J&J Talcum Powder Lawsuit Begins May 31, Despite Bankruptcy Stay

Alameda, CAOpening statements in Valadez v. Johnson & Johnson began in the Superior Court of the State of California, County of Alameda on May 31. US Chief Bankruptcy Judge Michael Kaplan permitted the trial to go forward despite a stay on most talcum powder lawsuits pending resolution of J&J subsidiary, LTL Management’s petition for bankruptcy.

Anthony (Emory) Hernandez Valadez is not expected to survive through the summer. The trial is his last chance for a day in court before he dies. Even if he prevails, neither he nor his estate will receive anything until the bankruptcy issue is resolved.

Clouds of Baby Powder

Valadez was diagnosed with pericardial mesothelioma, the rarest form of mesothelioma, on January 10, 2022. Several rounds of chemotherapy have been unsuccessful. He has no genetic defects that might explain his disease, court documents say.

The remaining explanation seems to be that his mother used large amounts of J&J’s Baby Powder during his childhood. At the time, Baby Powder was advertised as a good, clean, comfortable and hygienic product. Good moms used it. Valadez claims that this 23-years of liberal exposure to a product contaminated with asbestos caused his cancer.

Allison Brown, counsel for J&J, has questioned Valadez’s mother’s pre-trial testimony that she bought the Baby Powder in Monterey or San Francisco at a Safeway. There was no Safeway in Merced where the family lived. Later questions have emerged about Target. Discrediting a witness is part of a standard legal strategy. It is not clear how this might fly with a jury, however.

In addition, counsel has noted that Valadez would request more than $40 million in damages. Under the pending bankruptcy plan, Valadez would reportedly get only $50,000. Preferential treatment of this plaintiff, she implied, could imperil larger settlement plans.

Perhaps more significantly for the fate of other talcum powder lawsuits, however, counsel raised questions about the validity of scientific evidence that links asbestos-contaminated talc products with mesothelioma. This trial, like many talcum powder lawsuits, is likely to turn on expert testimony.

Questions about asbestos contamination

It is the asbestos that is linked with mesothelioma, not the talc itself. So, the question of contamination is crucial.

In her opening statement, Ms. Brown told jurors that initial research done in the 1970s, which found asbestos in talc, has since been discredited. She specifically cited subsequent research conducted by Dr. Arthur Langer at Mt. Sinai and Dr. Seymour Lewin at NYU. Their later investigations allegedly failed to substantiate the initial 1971 findings.

Attorneys for Mr. Valadez were instructed to go ahead with a video deposition of their first witness -- the same Dr. Arthur Langer. Dr. Langer will reportedly testify that talc occurs naturally with other minerals, including asbestos.

So begins the war of experts.

But why are other talcum powder lawsuits still stayed?

J&J is facing nearly 40,000 talcum powder lawsuits alleging that that asbestos contamination in the talc used in products like its iconic Baby Powder caused users to develop cancer. These include mesothelioma, ovarian cancer and others. Even though J&J has now pulled Baby Powder off the market, more lawsuits are likely to be filed because many of these conditions may have extremely long latency periods.

J&J has a vested interest in keeping these lawsuits from devouring all its corporate assets. As of June 21, 2023, the company had a net worth of $425.80 billion. The complicated bankruptcy tactic that J&J has employed to limit its potential future financial liability is called the Texas two-step. This involves splitting a company being sued into two, then shifting all potential liability to one of the newly-created entities. The new subsidiary holding the liabilities then files for protection under Chapter 11 of the federal Bankruptcy Code. Claimants can anticipate being paid from the new entity, but only to the extent of the assets it holds.

J&J’s new subsidiary, LTL Management, filed for bankruptcy almost immediately after it was created in October 2021. LTL made an initial settlement offer of 2 billion. This was ultimately rejected by the Third Circuit, which found that neither LTL nor J&J had a legitimate need for bankruptcy protection. Earlier in 2023, LTL sweetened the offer to $8.9 billion. Negotiations about this deal are currently in progress, and most talcum powder lawsuits have been stayed pending the outcome.

Weighing the equities

This is a situation fraught with difficulty. Anthony Hernandez Valadez’s situation is especially sad. But mesothelioma and other cancers associated with talc are deadly. It is reasonable to assume that many of the 40,000 pending lawsuits involve individuals at the end of their lives. Upending a settlement deal that might bring them or their families some resources seems short-sighted. On the other hand, perhaps using bankruptcy law to shield a corporate giant that may have negligently marketed a dangerous product is an abuse of law. There is no easy solution.