J&J Talc Group’s Bid to Hire Big Law Firms Prompts DOJ Challenge

Brown Rudnick LLP and Paul Hastings LLP can’t represent a talc claimants’ committee for Johnson & Johnson’s bankrupt subsidiary unless they forgo around $5.6 million for services they provided to other creditors, the Justice Department’s bankruptcy unit said.

The law firms are owed “significant sums” for their representation of two other groups as part of previous bankruptcy attempts by J&J units, the US Trustee said in an objection filed Tuesday in US Bankruptcy Court for the Southern District of Texas.

The debts owed to the law firms give them an adverse interest to the official talc claimant committee in the bankruptcy of J&J’s holding unit Red River Talc LLC, which should disqualify them from representing the committee, the US Trustee said.

“Neither Paul Hastings nor Brown Rudnick is disinterested and neither should be approved as counsel,” the US Trustee said.

Red River filed its pre-arranged Chapter 11 case in September to resolve thousands of ovarian and gynecological cancer claims.

The case, filed in Houston, is J&J’s third try at using bankruptcy to settle a mountain of cases over allegedly tainted talc products. J&J’s two previous Chapter 11 attempts led to dismissals in New Jersey.

It now aims to have its $8.2 billion payout plan approved later this month with the purported support of 83% of tort claimants.

The US Trustee on Tuesday also objected to the committee hiring Susman Godfrey LLP as special litigation counsel, calling its employment “excessive and unnecessary at this stage of the case,” the US Trustee said.

Money Owed

Paul Hastings previously represented a creditor group in J&J’s second bankruptcy attempt in New Jersey, the US Trustee said. An exact tally of what the firm is owed isn’t yet available, but Paul Hastings is seeking court permission to collect more than $2 million from that bankruptcy, the US Trustee said.

Either Red River or J&J is on the hook to pay that debt, making Paul Hastings a Red River creditor, the US Trustee said.

In addition, Brown Rudnick has disclosed it’s owed about $3.5 million for its work for another group representing talc claimants, the US Trustee said.

Brown Rudnick has for years represented plaintiffs’ groups opposed to J&J’s use of the bankruptcy system to address talc liabilities. It was tapped in November to serve as co-counsel to the official committee via a deal between competing claimant groups. The official committee now supports Red River’s pending Chapter 11 plan.

Red River this month also objected to Brown Rudnick representing the official committee, citing “extreme positions” it’s taken against the propriety of the case.

Hunter J. Shkolnik, a partner with Napoli Shkolnik, said he believes the opposition by the US Trustee and Red River is “completely misplaced.” Shkolnik’s firm represents the official committee co-chair but he said he wasn’t speaking on behalf of the committee.

Using unpaid bills as a basis to oppose the two firm’s employment is a “non-issue” and not a conflict in the context of the larger price tag for the case, he said.

“What we see are two of the most formidable bankruptcy firms combined representing the ovarian cancer victims and to not appoint these proposed counsel would do a huge injustice to the women,” Shkolnik said.

Attorneys for Brown Rudnick, Paul Hastings, and Red River didn’t immediately respond to requests for comment Wednesday.

Red River Talc is represented by Jones Day and Porter Hedges LLP.

The case is Red River Talc LLC & Off. Comm. of Talc Claimants, Bankr. S.D. Tex., No. 24-90505, objection 1/14/25.