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Column: 3M foes act fast to capitalize on J&J’s talc bankruptcy defeat

  • March 1, 2023

Feb 2 (Reuters) – When a U.S. appeals court ruled on Monday that Johnson & Johnson can’t use the U.S. bankruptcy system to offload vast litigation exposure from product liability claims, the people who reacted most quickly were undoubtedly J&J investors.

Within hours of the 3rd U.S. Circuit Court of Appeals decision, investors drove J&J’s share price down by nearly 4% — its biggest one-day decline in years.

But another, albeit much smaller, group of people was also roiled by Monday’s ruling from the 3rd Circuit: appellate lawyers who were finishing up friend-of-the-court briefs due on Wednesday in a 7th Circuit appeal by 3M Co that presents issues similar to those in the J&J case.

The lawyers’ quick response to the 3rd Circuit’s ruling – redrafting sections of their briefs to add quotations and references to the J&J decision – shows the deep significance of these cases for both plaintiffs and corporate defendants ensnared in mass tort litigation. If your appellate brief addresses an issue that could affect hundreds of thousands of people, it’s worth rushing to beat a deadline.

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The 3M and J&J appeals aren’t exactly the same, but both involve the big-picture question of whether corporations facing an onslaught of lawsuits can use the U.S. Bankruptcy Code to halt litigation and push for a global resolution via the Chapter 11 process.

At the 7th Circuit, 3M is appealing a bankruptcy judge’s ruling that tens of thousands of military veterans who allege hearing loss from 3M earplugs can continue litigating against the parent company, despite the Chapter 11 bankruptcy of the 3M subsidiary that originally made the earplugs. Like J&J, 3M shifted litigation liability to the subsidiary, Aearo Technologies, but also provided the bankrupt entity with an uncapped financial

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