J&J Talc Settlement Holdouts Accuse Company of Buying Votes

People who voted to settle their baby power-related health claims against Johnson & Johnson should have their ballots thrown out because the consumer products giant rigged the tally, according to lawyers for holdout claimants.

The company organized a vote of claimants as part of a strategy to win bankruptcy court approval of a deal to pay out more than $8 billion to end cancer lawsuits filed by tens of thousands of women, the lawyers alleged in a court filing. Under special Chapter 11 rules, a J&J unit needed to win the vote by 75% to have a chance at convincing a judge to approve the settlement.

“To get to 75%, J&J went out and effectively bought votes,” lawyers for the holdouts said in court. J&J’s bankrupt unit, Red River Talc, filed a bankruptcy plan backed by more than 83% of those who voted, court papers show.

In a court filing, Red River denied that the vote was flawed and alleged that lawyers opposed to the settlement have a financial interest in defeating the deal. The company vowed to fight the allegations and in turn accused lawyers for the holdouts of trying to improperly influence the tally.

When Red River filed bankruptcy last month, opponents vowed to try to have the case thrown out, just as two earlier Chapter 11 cases designed to settle the cancer claims were dismissed.

The judge overseeing J&J’s latest effort has said the voting dispute is likely to be a major focus of the bankruptcy case and both sides have been gearing up for months of court battles.

J&J is offering more than $8 billion to settle litigation claiming that the company’s baby powder and other talc-based products caused cancer. The proposal is being offered through a corporate shell J&J created to absorb the cancer claims and file bankruptcy.

The bankruptcy case is Red River Talc LLC, 24-90505, US Bankruptcy Court for the Southern District of Texas (Houston).

Photo: Photographer: Gabby Jones/Bloomberg