3M & Other Companies Might Follow J&J's Ch.11 Move

3M & Other Companies Might Follow J&J's Ch.11 Move

Introduction

Johnson & Johnson's (J&J) controversial bankruptcy move due to talc litigations will force the settlements for cancer victims, which will eventually result in the rest of the companies like 3M Co. and Dow Inc. following the same suit.

In February, a judge cleared J&J to use the legal bankruptcy move of Texas Two-Step, which is business-friendly. The move has shifted nearly 40,000 claims into a purposely created unit and has temporarily halted J&J's baby powder litigation.

Many legal experts stated that the ruling will stimulate other companies to implement a similar strategy to deal with the litigations. 3M is another company that faces similar product liability lawsuits over its earplugs designed for the military. J&J responded that the move was the only way to deal with the growing litigation costs. Attorneys for the cancer victims argued that the company is capable of paying settlements but has filed for bankruptcy to restrict the amount of settlement.

The court's decision to let J&J continue with bankruptcy is appealed by two victims groups. One of the groups said that the company's chapter 11 petition is not legitimate and was filed in a bad faith.

Other companies, including 3M, face 300,000 claims that are a part of an MDL with allegations of producing defective earplugs for the U.S. military. It is U.S.'s largest consolidated mass tort case. On the other hand, Dow Inc. faces more than 9,000 claims over accusations that its products cause cancer. Both the companies might follow the same strategy to dodge the growing litigations against them.