JOHNSON & JOHNSON BABY POWDER LAWSUITS

Reaching the status of becoming a household name is a goal that many brands attempt to achieve, even though only a select few succeed. Once this staple status is fulfilled, many brands will either become well-established within the consumerist public and have a specific product that is unequivocally linked to the brand. For example, although there are many brands of instant macaroni and cheese in the United States, the most ubiquitous is Kraft’s. Likewise, for Johnson & Johnson (J&J), the talc-based baby powder sold in an iconic white bottle became the product that established and solidified the company’s wholesome image nearly over a century ago. Companies strive to become a household name because the status comes with a multitude of perks, such as automatic consumer trust. But what happens when a breach of trust occurs between the public and the brand?

Formed over a century ago in 1886, the brand and pharmaceutical giant J&J has recently come under scrutiny for not only going through a lawsuit over the existence of asbestos in its talc-based baby powder, but also attempting to split its baby powder from the rest of its company via the establishment of a separate subsidiary. Although this split does not seem like a big deal at first glance, the numbers behind it would tell otherwise. The J&J Baby Powder offshoot, known as LTL Management, is valued at $2 billion — an amount that pales in comparison to the $440 billion that the entire pharmaceutical company is worth. Accounting for just $2 billion of its parent company’s value, the split guarantees that lawsuit plaintiffs will win smaller sums of money from LTL management than they would have with the J&J parent company.

Although J&J denies that the creation of the subsidiary is related to the baby powder suits, the company is facing nearly 40,000 lawsuits alleging that its baby powders and other talc-based products contain asbestos, a carcinogenic substance. Evidence against J&J is growing, and thousands of individuals, predominantly women who have developed ovarian cancer, have announced that J&J did not warn them of the potential risks of asbestos contaminating the baby powder.

Additionally, the March 2020 move to discontinue sales of their famous talc-based baby powder from the North American market paints a negative picture of the company. To counter this, J&J is denying that their baby powder contains carcinogens and continues to claim that the split has nothing to do with the suits. A 2018 investigation by Reuters, however, uncovered that the company was aware of asbestos in its talc-based products for several years but chose to keep the information undisclosed. This evidence, which includes internal documents between company leaders and other forms of verification of J&J’s knowledge, has aided in furnishing favorable lawsuit verdicts for the plaintiffs.

The push to establish LTL Management, which would inherit most of J&J’s baby powder lawsuits, can be seen as a strategic move to retain funds for the parent company. Almost immediately after LTL Management’s inception, the subsidiary company filed for Chapter 11 bankruptcy, a costly and long process in which the debtor is able to negotiate with creditors for the terms of the loan without having to liquidate their assets. Even though J&J is headquartered in New Brunswick, New Jersey, the corporation chose to split into two companies in Texas. The state has a controversial law called the “Texas Two-Step” that at its core is a restructuring method that companies can use to safeguard themselves in cases of mass tort litigation. While splitting into two companies in Texas, LTL Management chose to convert into a North Carolina Limited Liability Corporation (LLC), a business structure that safeguards its owners from personal responsibility for the company’s liabilities or debts, in order to file for bankruptcy. While many other states such as New Jersey do not have such archaic law which would most likely make the lawsuit much harder on the company, the Chapter 11 protection law in North Carolina momentarily pauses litigation against the bankrupt entity.

Not only is the well-known pharmaceutical company undergoing lawsuits and creating a separate subsidiary for its baby powder, Johnson & Johnson is also separately splitting into two different companies: one focusing on consumer health products and over-the-counter drugs, and the other focusing on pharmaceuticals, medical instruments, and vaccines. While the company denies that the influx of lawsuits are the reasons for the company-wide split, which include the United State’s nationwide opioid crisis and the sunscreen suit involving Costco Wholesale, many legal scholars suspect that one of the motivations behind such a decision was because of the social and legal reckoning the company is currently facing.

For context, J&J is one of the three leading drug distributors that are getting sued for their role in the United State’s nationwide opioid crisis. Over half a million people died from this crisis between 1999 and 2019, while 2020 ended with 69,000 deaths due to opioid overdose, a number likely aggravated by the pandemic. While most believe that there are a multitude of players to blame for the uptick in deaths as a result of the opioid crisis, blame continues to be shifted from manufacturers to distributors, from doctors prescribing the drugs to pharmacists filling prescriptions, etc. While progressing, these lawsuits do not seem to be reaching an end anytime soon.

For most, Johnson & Johnson is a trusted brand whose products can be easily found in any local store. The many lawsuits the company is facing, however, raises questions about consumer safety and whether regulations of consumer products of private companies are too lax. While the public has confidence in the products of established labels, the multitude of lawsuits filed against J&J’s products are causing consumers to question the sanctity of such brands.

- Jessica Cheng