By 
Johnson & Johnson has said it would stop selling talc-based baby powder worldwide after cancer lawsuits.
Photo: Imago/Zuma Press
A federal appeals court rejected
Johnson & Johnson
‘s plan to use a legal strategy to push about 38,000 talc lawsuits into bankruptcy court, hampering the controversial tactic the company and a handful of other profitable businesses have used to move mass personal-injury cases to chapter 11.
The Third U.S. Circuit Court of Appeals on Monday dismissed the chapter 11 case of J&J subsidiary LTL Management LLC, which the consumer-health-goods giant created in 2021 to move to bankruptcy court the mass lawsuits alleging its talc-based baby powder products caused cancer.
The unanimous ruling was a rebuke to an emerging corporate restructuring strategy in which companies facing mass tort litigation invoke a Texas law to create a new subsidiary with minimal business operations and make it responsible for tort liabilities before putting that subsidiary in bankruptcy.
A J&J representative didn’t immediately respond to a request for comment Monday. The company has denied that its talc products are unsafe and said resolving the tort claims in a chapter 11 plan was more efficient and fair for injury claimants than litigating or settling each claim one by one.
Write to Jonathan Randles at Jonathan.Randles@wsj.com
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