Shares of Johnson & Johnson (JNJ -6.87%) are tumbling on Tuesday. The company’s stock lost 6.3% as of 2:25 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite were down 0.4% and 0.1%, respectively.
The healthcare giant was rebuffed by a judge in its latest attempt to settle its yearslong legal battle.
Judge rejects $10 billion talc settlement once again
A bankruptcy judge in Texas dismissed J&J’s latest attempt to settle thousands of lawsuits that allege its baby powder and other talc-based products caused ovarian cancer. The $10 billion settlement was rejected by Judge Christopher Lopez, who ruled that the company didn’t offer enough time to properly collect the votes it needed from claimants.
There are tens of thousands of claimants and a majority would have needed to vote to accept the proposed settlement, which J&J claims it had. The judge said, however, that the “unreasonably short voting time” made the votes suspect and that at least half of the votes “cannot count.” This marks the third time Johnson & Johnson’s bankruptcy strategy has failed in court.
Following the ruling, Johnson & Johnson announced it would return to the courts to fight the cases individually and “defeat merciless talc claims.” The company has maintained that its products do not cause cancer and maintained ignorance of its baby powder containing cancer-causing asbestos. According to the lawsuits and investigative reporting from Reuters, the company not only knew, but actively kept the information from regulators and the public.
I would stay away from the stock until more information comes to light.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
