ATRA Reiterates Support for Chapter 11 Bankruptcy Use to Address Mass Tort Litigation, Urges Meaningful Dialogue Amid Senate Judiciary Committee Hearing
ATRA Urges Judge Kaplan to Prioritize Claimants’ Interests as Bankruptcy Proceedings Resume
LTL Management’s hearing on the plaintiffs’ motion to dismiss the bankruptcy proceedings begins June 27 and is scheduled to end June 30.
As Johnson & Johnson subsidiary LTL Management goes before U.S. Chief Bankruptcy Judge Michael Kaplan once again this week, the American Tort Reform Association (ATRA) urges Judge Kaplan to allow the company’s bankruptcy proceedings to continue.
In April, Johnson & Johnson announced that approximately 60,000 talc claims would be resolved through the bankruptcy process, allowing claimants to get fair resolution without having to wait through a lengthy trial.
“The bankruptcy system is the only viable process for addressing the challenges posed by the talc litigation,” ATRA President Tiger Joyce said. “The flaws inherent in the mass tort system, including high-dollar awards, low evidentiary standards, and minimal barriers of entry, have failed to serve the interests of all parties involved, except for plaintiffs’ lawyers and select claimants.”
LTL Management’s hearing on the plaintiffs’ motion to dismiss the bankruptcy proceedings begins today and is scheduled to end Friday.
The company initiated the voluntary Chapter 11 bankruptcy process, which presents a crucial opportunity to resolve the legal complexities surrounding talcum powder claims. By opting for bankruptcy, claimants can achieve fair resolution without enduring the delays and expenses associated with traditional litigation.
“The interests of claimants must be paramount in Judge Kaplan’s handling of the bankruptcy filing,” Joyce said. “The bankruptcy process offers a level playing field and ensures fairness for all parties involved.”
During an April hearing, it was suggested that plaintiffs’ lawyers stand to lose more than $780 million if claims are removed from the tort system and resolved through bankruptcy.
“Resolution of these claims should solely prioritize the best interests of claimants,” Joyce said. “The financial stake of lawyers should in no way compromise the integrity of the bankruptcy proceedings.”
Plaintiffs’ lawyers also have attempted to claim a common interest privilege with the U.S. Trustee in the case, supposedly a neutral party representing the interests of the U.S. government and taxpayers. It is not immediately clear what the nature of the common interest is between these parties or why they have asserted such a privilege.
ATRA has consistently supported the company’s use of the bankruptcy process to address talc claims. In February 2023 and in August 2022, ATRA filed joint amicus briefs in In re LTL Management, LLC before the U.S. Court of Appeals for the Third Circuit. The briefs highlighted why the use of bankruptcy to address litigation claims is a valid bankruptcy purpose that has been historically recognized by courts across the country. Resolution of mass-tort liabilities in bankruptcy court has been a key tool for U.S. businesses since the Bankruptcy Code was first enacted in 1978.
“Resolving these tens of thousands of talc claims through the bankruptcy process is the most equitable and practical approach,” Joyce said. “By upholding the interests of claimants and prioritizing their needs, Judge Kaplan can contribute to a just outcome in this complex and significant litigation and help ensure fairness, efficiency, and accountability within the legal system.”
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This is an opportunity to reassess the practices and regulations surrounding private-attorney contracting and to enact reforms that promote fairness, transparency and value for taxpayer dollars.
Allowing the company to continue the bankruptcy process will help ensure equitable and efficient resolution in complex mass tort claims