Johnson and Johnson reaches deal for $8.9B talc settlement
nytimes.com
nytimes.com
I'm extremely glad this tactic failed.
https://www.law.com/americanlawyer/2022/11/22/litigator-of-t...
The public benefit from presenting a vigorous defense in all cases (not just ones with sympathetic defendants) is to require the prosecution, as a matter of course, to actually prove their case in accordance with the law, something which should be required in a fair court system.
I can just as easily say that this tactic degrades prosecutorial effectiveness because it disincentives lawyers from taking cases. The corporations will just spin off and kill a business unit and no one gets compensated.
In this case, they would have recovered over $50 billion from the bankrupt company after the suit was paid off (assuming this deal covers all parties).
That they didn't need the tactic in the end doesn't make it any less sleazy to have attempted it.
On the contrary, doing that much extra work and complexity pays off mostly in organizational ways. Letting the current business operate without overly worrying about the progress of the trial (instead just having value removed by it), managing multiple plaintiffs, etc.
And if the total amount of lawsuits exceeds the value of the company, it prevents the earlier plaintiffs from getting 100% and the last plaintiffs from getting 0% (which results in more expensive lawsuits).
Which is less than the value of all of J&J, which should all be at risk for egregious misconduct.
> And if the total amount of lawsuits exceeds the value of the company, it prevents the earlier plaintiffs from getting 100% and the last plaintiffs from getting 0% (which results in more expensive lawsuits).
Sure, but it prevents everyone from getting what they should get from J&J in that scenario.
There's no way to give everyone what they're owed if there isn't enough money to go around. An orderly procedure is better than everyone rushing in with sharp elbows, and that's exactly why we have bankruptcy laws and courts - a system that works very well on the whole.
There's at least more money (significantly so!) in J&J as a whole than one of J&J's subsidiaries.
If my teenager had a car accident and injured you, I don't get to spin them off into a new standalone family unit and say "gee, sorry, you can't sue me!"
No there isn't. 61.5 billion in this subsidy, while the equity value of the whole company is 76.8 billion.
> If my teenager had a car accident and injured you, I don't get to spin them off into a new standalone family unit and say "gee, sorry, you can't sue me!"
Depends where you are; in a lot of states you wouldn't be liable.
> Depends where you are; in a lot of states you wouldn't be liable.
Take one of those states, then. In California, the parent is civilly liable if they granted the teen permission to drive the car. Should disowning your kid be a viable way out of that?
I mean, we have plenty of stories of people divorcing to avoid liability for their partner's medical/end-of-life care costs. So this stuff isn't limited to companies.
They should worry about it, that's the point of being put on trial.
You seem to be missing a simple matter - reciprocity.
These tactics are not available to me if I get sued by J&J, so why should they be available to J&J if they get sued by me?
"The Texas two-step allows solvent companies to shield their assets from litigants using protections that are normally reserved for bankrupt companies"
So I find your claims highly dubious that "wasn't as bad"
How can we make a campaign slogan specific to shit like this? Should we call it 'tough on some crime'? 'Tough on big crime?'
It’s already a slogan, there have been multiple presidential candidates in the last few years who made it a cornerstone of their campaign.
One of the things which draw us closer to each other is how we are able to make each other chuckle with stupid jokes.
Its a wonderful practice, you should give it a try.
>>This comment brought to you by Wheeties, Titie Whitites and 1955
I hate people that hate puns, because they are not Norwegian.
FTA - "The proposed settlement would be paid out over 25 years"
Inflation alone will wipe a big chunk of that value. Evan at 3% inflation, they will save over 2.5 billion in real dollar terms.
These diseases develop over time so there are claims that are unknown at this point in time but will appear in the future. It makes sense for a fund to be set up to cover future claims.
> Johnson & Johnson executives knew for decades about the risk of asbestos exposure linked to its talc products, including the famous baby powder
> Asbestos was first linked to ovarian cancer in 1958.
> In October, Johnson & Johnson recalled 33,000 bottles of baby powder after the Food and Drug Administration said it discovered evidence of chrysotile asbestos in a bottle
There is no need to establish scientific evidence for every single decision--in this case the causal link is already there (not to mention, who would fund a long term study on this?); it's just common sense (and knowledge) to assume long-term exposure to products containing carcinogens can elevate risk of cancer. Of course these corporations would never voluntarily admit to any wrongdoings.
https://www.nytimes.com/2023/04/04/business/media/johnson-jo...
This problem could almost certainly be put to rest if not only the companies were held responsible but equally so their employees. If employees knew life imprisonment was a likely outcome for their 'silence' things would almost certainly change.
