JOHNSON & Johnson (J&J) is weighing a third attempt to use bankruptcy to resolve tens of thousands of lawsuits that allege tainted talc in the company’s baby powder caused cancer, the healthcare giant told investors on Tuesday (Oct 17).

Erik Haas, J&J’s lawyer in charge of litigation, said during the company’s earnings call that it is working closely with law firms that represent “the vast majority” of claimants to come to a deal to end lawsuits that could potentially cost J&J billions of US dollars in legal damages if litigated.

“We’re pursuing a consensual resolution of the talc claims through another bankruptcy,” Haas said during the earnings call.

Courts have twice rejected J&J’s attempts to use the special powers of bankruptcy courts to end lawsuits by setting up a trust to pay victims. Bankruptcy rules let corporations put money into a trust that decides how much claimants should be paid, instead of allowing juries to decide whether a company is liable for damage caused by its products. Many J&J claimants have been vocal in their opposition to such an outcome.

In July, a judge in New Jersey rejected J&J’s second bankruptcy attempt, in which the company sought to resolve at least 40,000 suits for about US$8.9 billion. The judge said J&J did not meet the test imposed by a federal appeals court. The company has vowed to appeal that ruling to the US Supreme Court.

Clare Boyle, a J&J spokesperson, declined to comment further on the company’s plans to return to bankruptcy court to settle its talc liability.

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The first time J&J put a unit into bankruptcy to resolve the baby powder lawsuits, an appeals court ordered the case dismissed, finding that the company was not facing any imminent financial distress. J&J is one of the most profitable companies in the world, with a credit rating higher than the US government.

“It’s unbelievable that J&J would even think about trying to once again use the bankruptcy courts to cram down an unfair settlement on talc victims after being told twice before they are misusing the Chapter 11 system,” Andy Birchfield, an Alabama-based lawyer who represents thousands of women suing over cancers they blame on baby powder use, said on Tuesday. “We are not interested in allowing a wealthy corporation to try to force us into a paltry resolution of these cases.”

J&J now faces at least 51,000 lawsuits claiming talc used in baby powder and similar products caused cancer. During its second bankruptcy, lawyers said the company may eventually face about 100,000 claims.

A vote of alleged talc victims will be organised in the next six months to gauge potential support for a settlement, Haas said. Even if a third bankruptcy survived a challenge, the company would still need to win the backing of at least 75 per cent of claimant in order for a trust to be set up and all current and future lawsuits to be ended. BLOOMBERG