Monday, January 30, was a historic day for anyone who has ever been injured by a defective product, and certainly a great sign for our 3M clients.
Johnson & Johnson, a pharmaceutical mega-monster, which supposedly is dedicated to helping patients, is the manufacturer of after-shower baby powder. The baby powder, however, is carcinogenic and has caused untold suffering in the form of ovarian cancer. 38,0000 injured consumers filed suit against J&J.
Mid-litigation, J&J created an entity called LTL Management and transferred all of its talc liabilities before filing for bankruptcy two days later. J&J wanted to use the bankruptcy process to resolve claims without the Plaintiffs being allowed to present their case to the jury in open court. This would lead to less financial exposure and lower monetary awards. (Sound familiar?)
Johnson & Johnson Acted In Bad Faith
In a monumental decision issued yesterday, the United States Court of Appeals for the Third Circuit dismissed J&J’s bankruptcy. It found that J&J acted in bad faith. The bankruptcy code was never intended for multi-billion dollar companies to escape liability. The Third Circuit ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&J’s “two-step” sought to halt more of the plaintiffs alleging the company’s baby powder caused cancer. The appeals court ruling revives those lawsuits which were going to be mired in a cookie-cutter, low-value bankruptcy process.
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Praise be — the Court got it right.
In the 3M case, as you know, the bankruptcy court has ruled that 3M did not meet the standards for bankruptcy protection. 3M has appealed that decision. This Third Circuit ruling in the J&J case is not binding on the 3M case, but it should be persuasive enough for the appellate court in the 3M case to affirm the decision of the bankruptcy court and put this nonsense to an end.
As I said in the prior portal post, our clients need to remain strong and keep the faith. We will get there.
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