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Johnson and Johnson sues researchers who linked talc to cancer

reuters.com

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Re: Johnson and Johnson sues researchers who linked talc to cancer

#71

Post by KennyBlanken »

nl wrote: post #20
FireBeyond wrote: post #5

Apropos of anything else, J&J's handling of this has been despicable. Creating an entity specifically to pick up all of the related liabilities, picking up those liabilities and then (exact count may be wrong, but it's very close) literally filing for bankruptcy within the space of three days. The Texas two-step, as it's called. > In 2021, the company spun off its liabilities into a new entity called LTL Management u…

Having read the Matt Levine piece linked below ( https://archive.is/KcL2P ) I think that J&J did the right thing by attempting to use bankruptcy to organize payments. It was not avoiding liability at all. The court that dismissed the claim in general agreed with J&J's process, but said it was too early. Some key quote from Levine: > Juries in the US don’t like it when companies make products that kill people, and the…

"Not running out of money to pay people fairly"?

$65BN is almost exactly equal to one year's gross profits for the company, on top of which J&J has $24BN in cash and a market valuation of over $400BN.

https://finance.yahoo.com/quote/JNJ/key-statistics/

That $65BN is likely decades worth of claims, not one lump sum being demanded at once. Assuming the claims are spread out over just one decade, the settlement costs would amount to around 10% of their gross profits. Over multiple decades, it starts approaching "rounding error on the balance sheet."

Framing this as "J&J might run out of money to pay people for this" is pretty disingenuous to the point of feeling like corporate apologism.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#72

Post by FireBeyond »

bagacrap wrote: post #50
darth_avocado wrote: post #28

Earlier quoted context omitted.

> This can lead to unfair results, not for you — who cares about you — but for your victims: If a $1 billion company has killed 100 people, the first 10 who sue might get $100 million each of damages, leaving nothing for the remaining 90. There is a valid point there, but one could argue it sets up unfair precedent for companies to act in bad faith if they can get off easy.

How is the business getting off easy in this scenario. It's dissolving. What else can we do to it?

J&J isn't dissolving. It's still throwing off a billion dollars a month in shareholder dividends, freed from the shackles of any liability.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#73

Post by mitthrowaway2 »

medler wrote: post #25
wak90 wrote: post #18

Earlier quoted context omitted.

It's really odd that Bloomberg somehow reports that businesses abusing liability and bankruptcy laws is good, actually.

He doesn’t say it’s good. He says that’s not what’s happening. If you think he’s wrong, please explain why. I genuinely would love to hear a well-reasoned critique of his analysis.

By his reasoning, it's J&J that should declare bankruptcy. Not create a bankrupt subsidiary.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#74

Post by FireBeyond »

ozzydave wrote: post #16
adastra22 wrote: post #7

Earlier quoted context omitted.

How is this effective? Wouldn’t the creditors pierce the corporate veil of this obviously transparent and self-serving setup?

OP is spinning this as an attempt by J&J to escape paying out the liability which it wasn’t - Matt Levine (of course!) explains the details here: https://www.bloomberg.com/opinion/articles/2023-01-31/matt-l...

They still are. Just indirectly. They set the amount that they were willing to fund the subsidiary to the tune of.

Must be nice, being able to say "Well, we'll give LTL $X and that can be used for settlements" while still throwing off nearly $X a year in profits, and 25% of X in shareholder dividends alone.

Why should a company be allowed to set and determine how much liability it needs to pay?

Re: Johnson and Johnson sues researchers who linked talc to cancer

#75

Post by [deleted] »

jjallen wrote: post #52
FireBeyond wrote: post #5

Apropos of anything else, J&J's handling of this has been despicable. Creating an entity specifically to pick up all of the related liabilities, picking up those liabilities and then (exact count may be wrong, but it's very close) literally filing for bankruptcy within the space of three days. The Texas two-step, as it's called. > In 2021, the company spun off its liabilities into a new entity called LTL Management u…

Do you really think companies can just avoid all of their liabilities two days before something bad happens and protect all of their assets? Bankruptcy law is hundreds of years old and is designed to protect creditors actually. That’s why there is a separate court to handle things and involved independent outsiders and judges that oversee things. It works and is used every time there is a financial crisis and thousan…

[deleted]

Re: Johnson and Johnson sues researchers who linked talc to cancer

#76

Post by jrflowers »

NoZebra120vClip wrote: post #38

External-use-only products based on talc have been yanked from all shelves in every pharmacy and grocery store nationwide, while ironically, talc still remains on the shelves in pill form: alli® is an OTC weight-loss medication. https://www.myalli.com/content/dam/cf-consumer-healthcare/my... I don't really want to think about the mechanism by which talc induces weight loss along with the active ingredient.