This is obvious, what is not is why governments repeatedly fail to implement such legislation. That is, why is commerce so effective at being able to block governments from legislating thus?
They would choose to not work. In fact, no-one would be under that rule.
Liability must stop somewhere, and it stops at the corporate charter. Otherwise the risk is too great for any employee, to be held personally liable for actions of the company, but don't get the rewards, or call shots.
I simply do not believe that. If the rules are set correctly and everyone understands them then it's easy to work within those rules. For example, everyone knows not to fiddle the company's books—if one does and is caught then tough, one suffers the consequences.
Let's be clear about this, we're not talking about genuine mistakes or unforseen consequences, force majeure/Act of God or such but deliberate coverups when evidence of problems presents itself.
The rules would be simple, anyone who became aware of a dangerous issue would be liable to report it and be strongly protected at law from retribution by vindictive management. I would add this would be no different to Occupational Health and Safety law that already exists in many jurisdictions.
__
Edit: such laws would also be framed to avoid unnecessary damage to a company's reputation from trivial or even vindictive actions by wayward employees. Ways of reporting—both within a company and to government agencies—to ensure companies don't suffer undue harm already exist in some existing and proposed whistleblower legislation. They could easily be adopted.
More hard hitting justice for corporate malfeasance.
I don't know if this policy would make the world a better place. There are so many life saving or life improving technologies that would be delayed because of the burden of proving them to be "safe"
I suspect big companies would love to stifle the competition from small competitors who can’t afford to sink money into this type of analysis
Mind you I've been hearing about this mythical "little guy" that massive multinational corporations love to trot out when it comes to increasing regulations or taxes against them but over the course of my lifetime all I've seen is a massive increase in power and consolidation from these companies.
It's so odd realizing you live in a dystopian cyberpunk future without the pretty trinkets to go along with it.
This is the future all of us kids from the 1970s and 1980s BUILT on the premise of "wouldnt it be cool if...." -- We (and I am personally guilty, as are many HNers, of facilitating the "wouldnt it be cool if Cyberpunk tropes were reality?"
I helped build spying (marketing) infra, sentiment measures etc...
But the "little guy" that bigPharma preys upon is the 'patient' J&J needs corporate capital punishment, because this isnt the first time or only incident of them causing negative outcomes for profit (recall their tainted vaccines?)
It won't work for something like cigarettes where the risk is external but if the risk is to you, then you can manage it this way.
The thing is asbestos can occur naturally in and dirt all around the world. There are some places even in the US where dust storms are more dangerous just because this fact. Here's just a short memo about naturally occurring asbestos. https://ncceh.ca/sites/default/files/Naturally_occurring_asb...
I am not saying J&J should get off scotch free if they knew some sources of talc they were using had high levels of asbestos. However, I am gonna say it's not surprising that there may be some contamination. Moreover that's just one form of natural occurring contamination. There other minerals that naturally occur that also are unwanted contaminates such as heavy metals and so forth. What matters is are the contaminants reasonable low for a naturally sourced product since it's not possible to have zero contamination.
Johnson and Johnson knew their product had asbestos in it. It seems absurd they're not facing criminal charges. If I, as an individual, sold an asbestos tainted powder to people that resulted in deaths and cancer then there's a very good chance that I'd be spending the rest of my life in prison, even if I didn't knowingly do so. But if I do it as a massive global corporation, on a far wider scale, and with full knowledge of what I'm doing, my penalty is... nothing? I mean literally they're not even facing criminal charges, this was a civil suit. It just makes absolutely no sense whatsoever, and the stupidity of it all is enough to make one angry.
We have organizations like the FDA, etc., to ensure that the food and drugs we put in our bodies are safe. The reality is the gamut of technologies, products, and environments that impact our health are far more broad than “food and drug”; why not regulate them the same way?
I personally agree with the precautionary principle and think there should be stricter requirements for certain classes of new products, but the best solution is probably some type of compromise based on level of newness and possible danger.
The core problem is the "unknown unknown". There's no upper limit to how much testing you should do to ensure a product is safe because the space of possible dangers is nearly infinite. So any policy will be a balancing act of false positives and false negatives and what levels of each are tolerable. I think this is the proper question and it is not an easy one to answer.
In their case, $9 billion wipes out about three years of profit.
Perhaps the first comment was too harsh but let’s not be overly generous.
It looks like an $8.9bn settlement after $7.4bn in litigation expenses [1]. I would guess that is a substantial portion of J&J's total profits from talc-based products, inflation adjusted. Were that product an independent company, this would have bankrupted it. That's decent deterrence.
