By Brendan Pierson
(Reuters) – A federal judge on Friday rejected a bid by a group of cancer victims to block Johnson & Johnson (NYSE:) from pursuing a proposed bankruptcy settlement of tens of thousands of lawsuits alleging the company’s baby powder and other talc products contain cancer . – causing asbestos.
The cancer victims filed for a preliminary injunction in New Jersey on June 11 to prevent J&J from filing for bankruptcy out of state, which would have effectively foiled the $6.48 billion settlement plan. The motion was part of a class action lawsuit filed by attorneys for the plaintiffs who opposed the plan.
But U.S. District Judge Michael Shipp said Friday he could not grant the motion because any harm to the victims was “strictly hypothetical.” He said he had no jurisdiction to resolve a dispute over “events that have not occurred and may never occur.”
An attorney for the plaintiffs did not immediately respond to a request for comment late Friday.
J&J hopes to win support from 75% of claimants as part of its prepackaged bankruptcy plan. It has set a voting deadline of July 26.
The health care conglomerate is facing lawsuits from more than 61,000 plaintiffs who allege the talc caused ovarian cancer or mesothelioma, a deadly form of cancer linked to asbestos exposure.
J&J claims the talc is safe, asbestos-free and does not cause cancer. The company claims that a bankruptcy settlement pays claimants fairly and equitably, unlike the civil legal system in which most claimants receive nothing while some win exorbitant awards.
Plaintiffs’ attorneys opposing the plan say it is a fraudulent attempt to keep billions of dollars in company assets out of the plaintiffs’ reach, depriving them of the compensation they deserve.
J&J has twice failed to execute a bankruptcy maneuver aimed at ending current and future talc lawsuits.
The strategy, known as a Texas two-step strategy, involves creating a subsidiary to absorb J&J’s talc liability, which then declares bankruptcy to resolve matters. Two courts previously ruled that J&J’s subsidiary did not have the “financial distress” necessary to legitimize a bankruptcy filing.
J&J’s plan focuses on resolving bankruptcy claims from women with ovarian and other gynecological cancers allegedly linked to talc. It has settled most mesothelioma cases out of bankruptcy, and this month completed a separate $700 million agreement to resolve claims by attorneys general.
