An $18.8 million jury verdict in favor of a man who said
The July 18 verdict is the first in nearly two years to consider the health risks of J&J’s baby powder. It bolsters plaintiffs’ attorneys who have argued during the bankruptcy of J&J’s affiliate, LTL Management LLC, that the talc-based product causes cancer.
By awarding Anthony Hernandez Valadez millions, the California jury has thrown J&J a curveball and potentially influenced claimants to vote against the proposed $8.9 billion settlement designed to resolve tens of thousands of talc claims in LTL’s bankruptcy. It could also place pressure on the judge overseeing the case by inspiring others to try to pursue their claims in front of a jury.
“I think that this verdict supports our view that this is not an adequate proposal and I think any plaintiff should consider this as part of their decision about what they tell their lawyers,” said Chris Tisi, an attorney with Levin Papantonio Rafferty who represents talc claimants.
The verdict is one of multiple large jury verdicts awarded over the past decade to J&J claimants and underscores the company’s determination to resolve its liability through a controversial bankruptcy maneuver.
LTL’s bankruptcy halted litigation against J&J. But Judge Michael Kaplan of the US Bankruptcy Court for the District of New Jersey in May allowed Valadez to pursue J&J in California state court over claims that its baby powder caused Valadez’s mesothelioma. Valadez’s lawyer, Joseph Satterley of Satterley & Kelley, argued that his suit should be allowed to proceed, citing the “pending death of my client.”
Attorneys for Valadez estimate his claim would have been worth about $50,000 under the bankruptcy proposal.
The discrepancy between the jury verdict and the claim’s value in bankruptcy is not a surprise, said Jim Onder, an attorney who has urged his clients to accept J&J’s proposal.
He said claimants should pursue consensus on a settlement amount with J&J. Bankruptcy allows claimants to receive money faster and avoid the uncertainty of trial, Onder said.
“There are from time to time other large verdicts, most of which get reduced on appeal or reversed,” Onder said. “So as a result, I understand it has the tendency to confuse potential clients that somehow every case is worth that kind of number.”
J&J said it would appeal. The company says its baby powder does not contain asbestos and is safe.
The verdict has “absolutely no impact” on the bankruptcy process, J&J’s worldwide vice president for litigation Erik Haas said in a statement. The verdict can’t be paid until the bankruptcy concludes, unless Kaplan decides otherwise.
“We remain focused on all claimants having the opportunity to vote and decide for themselves on our plan to compensate them in a timely and efficient manner,” Haas said.
Piling on Pressure
Claimants could see the verdict as a reason to try their own claims in front of a jury, Michael Shepard, a mesothelioma attorney at Shepard O’Donnell PC, said. Claimants in J&J and other asbestos bankruptcies might try to obtain the same relief from bankruptcy that allowed Valadez to get a jury trial, he said.
That would be a thorny issue for judges, who would be in a position to pick winners and losers, Shepard said. “Which ones do you choose?” he asked.
It’s unclear how the verdict will affect the LTL bankruptcy in the long run, said Samir Parikh, a bankruptcy law professor at Lewis & Clark Law School. It probably won’t lead to an increase in the company’s settlement offer, Parikh said.
“It puts more pressure on them for sure, but I think their desire to settle was pretty significant,” he said, referring to J&J.
J&J’s use of bankruptcy to address thousands of cancer claims has been the subject of intense debate, as opponents say it’s taking advantage of a system that’s not meant for healthy companies. But the Valadez verdict reinforces LTL’s claim that it faces significant financial distress, its attorneys said in a July 19 filing. Any one of the claims against the company could be worth “millions or even billions of dollars,” they said.
The company’s lack of financial distress was a key reason that its first bankruptcy attempt was dismissed.
Michelle Parfitt of Ashcraft & Gerel, another attorney representing claimants, said Kaplan should take a different lesson from the verdict. It shows that bankruptcy isn’t the right venue to resolve the baby powder claims, she said.
“Judge Kaplan is going to have to acknowledge this is very important to the process,” Parfitt said. “It’s a window into our system.”
The case is LTL Management LLC, Bankr. D.N.J., No. 3:23-bk-12825, 7/18/23.
