The same judge who approved Johnson & Johnson’s (J&J) plan to shift its talc product litigation responsibilities to a subunit that files for bankruptcy has granted an expedited appeal of his own order, Reuters reported.
In February, U.S. bankruptcy judge Michael B. Kaplan faced criticism after ruling that J&J’s scheme, dubbed the “Texas Two-Step,” was not an abuse of the bankruptcy system. The bankruptcy judge ruled that J&J’s plan to form a subsidiary to hold its talc liabilities and then file this subsidiary case for Chapter 11 protection was not an abuse of the US bankruptcy code and was rather the best course for complainants to take.
Now, on March 30, Judge Kaplan has allowed plaintiffs who alleged J&J’s asbestos-contaminated talc products caused them to develop cancer to appeal his decision to the 3rd Circuit Court of Appeals. the United States.
In granting the expedited appeal, Judge Kaplan said, “Obviously this has an impact on decisions and potential restructurings beyond what is being argued in this court.”
The controversy over the two-step J&J in Texas has become a rallying cry for lawmakers to change the bankruptcy system.
Just days after J&J created a subunit in October called LTL Management through a divisive merger to hold its talc responsibilities, the new LLC filed for bankruptcy.
Judge Kaplan explained his decision to approve the bankruptcy of LTL Management because it would result in a faster resolution of the tens of thousands of talc cancer cases pending against J&J. But critics allege his endorsement saves wealthy companies like J&J from having to face their accusers in court.
LTL Management requested that the expedited appeal be reconsidered and that the appeal be adjudicated first in a US District Court. Judge Kaplan rejected LTL’s argument, saying an appeal to the United States District Court level would ultimately delay the outcome of the case. By immediately sending the case to the circuit court, the appeal will be heard by the second highest court in the country before the Supreme Court.
More than 38,000 talc cancer claims against J&J are pending. Talc plaintiffs filed claims for ovarian cancer or mesothelioma. Some claimants have requested separate panels for each type of cancer claim. However, Judge Kaplan also ruled on March 30 that only one panel of plaintiffs should be present during the bankruptcy appeal.
Before LTL Management filed for bankruptcy, J&J had to pay $3.5 billion in talc verdicts or settlements, including a 2018 decision in Missouri that awarded $2.1 billion to 22 plaintiffs for their claims against cancer.