bankruptcy, J and J vs 3M

Johnson & Johnson wins a key court battle in baby powder case

A federal judge has allowed a company spun off by Johnson & Johnson to proceed with a controversial bankruptcy, despite complaints from thousands of people who say they were harmed by the consumer product giant’s baby powder and who could now be denied a chance to sue.…

3M Can’t Use Bankruptcy to Halt Lawsuits Over Combat Earplugs, Judge Rules

US Bankruptcy Judge Jeffrey J. Graham refused to temporarily halt the lawsuits accusing 3M and its bankrupt subsidiary, Aearo Technologies, of selling faulty combat earplugs that damaged the hearing of veterans who used them.…

What is the difference in the two cases?

J&J, domiciled in New Jersey, used a Texas state law to stand up a fake company, domiciled in North Carolina, with no assets, no product, and no revenue. The talc liability was then transferred to the fake company, which declared bankruptcy the day it was formed. The judge has declared this Shiny.

3M is trying to declare a fully consolidated division bankrupt, while the rest of 3M continues raking in profits, immune from the liabilities of the division. This judge apparently does not recognize the imperative of not “burdening” the “JCs”.

Both cases are in Federal court. Can’t help but wonder if they will ride a narrative of “JC” privilege all the way to SCOTUS, Maybe we will get a broad decision by “unelected judges legislating from the bench” that all product liability suits are, in the narrative of the early 2000s, “junk”? That would save Congress the bother, and give them plausible denyability, in achieving the sort of “tort reform” advocates have wanted for years.



J&J … assigned legal liability for the complaints to the spinoff company, which immediately filed for bankruptcy — a maneuver dubbed the “Texas two-step.”

Mind boggling. So any US company can get rid of liabilities at will by ‚assigning‘ them to newly-founded shell companies? What‘s next - contractual liabilities, pension liabilities, fines?

In awe of the highly-developed US legal system…


Mind boggling. So any US company can get rid of liabilities at will by ‚assigning‘ them to newly-founded shell companies? What‘s next - contractual liabilities, pension liabilities, fines?

The envelope on handling these issues is being stretched to exceptionally shiny degrees.

A few years ago, Honeywell spun off it’s automotive turbocharger division as Garrett. Garrett was a real company, with facilities, products, and revenues. Garrett, which had never produced a product using asbestos, was required, as part of the spinoff, to pay for Honeywell’s asbestos liability from certain other divisions. Even though Garrett was a real company, it was incapable of funneling as much money into Honeywell as it wanted, so Garrett went BK. The bankruptcy judge, removed the asbestos obligation from Garrett, so the asbestos liability is apparently back in Honeywell’s lap.

J&J went a step farther than Honeywell. Instead of spinning off a real company, they created a fake company. The judge declared the scheme Shiny. In the back of my mind is the thought that J&J’s plan to spin off it’s consumer products division is a backup plan. In case the fake company “Texas two-step” ultimately fails, J&J can dump the talc liability on the consumer products spin-off, which will probably drive it into BK.

3M is trying to skip the spin-off step entirely, claiming that one division of a very healthy company is BK, as if it was a separate company with no other assets to draw on to meet it’s obligations. The judge hearing this case is apparently behind the curve on “JC” privilege.

In awe of the highly-developed US legal system…

As some have said of the “Private Equity” business model* “in most countries, this would be fraud. In the US, it’s perfectly legal”.

Oh, on the pension liabilities, a popular move now is to engineer a bankruptcy, and dump the pension obligations on the PBGC. Of course, most US workers saw their company paid, defined benefit, pensions taken away decades ago, replaced by a 401k that is mostly the employee’s money anyway.


*take control of a company, have the company borrow every nickle it can, bleed all the cash out of the company with “management fees” and “consulting fees”, then the PE group runs away with it’s loot, dumping the looted company into BK, stiffing all the other stakeholders.


Viewed from another angle, it is difficult to find fault with JNJ’s behavior. The concept that talc, applied to the nether regions of women, is able to swim upstream vaginally, to provoke ovarian cancers, just boggles the mind. The arrival of talc, even deposited vaginally via condom, through the cervix, across the endometrial cavity, and up the fallopian tubes, is against the general flow of mucoid secretions. The Fallopian lining is ciliated, pushing everything in an outward direction. This is why sperm have tails.

Gross miscarriage of justice based on thin evidence of possible minimal increased risk, all based on patient interviews of past use of talcum containing products.



Viewed from another angle, it is difficult to find fault with JNJ’s behavior.

I agree that, to the untrained, the probabilities of how the talc migrated seems remote, but it apparently did. Reportedly, J&J stated repeatedly that there is no asbestos in their talc. What J&J is doing, cherry picking a law from a state where the company is not domiciled, and spinning off a fake company that is set up to fail, to bear the liability, is clearly abusive.

3M does seem to be following J&J’s lead in creating a spin-off that is a real company, like Honeywell did with Garrett, in case their more questionable tactic of declaring a wholly owned subsidiary BK, is disallowed.

Jul 26 2022

3M will spin off its health-care business into a new public company

The new business will focus on wound and oral care, health-care IT and biopharma filtration, the material science company said in a release.…

Bet the ear plugs will be deemed “health care” and the liability fobbed off on spinco.


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I can appreciate a visceral reaction to the legal machinations that corporations use to evade their legal responsibilities. That is not the case here.

There is not a minimal chance that talc could reach the ovaries via a vaginal route, there is a zero chance. First It would have to move against vaginal flow to reach the cervix. Through most of the menstrual cycle, the cervix has an impenetrable mucus plug. During ovulation, the mucus thins, but active propulsion is necessary to penetrate it.

Postulate that vigorous intercourse might introduce talc into the uterine cavity does nothing to further the argument. Again, flow is outward. Finally, the fallopian tubes are ciliated and sweep everything down and out.

There is as much logic here expecting items introduced into the rectum the wind up in the stomach.

JNJ mentions asbestos because some talc has trace amounts of asbestos present. There, you might get cancer from inhalation as asbestos is known to provoke mesothelioma. JNJ states their talc is free of asbestos. The association of talc to neoplasia is very weak and not established in humans.

Let me guess. This was a jury trial, no?