© Reuters. FILE PHOTO: A bottle of Johnson and Johnson Baby Powder is seen in a photo illustration taken in New York, February 24, 2016. REUTERS/Mike Segar/Illustration
By Maria Chutchian
CHARLOTTE, N.C. (Reuters) -A U.S. judge gave Johnson & Johnson (NYSE:) a temporary reprieve from tens of thousands of claims that its talc-based products cause cancer, but handed the drugmaker a potential setback by moving the cases to a court where the outcome might be less favorable.
U.S. Bankruptcy Judge Craig Whitley in Charlotte, North Carolina put the claims on hold for 60 days, while directing that they be moved to a federal court in New Jersey.
The judge said at a hearing that New Jersey was the “most natural fit” for the claims because J&J is based there, and the state is home to much of the nationwide litigation over its talc products.
J&J has maintained that its talc products are safe.
While New Jersey is its home state, it wanted the claims to stay in North Carolina because of that court’s experience with so-called “mass tort” bankruptcies, and because of favorable legal precedents.
“Although we believe this case was properly venued in North Carolina, we will continue to work with all parties to seek an efficient and equitable resolution,” said John Kim, chief legal officer of LTL Management LLC.
J&J created LTL to hold its talc liabilities shortly before placing it into bankruptcy, where it hopes to settle the talc claims separate from the parent company.
J&J shares were up 0.9% at $164.00.
Lawyers for the plaintiffs were not immediately available for comment on Whitley’s ruling.
The New Brunswick (NYSE:), New Jersey-based company has spent close to $1 billion defending against nearly 40,000 legal claims that its baby powder and other talc-containing products caused mesothelioma and ovarian cancer.
Settlements and verdicts have cost J&J about $3.5 billion more, although it has prevailed in some cases.
LTL had argued that letting the litigation proceed would defeat the purpose of the bankruptcy, which was to consolidate and settle all talc claims, and that a claim against J&J was effectively the same as a claim against the bankrupt subsidiary.
It also said the litigation would reduce insurance proceeds available for a settlement, because the same policies covered J&J and LTL.
Lawyers for some talc users who later got cancer and their families said J&J should not reap the benefits of bankruptcy protection when it has not filed for bankruptcy itself and is financially strong.
Other plaintiffs said shielding J&J would interfere with upcoming trials. “Such overreach is unprecedented in a mass tort bankruptcy,” their lawyers said.
Read More: U.S. judge temporarily halts Johnson & Johnson talc cases, moves them