I think the same way. Seatbelts are made of nylon and I don’t really want to think about the mechanism which nylon makes a car move.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#77

Post by FireBeyond »

nl wrote: post #32
flagrant_taco wrote: post #27

Earlier quoted context omitted.

For one thing, this approach allows J&J to determine their maximum liability by only spinning off a certain amount to the subsidiary. It seems more fair to allow any and all claimants to sue J&J, or join together for a class action lawsuit. If the liabilities outstrip the company's total worth they can then go for bankruptcy of the entire J&J business and split assets proportionately across all liabilities.

> this approach allows J&J to determine their maximum liability by only spinning off a certain amount to the subsidiary. This is not what they did. To quote Levine's piece: > the box where J&J put its talc claims — could draw at least $61.5 billion from J&J to pay off those claims. The point here, the bankruptcy court concluded, was not to keep J&J from having to pay talc claims; the entire value of J&J’s consumer bu…

So they weren't bankrupt, then, because they had funding available for the entirety of any claims.

Which is why the judge dismissed the bankruptcy proceedings.

There's more nuance though than that.

> Moreover, New JJCI has agreed to fund the Debtor LLC’s Chapter 11 case and contribute $2 billion into a settlement trust for the benefit of the talc claimants as part of a Chapter 11 reorganization plan.

$2B = a lot less than $61.5B. And you can guarantee that J&J (who refiled the bankruptcy proceeding within 3 hours of it being dismissed) will fight that vehemently.

I like Matt Levine's reporting, but you'll forgive people for taking Bloomberg taking a pro-business position with more than a little grain of salt.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#78

Post by [deleted] »

User23 wrote: post #68
scott_w wrote: post #57

Earlier quoted context omitted.

That’s all well and good until you discover that you were affected by something else they did but you can’t sue them any more because they went bust servicing the talc powder claims.

Also maybe further hollowing out our country’s manufacturing base is kind of short term thinking.

[deleted]

Re: Johnson and Johnson sues researchers who linked talc to cancer

#79

Post by azinman2 »

SapporoChris wrote: post #15

This agency https://www.cancer.org/cancer/risk-prevention/chemicals/talc... seems to downplay the risk of cancer. Is it possible Johnson and Johnson have been maligned? I'm not an advocate, I'd be interested in seeing significant evidence that their product causes cancer. However, I'd like to see a firm distinction between talc and talc contaminated with asbestos. The link with asbestos and cancer is clear. I'm not c…

My understanding is that it naturally is in the material where talc is mined, so the inherent risk is always there.

Re: Johnson and Johnson sues researchers who linked talc to cancer

#80

Post by iancarroll »

jjallen wrote: post #52
FireBeyond wrote: post #5

Apropos of anything else, J&J's handling of this has been despicable. Creating an entity specifically to pick up all of the related liabilities, picking up those liabilities and then (exact count may be wrong, but it's very close) literally filing for bankruptcy within the space of three days. The Texas two-step, as it's called. > In 2021, the company spun off its liabilities into a new entity called LTL Management u…

Do you really think companies can just avoid all of their liabilities two days before something bad happens and protect all of their assets? Bankruptcy law is hundreds of years old and is designed to protect creditors actually. That’s why there is a separate court to handle things and involved independent outsiders and judges that oversee things. It works and is used every time there is a financial crisis and thousan…

It is a pretty well-documented strategy that has been done several times: https://en.m.wikipedia.org/wiki/Texas_two-step_bankruptcy

Not sure why you are treating it as an absurd concept.

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