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Jan. 30 (UPI) -- A federal appellate court Monday rejected a bankruptcy claim from Johnson & Johnson, which has attempted to protect itself from thousands of lawsuits related to claims its talcum-based powder causes cancer. The Third Circuit Court of Appeals ruled the pharmaceutical giant erred when it put its subsidiary LTL Management into Chapter 11 bankruptcy.
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Johnson & Johnson created the subsidiary in 2021, specifically to handle the plethora of lawsuits against its popular baby powder.
Monday's ruling means the subsidiary is ineligible to file for bankruptcy protection from some 38,000 lawsuits.
The court ruled "only a putative debtor in financial distress" is able to file for bankruptcy protection. Had it ruled differently, the bulk of the lawsuits against the company would have been shielded from financial penalty.
The New Jersey-based company said last August it would end sales of the talc-based baby powder at some point this year.
It originally said in 2020 that it was discontinuing the product amid the thousands of claims filed by customers in the United States and Canada, alleging it causes ovarian cancer and other illnesses.
In June 2021, the U.S. Supreme Court declined to hear an appeal by Johnson & Johnson, letting a lower court verdict stand and awarding nearly $2.1 billion to a group of 22 women in a class action lawsuit. The women contended the talcum powder contained asbestos and was the cause of their ovarian cancer.
A state appeals court in that case reduced the original $4.7 billion figure awarded by a jury to $2.1 billion.
Overall, the company faces costs of about $3.5 billion related to verdicts and settlements.
"As we have said from the beginning of this process, resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders," Johnson & Johnson said in a statement Monday.
"We continue to stand behind the safety of Johnson's Baby Powder, which is safe, does not contain asbestos and does not cause cancer."
