Johnson & Johnson cannot use bankruptcy case to settle cancer lawsuits says Judge

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Also read: Johnson & Johnson proposes nearly $9 billion settlement of talc cancer claims This time, lawyers for victims argued that J&J reduced the maximum amount of money it devoted to settling the cancer claims. Potential pay-outs in the first bankruptcy would have been backed by a J&J unit was worth about $61.5 billion at the time.

After a federal appeals court ordered Kaplan to dismiss the first bankruptcy, the company filed a new case in which it said the maximum it would pay out was $8.9 billion. J&J “sought the bankruptcy court’s assistance in cramming that bad deal down on cancer victims," said Andy Birchfield, who was among the lawyers fighting to have the second bankruptcy dismissed.

“Thankfully with today’s order that ploy is dead." To try to keep the second bankruptcy alive, J&J tweaked its legal strategy, watered down its support for LTL and cut a deal worth $8.9 billion with some of the lawyers suing the company. That settlement offer has split the law firms into dueling camps, with holdouts arguing that J&J’s new bankruptcy strategy should be thrown out just as the original was.

Although he believed he was compelled to dismiss the Chapter 11 case, Judge Kaplan said he remains troubled by the backlog of lawsuits in the court system that means only a handful of consumers are able to present their cases to juries each year. “This glacial pace coupled with the undeniable surge in the number of new actions means that the vast majority of claimants will not get the opportunity to seek recovery for years to come, if ever," Judge Kaplan said.

Also read: Johnson & Johnson ordered to pay $18.8 million in California Talc-Cancer trial. Details here But the appeals court made it clear that to justify a bankruptcy, a