Johnson & Johnson’s $8.9 billion baby powder deal faces key test in Oakland trial

By Jef Feeley | Bloomberg

Johnson & Johnson’s first jury trial in nearly two years over allegations that its talc-based baby powder causes cancer could influence plaintiffs weighing the $8.9 billion settlement offer put forth by the company last month.

The trial in Anthony Hernandez Valadez’s suit alleging he got mesothelioma from asbestos-contaminated talc in J&J products is scheduled to go before a jury Wednesday in state court in Oakland, California. Due to Valadez’s failing health, the case was allowed to proceed as an exception to the order putting all litigation on hold after J&J sought to wall off all of its talc liability in a Chapter 11 bankruptcy for its LTL Management unit.

J&J, which is trying to settle more than 40,000 talc cases in the bankruptcy, must convince 75% of plaintiffs to back its settlement offer. The company is hoping the Chapter 11 halt to most jury trials will help it build support for the deal. But a big award for Valadez could convince more plaintiffs to go to trial, potentially tanking the deal.

“People involved in the talc litigation will be watching the verdict in Mr. Valadez’s case very closely,” said Carl Tobias, a University of Richmond professor who teaches product-liability law. “It could very be one of the deciding factors in whether they accept J&J’s offer or hold out for their own trial.”

Over the years, New Brunswick, New Jersey-based J&J has steadfastly maintained its baby powder — sold in distinctive white bottles — never contained asbestos, is safe and doesn’t cause cancer. Executives say they are seeking a settlement to avoid billions in legal fees and expenses, along with a new wave of trials.

“The company deeply sympathizes with anyone suffering from cancer and understands they are looking for answers,” J&J said in a statement on the Valadez trial. “However, the science doesn’t support that the exceedingly rare form of mesothelioma at issue in this case is connected to talc exposure.”

If Valadez persuades jurors to award him millions on his talc claims, it would dwarf what other individual victims could expect to get in the settlement, said Elizabeth Burch, a University of Georgia professor who specializes in mass-tort law.

“It comes down to an economic decision as to whether you can wait any longer to be compensated in deciding on the settlement,” she said. “It’s clear the settlement won’t provide millions” to each individual who has sued, she added.

In 2021, another Oakland jury awarded a woman more than $26 million in a talc case against the J&J. The company is appealing the verdict.

Pulled From Market

J&J pulled its talc-based baby powder off the US market in 2020 and replaced it with a cornstarch-based product. It’s also planning to take the talc-based powders off the market worldwide by the end of this year.

The company’s nearly $9 billion settlement offer came as part of a second Chapter 11 filing for LTL. A previous one was rejected in January by a federal appeals court that concluded that J&J was misusing the bankruptcy process to strong-arm plaintiffs into resolving their cases. Some plaintiffs’ lawyers want LTL’s April filing tossed on similar grounds. US Bankruptcy Judge Michael Kaplan in New Jersey is expected to weigh that request sometime this summer.