[1] https://njbiz.com/jj-offers-8-9b-to-settle-claims-talc-produ...
You’re claiming a tougher penalty would be fought less vigorously?
If you know you screwed up and instead of taking ownership you play the blame game, if you lose the lawsuit, you should be responsible not just for the actual damages but also you should be required to payout 100% of your own lawyer fees to the defendant as well.
I’m not even convinced this is actually a good deterrence. Companies have been criminally negligent since the birth of capitalism. They have caused immeasurable harm in multiple schemes in many ill guided attempts of making more and more money. These companies have gotten several fines, some CEOs have even been imprisoned, others have been forced into bankruptcy, and yet we see companies being criminally negligent, causing more harm, starting new malicious schemes, again and again. If these fines are supposed to be a deterrence, they are obviously not working.
There is no amount of “process improvement” that is gonna change basic human nature.
Now I do believe that capitalism is a bad system that should be abolished. However I am aware that that isn’t going to happen any time soon. In the meantime I’ll settle for companies and CEOs being held responsible for the crimes they commit under the influence of the profit motive. I’d also be happy if we would do something to abolish the class of ultra-wealthy, or at the very least strip them off their influence over our democracy.
If you wanna abolish capitalism, what system do you think should take it's place that wouldn't have human selfishness?
Just to be clear:
> I merely stated that this happens under capitalism, and it keeps happening, even when the justice system is applied in an effort of deterrence.
is an explicit accusation against capitalism in exclusion of some other system.
As I said, above, humans have been negligent since time immemorial. People put in charge of companies in socialist systems are also criminally negligent, usually though there are even fewer consequences for them.
https://njbiz.com/jj-offers-8-9b-to-settle-claims-talc-produ...
This is in addition to the settlement deal discussed here.
But really the whole point here is that without painful penalties, there is no deterrence whatsoever. Seeing 'megacorp knowingly sold asbestos tainted product for decades' is not even going to elicit a 'omg I can't believe it' from anybody not born yesterday. Nor will the fact that they faced a civil penalty that was but the mildest of prods on the wrist, and 0 criminal penalties. We seemingly have a government completely incapable of holding large corporations accountable for their actions. And that is seriously not normal, nor acceptable.
[1] - https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso...
Imagine if Google was fined 50% of a year’s revenue because of Google Voice.
That’s a massive penalty by any measure.
Kill a giant after it steps on people and other giants will learn to tiptoe.
It's an analogy, trying to take it too far will get silly.
This is the sort of punishment we need for corporations.
Everybody thinks personal injury lawyers are slimy but then quotes their “data” like it was proven fact.
People get cancer all the time. It’s very, very hard to prove a causal relationship.
Regardless of the numbers, for that to be true, you've got to be pretty convinced you've fucked up really hard.
And they make a ton of money doing it.
Maybe make a new law
Some new law would likely be needed. How could such a law be written in a manner that satisfies the vagueness doctrine?
This is a serious problem if you want to wait until a perfect law is written it won't be solved.
Also, can you provide a some other solution?
Considering laws exist for many types of actions it should be possible to make one in which knowingly producing and distributing any product for any price that you know to cause harm, and that harm is not made of aware of to the public in an obvious way, should be held liable for any damages that occur from the use of that product as indicated by the instructions
This includes people that approve of the actions and/or responsible for the subordinates involved in the production/approval of said products, in the company/subsidiary/any related entity, as long as that person was provided with the information or access to information that would allow them to ascertain the risk with a reasonable amount of accuracy. However, it shan't be required to show that person actually consumed or understood that information if it was expected that they do so.
The punishment must be but can not be limited to monetary fines which can not be purged through bankruptcy. <something about jail here>
etc etc.
Even if you were found liable in civil court you wouldn't lose all of your income forever. You would be able to declare personal bankruptcy and clear the debt.
I guess it depends.
From the net:
"Instances in which a court ordered judgment won’t be overridden by bankruptcy include debts related to:
Student loans
Any debt owed to the government, including taxes and fines
Court ordered awards related to criminal proceedings"
If you only consider the profit from the talc business, how much is the fine compared to profit?
If you're talking about punitive damages, the size matters. Making sure that the action is non-profitable is important. But at the same time, you can only expect so much oversight of small parts of a company.
2% of the net worth of a Fortune 50 company is not a small fine.
> Why should not a company be brought to its knees? You know, the same as citizens are?
I'd flip this question around. Why should citizens be brought to their knees? But often, they are not. Certainly not with civil actions.
That's your opinion and worth as much as any other. Second, it isn't even 2% amortized, which compounds the lack of impact.
