For quite some time now, victims of mesothelioma and ovarian cancer and their families have been closely monitoring Johnson & Johnson’s (J&J) repeated legal attempts to escape asbestos liability. Specifically, the giant pharmaceutical company has repeatedly tried to use a controversial bankruptcy strategy. In a significant recent development, a federal bankruptcy judge in Houston, Texas, denied the company’s third attempt to use the bankruptcy strategy as a shield against the tens of thousands of lawsuits it is facing. This decision marked a critical moment in the victims’ quest for justice.
Over 90,000 lawsuits have been filed against J&J, alleging that the giant pharmaceutical company’s baby powder, which was a staple for years, contained asbestos. Asbestos is a naturally occurring mineral that, when inhaled or ingested, can lead to the development of mesothelioma and other severe health issues. Over the years, J&J has maintained that it is innocent and argued that its talcum powder was not asbestos-contaminated. Despite this, numerous jury verdicts have gone against the company, and personal injury as well as wrongful death claims have continued to rise.
To combat these lawsuits, Johnson & Johnson employed a controversial legal strategy called the “Texas Two-Step.” This strategy involves forming a new corporate entity, transferring all liabilities to it, and then having that entity declare bankruptcy. Johnson & Johnson aimed to limit its financial exposure while trying to resolve claims in bankruptcy court instead of through the traditional legal process, which can be quite unpredictable.
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