Johnson & Johnson has tentatively agreed to settle talc baby powder allegations with over 40 states attorneys general. Confirmation of the deal came on in January, revealing a strategic move by the company to address its longstanding legal liabilities.
Johnson & Johnson reached the preliminary agreement to pay approximately $700 million. This settlement is to conclude an investigation by several states into the company’s failure to adequately warn consumers about the potential health hazards of talc in its baby powder. Joseph Wolk, J&J’s CFO, further confirmed these details in a recent Wall Street Journal interview.
The development marks a new chapter in the company’s lengthy legal and investigative proceedings regarding the association between its asbestos-containing talc products and cancer. News reports and court cases over the past decade have shed light on the fact that J&J baby powder was contaminated with asbestos for decades – with no warning by the manufacturer.
As a result, the company faces over 50,000 lawsuits, predominantly from women who claim to have developed ovarian cancer as well as mesothelioma from the product. The proposed settlement with the various statesl does not resolve those claims. Those individual lawsuits for product liability related to consumer use of J&J baby powder will continue forward in the federal and state court systems.
Johnson & Johnson has previously attempted to limit its legal liabilities through bankruptcy courts, though without success. Using a controversial legal maneuver known as the “Texas Two-Step”, the company unsuccessfully attempted to shed its talc liabilities through bankruptcy.
On two separate occasions, however, US bankruptcy courts rejected those efforts by dismissing the attempted bankruptcy filings.
Despite these challenges, the company has consistently argued that its talc-based products are safe and do not cause cancer. However, in response to the controversy, J&J discontinued its talc-based powders in North America in 2020, transitioning to cornstarch-based products. Numerous American juries have found the company liable for manufacturing a dangerous and cancer causing product.
In a move to address these claims, the company allocated about $400 million last year to settle U.S. state consumer protection claims, part of a larger $8.9 billion plan through the bankruptcy filing of one of its units to resolve allegations that its baby powder and other talc products are carcinogenic.
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