The people who died over this are dead and aren't getting paid, so these kind of small payouts are minimal incidental damage.
Put one or two executives in jail and things will look different. Rob a bank, you go to jail. Rob people of their lives and you keep your well paid job and your company get slapped on the wrist.
Ultimately, the fines are paid by consumers. But jail time? That's a payment made by the guilty.
https://www.factsabouttalc.com/
The company liked to do a lot of performative charity events to convince ourselves that we weren't having a net negative impact on the world catering to some of the most vile corporate clients on the planet
More info about Saran wrap[2]. It's effectively 3000x more permeable to Oxygen that the old version.
[1] https://uspackagingandwrapping.com/plastic-wrap-101.html#:~:....
My guess is it'll never make a comeback. You can still get it, but maybe not in the formulation you used to get. I can't imagine too many companies willing to risk another class action just to make a few of us happier. Add it to the ever growing list of things we've had to give up on the altars of lawyers and social media.
As an aside, this has been a big deal for the ceramics industry, which uses talc in the production of clay bodies as well as glazes (think tile manufacturing -- DalTile uses so much talc that they recently bought their own mine to secure their supply).
Talc is an excellent material[1] that has been in use for decades, but its availability to the public has typically been driven by the demands of mining done on behalf of cosmetic industries. Since these lawsuits began and the talc supply dried up, ceramic industry has been scrambling for the past ~3 years to find alternatives with similar chemistry and working properties.
The network effects of industry and mining are pretty interesting (and frustrating to hobbyists, when your favorite materials disappear!).
AFAIK no link has been shown between lung cancer and talc. Likely none exists. Lung cancer links to stuff like Asbestos is limited to people like miners and factory workers who breathed the stuff in all day every day for decades. But generally speaking particulates are linked to lung cancer and other lung issues. Probably best to not breathe in clouds of the stuff but I wouldn't worry about normal usage.
(but don't inhale rocks, they are bad for your lungs)
See the recent thread about pharmacies having to pay huge fines for dispensing opioids as prescribed by a doctor. So now, pharmacies simply will not dispense them. People lose the freedom to get opioids for legitimate use, governments get plausible deniability they did something, and all for the political show of holding someone responsible.
I feel sorry for the people who have been hurt, of course. What crap.
When people later (inevitably) discover they got lung cancer, and it's traced to Johnsons & Johnsons Baby Asbestos, can they still sue J&J?
Edit: I now see that'll be phased out, later this year https://www.jnj.com/johnson-johnson-consumer-health-to-trans...
Corn starch as a replacement sucks compared to talc.
Studies can be replicated(or failed to do so) by a company the size of J&J.
When something “sounds” like it and you don’t have any evidence, it IS a conspiracy theory.
So presumably it's been addressed through closer monitoring, but the article does say that they plan to phase out talcum powder worldwide and replace it with cornstarch powder.
Edit: Apparently there are some studies which suggest talc itself could also be carcinogenic. I suppose this may be one reason why the issue is so confusing, because it's really 2 issues in one: a) whether talc that's sold is contaminated with asbestos, and b) whether talc itself is carcinogenic.
Allegedly. There's really good evidence that asbestos was making its way into he product in the 1970s, but evidence starts to get really thin starting in the 1990s. This is a settlement after all, so I wouldn't call it the final word on the subject.
I think " b) whether talc itself is carcinogenic." is a much more interesting question, but probably hard to answer at this point.
They have changed the process to remove the asbestos contamination, but have gone a step further in the US, out of risk-aversion, to replace the Talc with cornstarch entirely.
https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso...
IMO it's a sizeable enough amount to affect the company for a while, but I think it's unlikely it will prevent the same issues forever, simply because people in the company change and the underlying incentives are not influenced by a single event like this.
Edit: what I meant is that it the analogy would be like "this dishonest bit I did for this marginal extra income screwed my whole income"
Baby powder is < 0.02% of JJ revenue. The entire consumer segment is only ~14B (again, in revenue).
An 8B loss is very punishing for something that produced 0.02% of revenue (and probably wasn’t high margin?)
https://www.cnbc.com/amp/2018/12/17/talc-baby-powder-concern...
Oldish source
I’ll make another ill guided attempt at an analogy. If J&J was a criminal gang, and decided to venture into a new smuggling scheme. Then got caught, but as a punishment, they only had to pay a portion of their annual profits in a fine, but people would consider it huge because it was way bigger than what this smuggling scheme would have given them. Additionally no bosses were imprisoned.
A true justice system shouldn’t treat a malicious company any differently than a criminal gang.
