Johnson & Johnson Shareholders Vote to Continue Selling Asbestos Contaminated Baby Powder
Shareholders rejected a proposal asking Johnson & Johnson to stop selling its talc-based baby powder. The proposal needed a majority vote but failed to receive one at the company’s annual meeting of stockholders. Ending sales of the product was one of 14 issues being voted on at the meeting. J&J stopped selling talc-based baby powder in the United States and Canada after many lawsuits were filed claiming there was asbestos in its product. Talc can easily be contaminated by asbestos since talc formations can be found near asbestos formations. The lawsuits mainly involved people with mesothelioma and ovarian cancer. There have been around 40,000 lawsuits.
These lawsuits have cost Johnson & Johnson $4.5 billion in legal fees and settlements. There are still 25,000 lawsuits remaining. There were statements from both management urging the rejection of the ban and people who created the proposal requesting people vote for the passage of the ban. People claim that the sale of talc-based baby powder damages the reputation of J&J as a health-related product manufacturer and seller. In 2019, the FDA found asbestos in samples of talc-based baby powder, leading to a partial recall of the product. This led to talc baby powder sales being suspended in the United States and Canada.
Johnson and Johnson still claims that its talc-based baby powder is safe. It claims it stopped selling the product because of exaggerated reports of contamination, lawsuits, and less interest in the product. It also says that it regularly tests for talc and continues to find that there is no asbestos present in its product. Its reasoning for continuing to use talc in its baby powder is that it has decades of science showing that the product is safe.
Johnson & Johnson is one of the United States’ largest companies. Its market share is near $450 billion. It wanted to continue selling baby powder so it could separate its liabilities from its assets. It created LTL Management LLC, which immediately filed for bankruptcy protection. The bankruptcy plan was approved by a federal judge in February, which will make it cost less and will take less time because it doesn’t have to litigate individual lawsuits. LTL claims it has a net worth of $10 billion and has $10 billion in liabilities. There is also another $2 billion set aside by Johnson & Johnson for the bankruptcy trust. The company claims this is not an admission of guilt but rather an equitable and efficient way to settle claims in the talc litigation.
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