves what is or is not in their own best interest? Why are they so desperate to stop the vote? Make no mistake, the facts are clear. The company has offered one of the largest resolutions in the history of mass tort litigation,” Haas said on Wednesday in a statement to Law360. “Our focus has been and will remain reaching a full, fair and final resolution of this litigation, and allowing the claimants to speak for themselves.”
J&J has initiated proceedings in both the New Jersey multicounty litigation and the federal multidistrict litigation to disqualify the Beasley Allen firm and attorney Andy Birchfield from the litigation over their ties with an attorney who used to represent J&J in the litigation. On Monday, the company accused the firm and Birchfield of attempting to bias the vote on its new proposal. An attorney for Beasley Allen called the bid an “unwarranted publicity stunt.”
The five named plaintiffs, Rebecca Love, Sharon Murphy, William A. Henry, Alishia Gayle Davis and Brandi Carl, are seeking to represent all who either had a pending lawsuit alleging an ovarian cancer or mesothelioma personal injury claim caused by asbestos or other ingredients in Johnson & Johnson talcum powder products, or had executed a retainer agreement with a lawyer or law firm to pursue such a claim, as of Aug. 11, 2023.
LTL was created just two days before the company first filed for Chapter 11 protection in North Carolina in October 2021 to deal with tens of thousands of claims arising from exposure to J&J’s cosmetic talc products.
The case was soon transferred to New Jersey bankruptcy court, and in January 2023 the U.S. Third Circuit Court of Appeals found that LTL was not in financial distress and lacked the required good faith to commence its bankruptcy, dismissing the case.
A second bankruptcy filed by LTL in the same court in April 2023 was dismissed that July.
The plaintiffs are represented by Richard Golomb of Golomb Legal PC, Christopher Tisi and Mike Papantonio of Levin Papantonio Rafferty Proctor Buchanan O’Brien Barr Mougey PA, Brian A. Glaser, David Selby Thomas Bennett and Todd Matthews of Bailey Glasser LLP, P. Leigh O’Dell, Andy Birchfield Jr., Ted G. Meadows and David B. Byrne of Beasley Allen Crow Methvin Portis & Miles PC, Michelle A. Parfitt of Ashcraft & Gerel LLP and Warren Burns, Amanda Klevorn and Natalie Earles of Burns Charest LLP.
Counsel information for the defendants was not immediately available.
The case is Love, D.D.S. et al. v. LLT Management LLC. et al., case number 3:24-cv-06320, in the U.S. District Court for the District of New Jersey.
–Additional reporting by Carolina Bolado. Editing by Rich Mills.