J&J Subsidiary Will Separately Mediate States’ Talc Claims in Bankruptcy, Judge Says

40 states sought to participate in ongoing mediation with cancer plaintiffs
States said their consumer protection claims could be worth trillions of dollars
A new mediator will be appointed by May 24

(Reuters) – U.S. states that claim that Johnson & Johnson violated consumer protection laws should mediate their dispute with a unit of the drugmaker separately from individuals who claim that Johnson & Johnson talc products cause cancer, a federal judge said on Wednesday.

The subsidiary, LTL Management LLC, was formed in October to resolve thousands of lawsuits against J&J in bankruptcy court. New Jersey Bankruptcy Judge Michael Kaplan approved the controversial strategy in February, allowing J&J to assign the lawsuits to LTL and then place LTL in bankruptcy.

In March, Kaplan ordered LTL and talc plaintiffs to begin mediation on a potential settlement of the cancer claims.

The attorneys general of 40 states sought to join the mediation, saying that no settlement can succeed without the states’ input.

The states have asserted claims far in excess of the $2 billion that J&J initially set aside for a future bankruptcy settlement. The magnitude of those claims could allow the states to crowd out other stakeholders during negotiations to resolve LTL’s bankruptcy.

Kaplan said during a Wednesday court hearing that the states’ claims should be mediated separately and that he intends to appoint a mediator for those claims by May 24. The new mediator will be able to work with the talc victim mediators toward a comprehensive bankruptcy settlement, Kaplan said.

Talc plaintiffs have argued that the bankruptcy filing was an abuse of the legal system, and they are appealing Kaplan’s decision to allow the case to remain in bankruptcy court.

The case is In re LTL Management LLC, U.S. Bankruptcy Court, District of New Jersey, No. 21-30589.

For LTL Management: Gregory Gordon, Dan Prieto, Amanda Rush and Brad Erens of Jones Day

For the talc committee: David Molton of Brown Rudnick; Melanie Cyganowski of Otterbourg; Daniel Stolz of Genova Burns; Brian Glasser of Bailey Glasser; Lenard Parkins of Parkins Lee & Rubio; and Jonathan Massey of Massey & Gail

For the committee of state attorneys general: Ericka Johnson of Womble Bond Dickinson