J&J Wins Halt to 38,000 Baby Powder Lawsuits Amid Bankruptcy

(Bloomberg) -- Johnson & Johnson won court approval to halt tens of thousands of lawsuits alleging its baby powder caused ovarian cancer and other health problems in women, clearing a hurdle in front of its plan to pay $2 billion or more to end claims related to baby powder and other talc-based products.

The plan is part of a legal strategy known as the Texas Two Step in which J&J created a unit in Texas to hold all of the lawsuits, then transferred that unit to North Carolina and placed it in bankruptcy. The proceedings halted suits against the unit in court protection, but still left Johnson & Johnson exposed to some 38,000 lawsuits, some of which are nearing jury verdicts. 

Under certain circumstances, a non-bankrupt parent company can benefit from a bankrupt unit’s lawsuit stay. Last month, U.S. Bankruptcy Judge Craig Whitley declined to immediately protect J&J from the lawsuits and asked the company to return to present more evidence.

The lawsuit halt is an opening move in what is likely to be a long court fight.

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