Johnson and Johnson (J&J) is a multinational corporation that manufactures everything from Tylenol to body lotion. Johnson and Johnson products are used worldwide, and can be found in just about any home . One of Johnson and Johnson’s most popular products is baby powder, made with the mineral Talcum, a naturally occurring mineral, which is used as a thickening agent in baby powder. Johnson and Johnson have been using talcum in their baby powders for years, but recently, new data suggested that talcum powder contains trace amounts of asbestos.
Asbestos is widely known as a toxic mineral, and long term exposure can highly increase the risk of mesothelioma, lung, laryngeal and ovarian cancer. This obvious health scandal enraged consumers, and led to multiple lawsuits in early 2020, which is when the initial talcum-cancer connection was made. Johnson & Johnson denied these claims, despite being hit with multi-million-dollar verdicts in several trials where juries have found that J&J’s talcum contributed to consumers’ cancer diagnoses, and that J&J knew its talc could contain dangerous impurities. Due to the sheer magnitude and severity of these lawsuits, combined with a 20% dive in the stock price, Johnson and Johnson made the decision to sell-down its remaining inventory of talcum-based baby powder in the United States and Canada.
However, even though J&J stopped selling talcum-based baby powder in the United States, there was still the issue of global sales. For example, when the news of the health scandal broke globally, J&J was still stocking their shelves with their baby powder in India, and other regions worldwide. Gopal Krishna, with the Toxics Watch Alliance and Occupational Health India, in a plea to the NHRC (National Human Rights Commission in India), said J&J’s announcement to withdraw its baby powder from North America “is aimed at safeguarding the health and human rights of residents and citizens of North America but not the residents and citizens of India.” In addition to India, other countries, such as the Democratic Republic of the Congo suspended the importation and sale of J&J’s talc-based baby powder. Some time passed, and in November 2021, one of the many lawsuits succeeded, and Johnson and Johnson was ordered by a Missouri court to pay $2.2 billion to 22 women who were diagnosed with ovarian cancer after using its talc-based products. The court stated that the company’s decision not to warn people, despite its knowledge of the contamination of their baby powder with asbestos, was driven by “evil motive or reckless indifference.”
By this point, Johnson and Johnson was losing a tremendous amount of money, so in an attempt to minimise future losses, the company attempted a legal strategy colloquially known as the “Texas two-step’, which involves the creation of a subsidiary company that can bear the liability for legal claims. In J&J’s case, the subsidiary created was LTL Management, which bore the liability for the talc-related claims. However, within mere days of its creation, LTL filed for Chapter 11 Bankruptcy in 2021, which would move the 38,000 lawsuits to bankruptcy court. Chapter 11 allows a business to continue operating with restructured debt. An “automatic stay” prevents foreclosures and ongoing debt collection. The stay protects the debtor from all lawsuits, bank levies, foreclosures and repossessions. This way, J&J could halt the endless flow of lawsuits. However, on January 30th of this year, a federal court rejected Johnson and Johnson’s attempt to move the lawsuits to bankruptcy court, effectively opening them up to new lawsuits once again, ensuring that the individuals affected by the health scandal would have their day in court. In 2023, J&J plans to end the sale of talc-based powder worldwide, and will replace the talcum mineral with cornstarch.