J&J: Please Don’t Feed The Predatorts

Billion-dollar settlements with the litigation industry only encourage more junk science and more extortion

This week, Johnson & Johnson announced the agreement to settle the bulk of their non-asbestos associated talc lawsuits (around 76,000 cases) for as much as $5.5 billion. J&J had previously settled all mesothelioma cases (with claims linking their talc products with asbestos contamination) for an undisclosed amount.

According to the company’s press release, Erik Haas, J&J’s vice president of litigation, declared that the allegations in the lawsuits “lacked scientific merit”. In a series of recent cases, the plaintiff’s claims were thrown out for lack of any causal evidence. Of the 20 non-mesothelioma individual ovarian cases to have come to a verdict, J&J had only lost one.

But then Haas added that the $5.5 billion settlement “allows the Company to put this matter behind it”. The J&J shareprice briefly popped. How could J&J and its shareholders celebrate paying out $5.5 billion to law firms who lacked evidence in cases they were clearly losing?

Several years ago, J&J had tried to settle all of the outstanding cases by folding talc into a subsidiary that would declare bankruptcy with an $8 billion trust to handle the lawsuits (a so-called Texas two-step tactic). This strategy was thrown out by a judge with the simple logic: “If you have $8 billion, you aren’t bankrupt!”. We can assume that in the Kenvue spinoff, J&J had put $8 billion aside for the talc litigation costs. With the Kimberly-Clark acquisition of Kenvue expected to close in the second half of this year, that reserve fund needed to be settled.

What J&J are celebrating is that they did not have to pay $8 billion. But $5.5 billion is still $5.5 billion and if that is the price a company is willing to pay to have certainty and just move on, then investors should take a serious look at J&J’s concept of fiscal responsibility.

Legitimizing Extortion

Putting short-term clarity aside, as well as finality within a business sector that nobody seems to want, giving $5.5 billion to a band of Predatorts legitimizes their extortion strategy. Like glyphosate, there was no evidence to justify fifteen years of litigation. The Predatort Playbook involves a group of law firms assembling thousands of plaintiffs to file lawsuits in multi-district litigations targeting a single company with the intention of becoming a legitimate threat to the company’s existence.

The Predatorts goal is to terrify the shareholders (mostly fund managers) into demanding the management settle the cases so the parasites would go away. If the company’s market value declines more than the billion-dollar settlement target, such an extortion payout could be justified. This tactic was documented six years ago in my analysis of the Predatort Extortion Racket.

Most cases are bogus and the law firms have no intention of actually litigating the hundreds of thousands of plaintiffs they have traded like cattle by a type of misery merchants in a plaintiff victim exchange. Some case numbers were bought for less than a C-note. They are merely listed in caseloads as leverage for the desired settlement where most of the payout would go to the law firms. There will be non-disclosure agreements, but if past settlements are anything to go by, the lion’s share of the J&J $5.5 billion gift will go to the Predatorts.

And here is why this needless settlement disgusts me. J&J had always been a company that stood by its science and social responsibility. For 15 years, they fought these greedy Predatorts, including some of the more disgraceful caricatures like Mark Lanier, who called himself a magician for managing to fleece J&J out of billions without any real evidence. For the last few years, J&J were winning and vindicating their position that they were not responsible for the opportunistic claims made against them. At the same time, the litigation industry was getting schooled on ethics and judicial integrity.

Managing and servicing 76,000 plaintiffs over an extended period of time, before any prospects of coming before a judge, costs a lot of money to these highly leveraged law firms. With payouts often many years away, barring any appeal process, the law firms need to borrow heavily from litigation finance companies at loan shark rates and conditions. With a small law firm of under ten partners purchasing and processing 10,000 talc plaintiffs over five to eight years, facing the prospect of zero return would be enough to bankrupt most firms.

With my 2019 exposé on the litigation finance price gouging practices, I had made a plea to both Bayer and J&J to resist shareholder pressure and hold out, calling the Predatort extortionary bluff, and taking each case to court. I was certain that this approach would bankrupt perhaps half of the law firms drinking from the plaintiff’s bar.

J&J was doing just that, and being quite successful, until this week when they decided to gift the Predatorts with $5.5 billion. This will allow the law firms to pay off a large amount of their litigation finance debts, live to fight another day and perhaps pay a pittance to their thousands of plaintiffs. Worst of all, J&J’s regrettable action will once again justify the Predatort Extortion Racket and allow these law firms and their ecosystem of bottom-feeders to target another industry without any evidence or legitimate grounds.

J&J may claim a victory in reducing their payout by $2.5 billion; the Predatorts will share in the winnings; but there is one group that certainly cannot declare victory: that is the pathetic body of scientists who answered the Predatort call to link talc to cancer but could not provide sufficient scientific evidence needed to convince judges and juries.

An Embarrassment for IARC

My three-part exposé into IARC’s third monograph on talc (summarized in the Firebreak here) showed how it was designed and executed simply to provide evidence for the ongoing talc litigations. The methodological contortions IARC went through to reach the conclusion that talc was probably carcinogenic not only failed to persuade judges and juries, it also failed to convince many members of IARC’s own panel of experts for the talc monograph.

As seen previously with case studies on IARC’s benzene, glyphosate and gasoline monographs, the international cancer agency’s hazard assessments have become nothing more but an artificial evidence mill for the US litigation industry. Many experts serving on IARC panels then enter the revolving door, taking their credentials to law firms to work as highly-paid litigation consultants. But the twists and turns to declare talc carcinogenic was just too evidence poor to have any legs. As hard as IARC tried to twist the methodology, their conclusions on the carcinogenicity of talc could not stand up in court.

With the US government declaring that conclusions from IARC monographs would have no value within the American regulatory process, and with the US leaving the cancer agency, the game seemed to be up. IARC will soon be as irrelevant as its sister group, the Ramazzini Institute.