By CultureBanx Team
- Johnson & Johnson will have to face more than 38K lawsuits alleging the company’s talc products, like baby powder, caused cancer, which could result cost $5.5B in liability
- To sell more baby powder J&J specifically targeted Black women in under-developed geographical areas
Pharmaceutical giant Johnson & Johnson (JNJ +0.29%) has 99 problems and a Federal Appeals Court is one. The 3rd U.S. Circuit Court of Appeals dismissed a bankruptcy filing by a Johnson & Johnson spinoff company that clears the way for more lawsuits over its baby powder. For Black women, the bankruptcy setup claim was even more concerning because 15 years ago they were selected by J&J as “the right place” to sell more baby powder to, specifically targeting “under-developed geographical areas.” J&J is still facing more than 38,000 cases that allege its talc products caused cancer, after agreeing to a $100 million settlement back in 2021.
Why This Matters: J&J planned to dance a “Texas two-step” through its subsidiary, LTL Management, as part of a legal strategy that allows companies to separate liabilities from assets through a divisive merger, according to Reuters. The company had set aside $3.9 billion in a ‘trust fund’ for litigation expenses to cover payouts for trust lost from 25,000 consumers who purchased its Baby Powder. However, the court ruled that J&J was not in genuine financial distress and noted the spinoff company still has access to its assets, worth an estimated $61.5 billion.
“Bankruptcy courts aren’t a menu option for rich companies to decide that they get to opt out of their responsibility for harming people,” said attorney Jon Ruckdeschel.
Racial and ethnic disparities in U.S. healthcare are rife, with Black women facing higher risks to their health from discrimination. This is something Johnson & Johnson preyed upon as it began distributing baby powder through a specially curated network of churches and beauty salons targeting Black & Hispanic communities.
Moreover, J&J launched a $300,000 radio advertising campaign in six markets with the prime goal of reaching “curvy Southern women 18-49 skewing African American.” To add insult to injury, an independent investigation discovered that the company knew for decades that asbestos was mixed in with the talcum.
The company continues to stand behind the safety of its Baby Powder, which it claims is “safe, does not contain asbestos and does not cause cancer.” J &J also stated “the ruling does not reflect the facts established during the Bankruptcy Court’s trial regarding the appropriateness of LTL’s formation and filing.” Johnson & Johnson plans to appeal the decision. “Our objective has always been to equitably resolve claims related to the Company’s cosmetic talc litigation,” JNJ said in a statement.
What’s Next: In recent years, the company has reformulated its baby powder, replacing talc with cornstarch. If J&J reached comparable settlements in all of the 38,000 talc cases pending against it, the company would have about $5.5 billion in liability.
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