Five plaintiffs involved in the talcum powder lawsuit have filed a class action complaint seeking for a federal court to issue a temporary restraining order to block Johnson & Johnson from attempting to file for bankruptcy anywhere outside of New Jersey, its home state.
According to the lawsuit, J&J “executed a scheme through a series of corporate transactions” to prevent talcum powder cancer victims from going to trial and receiving fair compensation for their damages. The complaint accuses J&J of “pursuing a strategy of repeat fraudulent transfers and serial bad faith bankruptcy filings.”
Previously, J&J tried to file for bankruptcy in 2021 and in 2023. Johnson & Johnson planned to transfer its talcum powder claims into LTL Management, its subsidiary company, file LTL for Chapter 11 bankruptcy, and then take advantage of bankruptcy protection law. By doing this, J&J hoped to create a settlement trust that would forcibly resolve all remaining talcum powder claims and prevent new lawsuits from being filed.
However, both bankruptcy attempts were dismissed by the U.S. Third Circuit Court of Appeals and U.S. Bankruptcy Judge Michael Kaplan in 2023. They found that neither J&J nor LTL Management were in genuine financial distress, so they were not eligible for Chapter 11 bankruptcy protection.
Relocating to Texas
In January 2024, a Bloomberg report found that Johnson & Johnson filed a request to move LTL Management from New Jersey to Austin, TX under a slightly new name: LLT Management. Once the move was complete, the report suggested that J&J planned to file for bankruptcy a third time and once again attempt to force victims into accepting a low-ball settlement that would resolve all current and future talcum powder cancer claims.
However, by moving LLT Management to Austin, J&J hopes to obtain a different outcome than it did when filing for bankruptcy in New Jersey by taking advantage of Texas’ more conservative and business-friendly political climate. Since the “Texas Two-Step” is a legal loophole created by a Texas law that allows a business to split in two, this bankruptcy maneuver is more likely to be accepted in Texas than it would be in New Jersey.
For these reasons, this new class action lawsuit was filed in an effort to stop J&J from leaving its home state of New Jersey— where thousands of claims are still waiting to be settled— to take advantage of Texas’ business-friendly climate and force cancer victims into an unfair settlement. Though it’s unclear whether this class action will successfully prevent LLT Management from relocating to Texas, it’s a valiant effort to turn the tides for the talcum powder lawsuit and give plaintiffs a chance to receive the compensation they deserve.
Johnson & Johnson has been trying to take advantage of bankruptcy law to avoid being found liable for the massive damage it caused to thousands of families, but it’s not too late to join the lawsuit to hold them accountable. If you or an immediate family member used J&J’s baby powder and developed ovarian cancer in 2014 or later, see if you qualify to join the lawsuit.
