Imerys SA, which mines talc used in Johnson & Johnson’s iconic Baby Powder and other products, agreed to turn over its North American operations to resolve more than 14,000 lawsuits claiming the mineral caused cancer in some consumers.
Imerys Talc America, Imerys Talc Vermont and Imerys Talc Canada — units that sought bankruptcy protection last year — will be sold at auction with the proceeds going into a trust to compensate talc victims, the company said in a statement. In return, plaintiffs will drop their suits, allowing the businesses to emerge from Chapter 11. Paris-based Imerys SA, the company’s parent, didn’t file for bankruptcy protection.
The deal aims to end six years of litigation over Imerys’s role as the sole talc supplier for J&J. Consumers allege asbestos-laced talc causes one kind of cancer, while the mineral on its own causes another. J&J faces almost 20,000 suits making the same allegations, according to its latest regulatory filing.
The Imerys auction plan “provides a favorable solution for all stakeholders, including representatives of current and future claimants in talc-related litigation,” the company said in its statement early Friday.
Shares of Imerys surged as much as 8.1% in Paris after the settlement was announced.
J&J and Imerys have faced talc suits since 2014. Of those that have gone to trial, some juries have hit the companies with hundreds of millions of dollars in damages for their alleged mishandling of the product. The companies have had some verdicts wiped out on appeal.
In 2018, Imerys agreed to pay $5.5 million prior to trial to settle claims by 22 women arguing its talc was tainted with asbestos. In that same case, a jury ordered J&J to pay $4.7 billion in actual and punitive damages to the women over their Baby Powder claims. The case is on appeal in state court in Missouri.
Women contend internal memos show J&J knew in the early 1970s that some of its powder contained asbestos. Others contend that just using the mineral on their genitals could cause ovarian cancer. J&J and Imerys deny talc causes any form of cancer and argue years of testing found the product to be safe. The companies also dismiss claims they improperly marketed their products and wrongfully targeted minorities.
As the talc suits mounted, defense costs became a drag on Imerys’s revenue, as did disputes with J&J and insurers about responsibilities for those costs, court records show. Imerys executives said they concluded the company lacked “the financial wherewithal to remain in the tort system” and decided Chapter 11 “was their best option.”
“This is one solid step in trying to get a measure of compensation for many people hurt from talc,” Mark Lanier, a Texas-based plaintiffs’ lawyer who served as head of the Imerys creditors committee, said in an emailed statement. “This is really a call for all talc producers and sellers to find a way to comprehensively settle all legitimate talc-cancer cases,” said Lanier, who won the $4.7 billion verdict against J&J in 2018.
Other companies have used bankruptcy to resolve mass-tort litigation.
Opioid maker Purdue Pharma LP filed for Chapter 11 last year with a $10 billion plan to sell assets to resolve thousands of lawsuits alleging it fueled the U.S. opioid epidemic by illegally pushing sales of its addictive OxyContin painkiller. The Purdue plan has been stalled by opposition from some states and local governments, who are demanding the company and its owners, the Sackler family, pay more.
Unlike with Purdue, Imerys officials came together with a committee representing talc victims to craft a deal that calls for the company to hand over as much as $132 million in cash and notes to help fund the trust’s initial operations, according to the company’s disclosure statement.
Some of that contribution is contingent on how much the North American businesses fetch at auction, which may include a bid from Imerys SA to buy back the assets, court filings show. Those units make talc that’s also used in plastics, ceramics and paper, and generated about $174 million of combined revenue in 2018.
Imerys also is relinquishing its claims to insurance covering the talc cases, which could total more than $2 billion, according to court filings. But the talc producer is fighting in court with some insurers over whether the talc claims are covered.
Likewise, the trust may be entitled to demand J&J kick in money to former Baby Powder users who developed ovarian cancer or mesothelioma, a form of cancer linked specifically to asbestos exposure.
“J&J has refused to acknowledge or accept its indemnification obligations and has disputed the scope of coverage,” Imerys said in court filings.
Jake Sargent, a J&J spokesman, declined to comment.
The plan also makes provisions for former Baby Powder users who develop cancer in the future. Imerys tapped James Patton, a veteran bankruptcy lawyer, to represent potential future claims against the trust.
Imerys officials are hoping the reorganization plan will get final approval before the end of the year from U.S. Bankruptcy Judge Laurie Silverstein. A hearing on the plan is scheduled for June 30.
The case is In Re Imerys Talc America Inc., 19-10289, U.S. Bankruptcy Court, District of Delaware (Wilmington).
–With assistance from Steven Church, Andrew Noël, Myriam Balezou, Finbarr Flynn and Albertina Torsoli.
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