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The New “Asbestos Racket”: Is Baby Powder the Face of Class Action?

by: The Knowledge Group

October 21, 2019

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What’s today’s big news in class-action litigation? Baby powder.

Johnson & Johnson CFO Joseph Wolk has lamented that talc is now the face of class-action litigation. The anti-talc lawsuit business has grown into a $36 billion industry, Wolk said during the corporation’s third-quarter earnings call.

Making matters worse is a current powder recall after the FDA found asbestos in one of J&J’s talc bottles.

“[O]ur consumer talc products do not contain asbestos,” Johnson & Johnson responded, adding that cross-contamination or counterfeiting may be involved.

J&J Is “Big Business” for Plaintiffs’ Attorneys

Wolk told shareholders the company won’t keep reserve funds to cope with the 100,000+ lawsuits confronting various J&J consumer and medical products, because the company expects to fight and prevail over the “big business model for plaintiffs’ attorneys.”

As for talc-based claims, 15,500 suits against J&J are currently active. That’s up from 1,400 cases in early 2016. The Wall Street Journal has called such litigation “the next asbestos racket” and took note in 2017 when a California judge threw out a $417 million jury award.

Yet in 2018, a jury awarded an ovarian cancer patient $25 million. In 2019, Bloomberg News reported that federal criminal investigators were examining the corporation’s statements denying cancer risks.

And in 2019, Wolk says attorneys have spent more than $400 million to keep finding plaintiffs by marketing lawsuits on television.

Future Risks

Talc commonly forms alongside asbestos. In a federal case playing out in New Jersey, plaintiffs’ lawyers say J&J knew since the 1970s that talc mined in Italy and Vermont was retaining asbestos particles.

While J&J defends talc as harmless, baby powder payouts could ultimately cost the firm billions.

To date, Johnson & Johnson’s PR and legal strategies add up to a textbook case on how not to handle risk. Powering through without legal reserve funds sounds like the latest in a string of poor moves.

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