Product News and Recalls

Johnson & Johnson Uses Legal Exploit to Evade Talc Asbestos Liability

Johnson & Johnson uses Texas two step bankruptcy to shield itself from talc asbestos liabilityWell, they did it. To anyone who was hoping that the corporation once revered as one of the world’s most trusted and wholesome names in healthcare goods would abandon a plan so sinister that it drew criticism even at its mere mention, Johnson & Johnson would like you to know that your hope was woefully misplaced.

When reports surfaced this summer that the corporation was exploring an obscure legal maneuver known as a Texas two-step bankruptcy to evade liability for potentially causing tens of thousands of cases of cancer across the country by knowingly selling talc-based products laced with asbestos for decades, even the most cynical among us wanted to believe that basic human decency would prevail, and the strategy would be abandoned. The move would allow J&J to spin off a new company from itself and immediately offload all its toxic talc liability onto the newly created entity. The new company would then be immediately declared bankrupt which would afford it all the protections allowed by law by such a declaration – including a variety of liability shields.

This effectively means that the tens of thousands of victims trying to hold J&J responsible for causing their cancer no longer have a company to sue. Johnson & Johnson and its $400 billion market value are no longer the corporation that gave them their disease and, in some cases, took them away from their families. A new entity known only as LTL is now the responsible party. And LTL was magically created and then somehow went bankrupt seemingly overnight.

The move was decried as “an unconscionable abuse of the legal system” by the American Association for Justice who described the “gimmick” as being “as despicable as it is brazen.” And yet it was completely legal and signed off by judge.

One can only hope that the court of public opinion is willing to rule on J&J’s behavior in a way the American legal system seems so poorly equipped to handle.