September 30, 2022

Johnson & Johnson Will Discontinue Talc-Based Baby Powder Globally in 2023

In April, Johnson Johnson’s shareholders voted against a proposal to stop sales of the talc baby powder in global markets such as Asia and South America — a request that had been fueled by concern about the company’s legal and reputational woes. Last year, the company faced $1.6 billion in talc-related litigation expenses and had set aside $3.9 billion the previous year. Reputation tracking firms said Johnson Johnson’s once-pristine name had been tarnished among consumers by the accusations around talc.

Talc-based products account for a tiny sliver of Johnson Johnson’s sales of consumer products, which also include Band-Aid bandages and Listerine mouthwash, but are responsible for an enormous portion of its legal headaches. In one talc case, Johnson Johnson was ordered to pay $4.69 billion to 22 plaintiffs in one of the largest personal-injury verdicts ever.

The company has tried to limit its legal exposure via an elaborate corporate pirouette known as the Texas Two-Step. In February, a bankruptcy judge in New Jersey cleared the company to move ahead with the maneuver, which gets its name from a foxtrot-inspired dance style and derives its convoluted structure from a quirk of Texas business law.

The reorganization process, which involves partitioning off assets and sealing them away from creditors, has been tried only a handful of times since being conceived in 1989, mostly by companies facing asbestos exposure claims. If successful, it could shield Johnson Johnson from billions of dollars in legal claims while also demonstrating an escape route for other companies swamped with personal injury litigation.

The gambit has put the Johnson Johnson talc lawsuits in stasis and could leave claimants, some of whom are extremely ill, with a smaller pot of funds for payouts. Plaintiffs’ lawyers have filed an appeal to try to stop the maneuver and said the next hearing is scheduled for September.

“After decades of selling talc-based products the company knew could cause deadly cancers to unsuspecting women and men, J.J. has finally done the right thing,” said Leigh O’Dell, one of the plaintiffs’ lawyers.

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