J&J Talc Claimants Ask Third Circuit to End Unit’s New Bankruptcy

A group of cancer victims suing Johnson & Johnson over its talc products asked the Third Circuit to shut down a subsidiary’s bankruptcy in a move that would bypass the typical route for dismissing a Chapter 11 case.

J&J is trying to use the LTL Management LLC bankruptcy to improperly derail litigation alleging its talc products, including baby powder, caused cancer, the committee representing talc claimants said in a Tuesday filing with the US Court of Appeals for the Third Circuit. J&J created LTL in 2021 to handle tens of thousands of talc-related claims.

The committee asked the Third Circuit to consider its case and send it back to a lower court with instructions to dismiss the bankruptcy. The appeals court should at least allow talc claimants’ tort litigation—which had been halted by LTL’s bankruptcy—to proceed against J&J, the committee said.

The Third Circuit rejected LTL’s first bankruptcy filing earlier this year. Hours after that case was formally dismissed on April 4, the J&J unit filed for Chapter 11 protection again, this time with an $8.9 billion settlement offer. J&J has maintained that its talc products do not cause cancer.

Motions to force lower courts to take an action before a full judicial review, known as “mandamus” motions, are granted only under exceptional circumstances, such as in emergencies or on issues of public importance, according to the Department of Justice.

But the committee said the New Jersey bankruptcy court’s recent ruling allowing LTL’s second Chapter 11 to continue—while also halting trials against J&J—is “urgent” and warrants immediate Third Circuit review.

LTL aims to file a reorganization plan by May 14, according to court records. That would come before the resolution of claimants’ motions to dismiss the second bankruptcy case, the committee said.

“After rushing its plan, LTL also apparently seeks to stuff the ballot box by opening voting to individuals who do not have cancers linked to J&J products,” the committee said. “The risk of evasion of appellate review is tremendous.”

The committee’s filing came on the same day the DOJ’s bankruptcy watchdog, the US Trustee, asked the New Jersey bankruptcy court to dismiss the LTL bankruptcy case.

Erik Haas, J&J’s worldwide vice president of litigation, said the company plans to file a response in the appeals court.

“The filing is a desperate and legally deficient attempt by a small number of law firms to try to prevent claimants from voting on the resolution plan - a plan the vast and growing majority of claimants support,” Haas said. “The law firms behind this filing have financial interests that conflict with, diverge from and contravene those of their clients.”

The case is LTL Management LLC, Bankr. D.N.J., No. 23-12825, 5/1/23.