A Dallas Fort Worth lawyer, representing some 4,000 plaintiffs in a lawsuit against Johnson & Johnson, which is currently being litigated in bankruptcy court, is also accusing the baby powder manufacturer of having tested asbestos on African American incarcerated individuals in the 1960s. Johnson & Johnson does not deny the allegations.
“The testing came to light through unsealed, evidentiary exhibits that were presented in prior trials that had taken place in talc litigation,” said Majed Nachawati, a partner in the Fears Nachawati Law Firm. “They were injecting asbestos into African American male prisoners to conduct testing on the prospective effects of asbestos on humans.”
None of the exhibits showed any testing on caucasian inmates, according to Nachawati.
“That is the definition of — at a minimum — racism and inhumane, cruel, and barbaric treatment,” he said. “It speaks volumes about what the company’s values were and the conduct they engaged in.”
Nachawati further alleges that Johnson & Johnson’s targeting did not stop with prisoners.
“When we did the discovery, documents were uncovered showing that they specifically targeted the African American community with their talc-based products that had asbestos in them,” he added.
Johnson & Johnson admitted to targeting African Americans in the past but told The Dallas Express that this type of testing was discontinued more than 40 years ago.
“Our ethical code is aligned with today’s advanced protocols and the latest ethical guidelines from leading medical institutions,” said Melissa Witt, a J&J spokesperson.
“At the time of these studies, nearly 50 years ago, testing of this nature among this cohort set was widely accepted, including by prominent researchers, leading public companies, and the U.S. government itself,” Witt explained.
She continued, “We deeply regret the conditions under which these studies were conducted, and in no way do they reflect the values or practices we employ today. As the world’s largest healthcare company, our transparent, diligent approach to bioethics is at the heart of all we promise our customers and society.”
Nachawati’s plaintiffs are among the women nationwide who allege they developed ovarian cancer after using the talc powder. However, Johnson & Johnson’s bankruptcy filing has delayed the litigation.
“The bankruptcy judge issued an opinion ruling that Johnson & Johnson can move ahead with the bankruptcy process for this subsidiary that it created,” said Tiger Joyce, president of the American Tort Reform Association (ATRA).
Specifically, on February 25, Chief Bankruptcy Judge Michael B. Kaplan of the U.S. District Court of New Jersey upheld Johnson & Johnsons’ bankruptcy claim through its subsidiary LTL Management, which was filed using the Texas Two-Step.
“The Court’s comments are not intended to dismiss or discredit the inarguable benefits of our tort system and the essential work of our plaintiffs’ bar in bringing about corporate transparency and vindicating the rights of those victims who are ill-equipped to pursue their rights against large corporate defendants,” Kaplan said in his 56-page opinion.
He continued, “In this vein, we can all point to concrete illustrations where such litigation has been responsible for necessary safety reforms and health measures. What the Court regards as folly is the contention that the tort system offers the only fair and just pathway of redress and that other alternatives should simply fall by the wayside.”
The Texas Two-Step refers to Section 1.002(55)(A) of the Texas Business Organizations Code, in which a corporation is split into two separate entities, as previously reported in The Dallas Express.
For example, in Johnson & Johnson’s case, the first company — LTL Management — was saddled with the claims, while the second company — Johnson & Johnson Consumer Inc (JJCI) — took on the corporate assets. LTL Management then filed for bankruptcy to litigate the claims as a subsidiary on behalf of Johnson & Johnson.
“The bankruptcy process is a single forum to resolve claims, with the bankrupt entity having to go through the process of essentially providing its assets that would then be divided up under the rules of bankruptcy,” Joyce told The Dallas Express. “So, it’s not a case of not compensating. It’s compensating under different rules and different procedures.”
However, those different rules and procedures are disadvantages to the plaintiffs by lowering the payout they would have received in a trial, according to Nachawati.
“What’s at stake is, ‘Justice delayed is justice denied,'” he said. “In general, all these people who are dying, their cases have stayed. Their lives are in the hands of a bankruptcy court right now. We can’t get to trial anywhere because there’s an automatic stay. Filing for bankruptcy stops all litigation.”
A stay on a legal case refers to a pause when a judge’s decision is appealed to a higher court.
University of Chicago Law School Professor Anthony Casey told The Dallas Express that the Texas Two-Step bankruptcy would not reduce the number of payout plaintiffs will receive.
“There’s this funding agreement that says the liabilities will be paid up to the value before this merger divided the two entities,” Casey said. “In that way, the asset value of JJCI was not separated from the liabilities because the funding agreement brought it with.”
The funding agreement in the Johnson & Johnson bankruptcy provided for $60 billion, according to Nachawati.
“The funding agreement here says the talc liability will be funded up to the value of JJCIs assets at the time of the merger, and if those assets go up, the value of the funding goes up with it,” Casey added. “It’s hard to see how that reduces the available payout.”
Plaintiffs have vowed to appeal Judge Kaplan’s denial of their motion to dismiss the bankruptcy partly because Nachawati said Johnson & Johnson only offered to fund the $60 billion agreement with $2 billion.
“The funding agreement that was created purports to be the value of the company but, in our view, the value of these claims far exceed what these cancer victims would receive under a bankruptcy resolution if there ever is one,” Nachawati said in an interview. “So, in other words, their liability, had they not filed bankruptcy and had this funding agreement, could be larger than $60 billion.”
When asked about the funding agreement, Witt did not respond to requests for comment.
“If the claims were in the jury system instead of the bankruptcy court, the claims could exceed the $60 billion, but what they created were all shell companies,” Nachawati alleges. “So, it would be a bankruptcy of a remote entity that they created for this liability purpose.”
