Beasley Allen: ‘We believe this decision should spell doom for J&J’s third bankruptcy plan’

The U.S. Supreme Court has denied a $7 billion Purdue Pharmaceuticals bankruptcy plan which would have given the Sackler family, which founded the company, immunity from additional liability for their irresponsible actions in promoting the deadly use of opioids to the public and physicians.

The Sackler family had agreed to provide up to $6 billion in funding in exchange for immunity from further legal action while protecting billions in other assets. But the court ruled 5-4 that bankruptcy law does not permit that kind of protection.

The decision has significant implications for ongoing efforts by Johnson & Johnson (NYSE:JNJ) to seek bankruptcy protection in an effort to resolve tens of thousands of ovarian cancer claims tied to the use of the company’s talc-based products, including the Johnson’s Baby Powder and Shower to Shower brands.

In response, the following is a statement from Leigh O’Dell of the Beasley Allen Law Firm and Co-Chair of the Plaintiffs’ Steering Committee in the Talc/Ovarian Cancer MDL in New Jersey Federal Court.

“We believe this decision should spell doom for J&J’s third bankruptcy plan. Today’s ruling affirms that financially solvent entities, or individuals, cannot use the bankruptcy courts as a shield to escape liability for marketing and manufacturing dangerous products.

“The parallels of this case with J&J’s continued and unsuccessful attempts to use the bankruptcy laws to mirror the fraud perpetrated by the Sackler family cannot be denied. Even with an overwhelming majority of creditors approving the Sacklers’ indemnification scheme, the principles of fundamental fairness -- that it is the debtor who may receive the benefits of bankruptcy not other wrongdoers (such as the Sacklers or J&J) -- have been upheld.

“We hope that this decision provides clarity to the controversy that resulted in rampant forum shopping by companies and inconsistent administration of the code by the courts. We also hope that this decision will derail any attempt by J&J to return the talc litigation to the bankruptcy courts, and we can continue to move forward with trials that support the constitutional rights of our clients and resolutions that consider the true financial and emotional toll suffered by thousands of J&J’s victims.

“J&J’s response to today’s Supreme Court ruling in the Sackler case reveals a half-trillion-dollar company still desperate to use bankruptcy as a shield to protect itself from the tens of thousands of women who have cancer only because they used Johnson’s Baby Powder or Shower to Shower. It won’t work.

“Despite mountains of evidence to the contrary, J&J continues to mislead juries and members of the public by claiming talc-based baby powder doesn’t contain asbestos. Yet, at the same time, J&J seeks the shelter of a bankruptcy escape hatch that Congress designed exclusively for asbestos-containing products. They can’t have it both ways. It’s time for J&J to abandon its hysterical, bullying, and untruthful rhetoric and act as a responsible corporation.”

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