J&J subsidiary to mediate talc claims from bankrupt states separately, judge says

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The Johnson & Johnson logo is seen on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2019. REUTERS/Brendan McDermid

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  • 40 states sought to participate in ongoing mediation with cancer plaintiffs
  • States said their consumer protection claims could be worth trillions of dollars
  • A new mediator will be appointed by May 24

(Reuters) – U.S. states that say Johnson & Johnson violated consumer protection laws should mediate their dispute with a unit of the drugmaker separately from people who say Johnson’s talc products & Johnson cause cancer, a federal judge said Wednesday.

The subsidiary, LTL Management LLC, was formed in October to settle thousands of lawsuits against J&J in bankruptcy court. New Jersey bankruptcy judge Michael Kaplan approved the controversial strategy in February, allowing J&J to assign the claims to LTL and then declare LTL bankrupt.

J&J maintains that its talc and baby powder products are safe and asbestos-free, and has argued that bankruptcy is the fairest and most efficient way to resolve the 38,000 lawsuits alleging that the products cause cancer.

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In March, Kaplan ordered the LTL and talc plaintiffs to begin mediation on a possible settlement of the cancer claims.

Attorneys general from 40 states tried to join the mediation, saying no deal can succeed without state participation.

States have asserted claims well in excess of the $2 billion J&J initially set aside for a future bankruptcy settlement. The magnitude of those claims could allow states to crowd out other interested parties during negotiations to resolve LTL’s bankruptcy.

Kaplan said during a court hearing Wednesday that the states’ claims must be mediated separately and that he intends to appoint a mediator for those claims by May 24. The new mediator will be able to work with mediators for talc victims toward a comprehensive bankruptcy settlement. Kaplan said.

The Talc plaintiffs have argued that the bankruptcy filing was an abuse of the legal system and are appealing Kaplan’s decision to allow the case to remain in bankruptcy court.

The case is In re LTL Management LLC, US Bankruptcy Court, District of New Jersey, No. 21-30589.

For LTL Management: Gregory Gordon, Dan Prieto, Amanda Rush and Brad Erens of Jones Day

For the talc committee: David Molton of Brown Rudnick; Melanie Cyganowski of Otterbourg; Daniel Stolz of Genoa Burns; Brian Glasser of Bailey Glasser; Lenard Parkins of Parkins Lee & Rubio; and Jonathan Massey of Massey & Gail

For the Committee of State Attorneys General: Ericka Johnson of Womble Bond Dickinson

Read more:

Judge greenlights J&J’s strategy to settle talc lawsuits in bankruptcy courtJudge allows expedited appeal of J&J’s talc bankruptcy strategy

Special Report: Inside J&J’s Secret Plan to Limit Litigation Payments to Cancer Victims

J&J’s Legal Strategy for Talc and Baby Powder

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