I can’t tell what you’re trying to say. If people consider it huge, that means it’s a good punishment, no?
> I think this is ignoring the criminal part of criminal negligence. A crime was committed, innocent people got hurt. Justice isn’t served by merely nullifying the venture in a capital sense. No, a true justice punishes the responsible by stripping away their freedom. In a corporate sense this means taking away all your corporate profits way beyond what your little venture would have given you, imprisoning the people responsible (including CEOs), and even disbanding the whole company if the crime is severe enough.
Putting thousands of people out work because a small segment of a business did a bad thing isn’t wise
> Putting thousands of people out work because a small segment of a business did a bad thing isn’t wise
This is a hyperbole. Courts can split up companies, they can remove leaderships, they can confiscate the stocks, heck, if you are so worried about the workers, perhaps you should ask your legislator to introduce a law where a malicious company can be ordered to reorganize as a coop and given to the workers.
I’m confused how you can accuse me of hyperbole for stating that putting thousands of workers out of work is bad while it was you that suggesting disbanding the company for big enough crimes.
Splitting up a company isn’t really a punishment. Probably good for competition though.
Taking away stock is just a fine.
Reorganizing as a coop is just kind of dumb.
> A company paying a portion of their annual profit over two decades for knowingly risking cancer onto their customers probably fails every single of these groups.
How about 2,000x the annual revenue generated from the activity?
No. Companies should not be allowed to do crime, and the punishment should be proportional to the harm they caused, not to the revenue hypothesized by the scheme.
A crime syndicate does not have to pay 2000 times the amount they would have gained by smuggling drugs, no their mules go to jail, their CEO is hunted down by the military, and their whole organization is disbanded. Nobody cares about the workers in this instance (I wonder why).
> Reorganizing as a coop is just kind of dumb.
Yeah, Well, You know, that’s just like, your opinion, man.
It is proportional to the harm. And it is a massive multiplier over the amount earned by the scheme. If JJ only did Talc, they would be dead many hundreds of times over. But Talc is a tiny sliver of what they do. So they happen to be large enough to survive a massive blow from their talc operations.
Think about what you’re saying. It does not make any sense. You seem to be upset mostly that JJ still exists. Which is only true because they are large and diverse in many products that are completely unrelated to the line of business that caused the problem.
> A crime syndicate does not have to pay 2000 times the amount they would have gained by smuggling drugs, no their mules go to jail, their CEO is hunted down by the military, and their whole organization is disbanded. Nobody cares about the workers in this instance (I wonder why).
Because those workers are criminals, not office workers and factory workers, the vast majority of whom are ordinary Americans doing normal, productive, legal jobs that are unrelated to the fact that talc had asbestos.
And then got one 50k fine a few years down the line.
And then allowed to pay it over 25 years during a period of very high inflation.
A year from now that debt is considerably smaller in real terms, even if they pay zero.
Punitive damages for companies do feel out of wack though.
If a person commits a felony like that, they're thrown in prison, prevented from making any income for years, and then (in the US at least) prevented from making any good income for the rest of their lives due to our draconian restrictions on ex felons.
If a company does similar, then... the company itself is often just fine, especially if they're a big/rich enough company.
So if your yearly income is 200k, and I fine you 100k, that's no big deal?
Paid over 25 years, so $2800/year?
Factoring depreciation due to inflation @2%/year, you're at $55.5k total and an effective average annual payment of $2200/year or $183/month. On a salary of 200k.
Yeah, I'm going to say that's not a big deal. That's less than the cheapest health insurance in the country.
This would like if you earn 100k per year and after all of your rent/food/gas and other expenses were paid for, you had $10k left. And you were fined $5k, which you were able to payout at a rate of $200 per year for the next 25 years. For causing cancer and other diseases to tens of thousands of people.
Talc naturally has asbestos in it. J&J tested their talc and said the levels were so small as to not be a health hazard.
Lawyers brought civil suits claiming it was a health hazard.
The courts agreed.
The courts also agreed that breast implants cause cancer. Of course turns out they dont.
The bit where they decided a know carcinogen wasn’t going to cause cancer. That’s the shit they pulled.
You going to sue Nescafe into oblivion as well?
https://www.researchgate.net/publication/21242820_Ames_the_A...
In most cases the corporations or their lobby groups are writing the laws that regulate them. They literally write the bills and hand them to congress to pass.
At least give them a public shaming, if we cant find them criminally responsible.
https://www.reuters.com/investigates/special-report/johnsona...
That's part of the point actually, some of the people in charge at the time are probably still alive and would deserve to be brought to a court…