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Key Takeaways
- Johnson & Johnson on Wednesday proposed a settlement that would pay roughly $6.5 billion to settle lawsuits alleging the company’s talc powder caused cancer.
- The settlement would resolve nearly all of the pending suits against J&J and its subsidiaries, the company said.
- Claimants would have three months to vote for or against the settlement package.
Johnson & Johnson (JNJ) shares rose in early trading Wednesday after the company announced a plan that would resolve nearly all pending litigation over claims that its talc powder caused ovarian cancer.
What Would the Proposed Settlement Do?
The company said Wednesday in a press release that the settlement would resolve 99.75% of all pending talc lawsuits, with the remaining suits focused on mesothelioma and not ovarian cancer. Johnson & Johnson said it has plans to address those suits, as well as consumer protection claims from regulators, in other deals apart from Wednesday’s settlement.
Under the proposed package, claimants would have a three-month period in which they would be informed of the terms of the settlement, and could vote for or against the package, something Johnson & Johnson hasn’t proposed in other settlements for the talc lawsuits that have been rejected by the courts.
The plan that Johnson & Johnson proposed Wednesday includes roughly $6.5 billion that would be paid out over a span of 25 years, which the company said is more than claimants would be able to recover through trials.
If 75% or more of the claimants vote in favor, Johnson & Johnson said the subsidiary that is handling the lawsuits, LLT Management, could “file a consensual ‘prepackaged’ Chapter 11 bankruptcy to secure its confirmation.”
“The company has worked with counsel representing the overwhelming majority of talc claimants to bring this litigation to a close, which we expect to do through this plan,” said Erik Haas, J&J’s Worldwide Vice President of Litigation.
J&J Still Says Claims Have No Merit
The company still says “none of the talc-related claims against it have merit,” and said it will continue to pursue other previously announced methods to resolve the litigation.
The other methods include appealing prior rulings that rejected LLT’s bankruptcy plans, along with continuing litigation against claimants who do not choose to settle and “pursuing affirmative claims” against the experts for the claimants who Johnson & Johnson says have defamed the company and its products.
Johnson & Johnson shares were up 2.8% at $148.62 in the opening minutes of trading Wednesday.