J&J to Pay $75 Million to Settle $6 Billion Baby Powder Suit (2)

Johnson & Johnson will pay $75 million to settle a consumer protection lawsuit filed by Mississippi over the company’s talc-based baby powder, according to people familiar with the matter, resolving litigation in which the state had sought as much as $6 billion.

The pact comes as lawyers for the state and J&J were gearing up for a non-jury trial next month in Jackson, Mississippi, said the people, who asked not to be named because the accord isn’t yet public. Mississippi was one of only two states to file suit over J&J’s marketing of its baby powder.

The state sued over J&J’s failure to warn consumers about the powder’s alleged cancer risks over nearly a 50-year period. The settlement comes as the world’s largest maker of health care products seeks to manage a growing number of suits by consumers accusing it of concealing the product’s risks, after two unsuccessful attempts to use the bankruptcy courts to impose a settlement on former users.

The decade-long litigation, along with the prospect of future cancer suits, has put a damper on J&J’s stock price, analysts such as JPMorgan Chase & Co’s Chris Schott have noted in the past. The shares were up 0.3% in New York trading.

“Consistent with the plan we outlined last year, the company continues to pursue several paths to achieve a comprehensive and final resolution of the talc litigation,” Eric Haas, J&J’s worldwide vice president of litigation, said in an emailed statement. “We will continue to address the claims of those who do not want to participate in our contemplated consensual bankruptcy resolution through litigation or settlement.”

Debbee Hancock, a spokeswoman for Mississippi Attorney General Lynn Fitch, didn’t immediately return calls Thursday seeking comment on the settlement.

Fines Sought

As part of its case, Mississippi asked a judge to order J&J to put a warning on baby powder sold in the state and force the company to pay as much as $10,000 per violation of the state’s consumer-protection laws tied to years of sales. Mississippi sought at least $6 billion in fines, the people said.

The pact follows J&J’s agreement in January to pay $700 million to resolve a probe by 42 US states into claims J&J wrongfully marketed its talc-based baby powder by not warning about possible cancer risks. Mississippi’s settlement wasn’t covered by that deal, the people said. Only Mississippi and New Mexico have actually filed suits targeting the company’s marketing of its baby powder.

J&J argues in court filings its talc-based products don’t cause cancer and it has marketed its baby powder appropriately for more than a century. It also notes federal regulators haven’t demanded it to post a cancer warning on the bottle. The company no longer makes or sells its talc-based baby powder, replacing it worldwide with a cornstarch version

The New Brunswick, New Jersey-based company offered to settle all current and future baby powder claims for $9 billion in the bankruptcy filing of one of its units. Lawyers for former talc users have rejected that offer. J&J has vowed to have a unit file a third bankruptcy case in hopes of facilitating further settlement talks.

At one point, J&J sought to use Mississippi’s case to get appellate courts to create a broad shield for the company from suits targeting its baby powder. But the Mississippi Supreme Court refused to find talc plaintiffs were precluded from suing the company since the US Food and Drug Administration refused to require it to include a cancer warning on the product after anti-cancer advocates requested them. The US Supreme Court later refused to hear J&J’s appeal of the state appellate court’s finding.

J&J said in securities filings last month it now faces nearly 60,000 suits from ex-talc users who blame their cancers on the powder. The company has settled a recent spate of trial-ready cases, but still faces some state-court juries later this year. A large number of talc cases are consolidated before US District Judge Michael Shipp in Trenton, New Jersey for pre-trial information exchanges.

On Wednesday, Shipp ordered a fresh review of the evidence plaintiffs are relying on to make their cases that J&J’s talc-based baby powder causes ovarian cancer. Shipp took over the case last year after ex-Chief District Judge Freda Wolfson retired. Wolfson had signed off on the ovarian-cancer evidence.

The case is Mississippi v. Johnson & Johnson, Civil Action No. 25CH1:14-cv-001207, Chancery Court for the First Judicial District of Hinds County, Mississippi (Jackson).

(Updates with details on fines sought.)

To contact the reporter on this story:
Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Peter Jeffrey, Steve Stroth

© 2024 Bloomberg L.P. All rights reserved. Used with permission.