Stand Against J&J’s Abuse of Bankruptcy: An Open Letter to the Legal Community

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As many of you know, over the last two years, our firm and many others have successfully stood against Johnson & Johnson’s attempt to abuse the bankruptcy system and strip plaintiffs of their right to a trial by jury. If J&J had been successful, it would have paved the way for any profitable company facing mass tort liabilities to shut the courthouse doors to their victims, creating the most significant threat to the civil justice system in recent memory.

After the dismissal of two previously filed bad-faith bankruptcies, as unimaginable as it seems, J&J’s legal department is contemplating a third bankruptcy bid to avoid accountability to talc cancer victims. This has been reported in numerous news articles based on statements made by Erik Haas, World Wide Vice President for Litigation, during J&J’s earnings call. To even consider another bankruptcy attempt is a tremendous disservice to the thousands of customers and their families who trusted J&J to provide safe products. It is also a major disservice to J&J shareholders.

In refusing to accept responsibility and provide fair compensation to victims of its Baby Powder, J&J’s legal department chose the ill-advised path of a Texas Two-Step bankruptcy. By continuing to pursue this ill-fated, bad-faith bankruptcy strategy, J&J, one of the wealthiest and most powerful companies in the world, only magnifies and multiplies its talc liability problem.

J&J’s lawyers have taken this once-great company down the path of gross deception and denial to the depths of bankruptcy – not once but twice. Now they are threatening a third time. The lack of integrity and human decency is appalling.

The Third Circuit Court of Appeals rebuffed J&J’s first bankruptcy ploy in January of this year. At that point, J&J again had the opportunity to act responsibly, enter good faith negotiations, and provide fair compensation to cancer victims. Instead, the company responded by cobbling together a small band of lawyers, with tens of thousands of non-meritorious and unverified cases, and once again attempted to abuse the bankruptcy system to force through a settlement plan over legitimate claimants, an effort that was subsequently denied by the court.

Had J&J’s bankruptcy ploy succeeded, our clients would have been victimized yet again – not only by suffering from a deadly cancer at the hands of its product – but also by being denied their right to a trial by jury and being forced to accept pitifully inadequate compensation through the bankruptcy plan.

A key reason that J&J’s second attempt failed is that enough of us stood together in unity, which was (and is) a powerful force to thwart J&J’s efforts.

Another is that the talc leadership has made a firm commitment to fulfill their duties on behalf of all plaintiffs and continue fighting until there is a just and fair resolution. Because of this commitment, firms are free to turn down pennies-on-the-dollar offers.

We know that the average cost of medical care and lost wages for ovarian cancer victims is in the hundreds of thousands of dollars. This amount does not include the additional pain and suffering and punitive damages asserted at trial. The medical costs incurred by mesothelioma victims are even higher. J&J is using bankruptcy tools to cram down compensation by stuffing the ballot with illegitimate claims so that real claimants would be paid only a tiny fraction of true values – saving J&J billions of dollars.

One lesson that is evident through J&J’s twice-failed bankruptcy efforts is that bankruptcy is a weapon that must be kept out of reach of powerful and extraordinarily profitable major corporations.

Andy Birchfield, Esq, Leader of Mass Torts Department at Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.

Now is the time for us to stand together against J&J and say we will never again negotiate with hugely profitable companies in bankruptcy – it would be unfair to our clients. Let’s declare firmly that we will not negotiate with J&J in bankruptcy. Not now. Not ever.

We reject any efforts by J&J to abuse the bankruptcy system and foist on victims a so-called resolution that takes away their constitutional right to a jury trial and prevents them from obtaining fair compensation.

We appreciate your steadfast support. We are better standing together so that our clients receive the justice they deserve in the fight ahead.

Thank you,

Mike Papantonio

Levin Papantonio Rafferty