Did Johnson & Johnson's Proposed $8B Talc Bankruptcy Plan Just Jump to $9.1B?

More than a decade after taking on Johnson & Johnson with the first trial linking baby powder to ovarian cancer, attorney Allen Smith has signed off on a proposed bankruptcy plan after negotiating for an additional $1 billion.

Smith, of the Smith Law Firm in Ridgeland, Mississippi, said he would recommend the plan to his 12,000 talc clients. Despite opposing J&J’s prior bankruptcies, both of which were dismissed, Smith said he negotiated adding another $500,000 to an initial $6.48 billion for current talc claimants. And J&J also increased the plan’s total value, when including future talc claimants, to $9.1 billion from $8 billion, Smith said.

“I fought against bankruptcy there based on the terms on the table, and, after my negotiations with Johnson & Johnson over the past month regarding the potential bankruptcy refiling, when they put the additional money in to compensate my clients, I agreed,” he said.

“Is this settlement perfect? No. No settlement is perfect,” he added. “Does this settlement offer fair and reasonable compensation to my clients in a timely manner? 100%.”

Smith, however, has partnered with Beasley Allen in representing all 12,000 talc claimants. And Beasley Allen, in Montgomery, Alabama, continues to oppose J&J’s proposed bankruptcy plan.

“I’m going to recommend it to my clients,” Smith explained when asked about his and Beasley Allen’s contrasting positions. “What I’ve always been about, and continue to be, is the best interest of my client. I have no other motivations.”

Andy Birchfield, a principal with Beasley Allen. Courtesy photo

Beasley Allen, in a Wednesday statement, said it would “continue to represent the collective best interests of our clients in seeking an agreement with J&J that provides fair and timely compensation to the victims of the company’s products.”

“While we respect his lengthy history in this litigation, we disagree with his decision to join J&J’s bankruptcy efforts,” Beasley Allen principal Andy Birchfield said about Smith. “Mr. Smith has no authority to alter the previous vote of our mutual clients, in which they overwhelmingly rejected J&J’s bad-faith bankruptcy plan. Those individuals are not required or expected to accept any recommendation that he may make as to the proposed settlement of their claims.”

‘Icing on the Cake’

The move by Smith comes about a week after J&J paused its timeline for certification of the vote on its proposed bankruptcy plan, which needs the support of 75% of talc claimants.

J&J said it would make the “new terms” public when the vote is certified, which could be completed later this month.

“Plaintiffs’ attorneys who have opposed the plan reached out to engage in negotiations with the company,” Erik Haas, J&J’s worldwide vice president of litigation, said in an Aug. 23 statement.

“These lawyers, who attest that they represent the majority of claimants who oppose the plan, requested that the claims administrator pause the plan’s certification,” he continued. “This will allow these plaintiffs’ attorneys time to speak to their claimants to now consider supporting the plan. We have agreed to a short extension of the certification timeline to accommodate this request.”

Smith said he and Beasley Allen “have by far the most talc claims of anybody opposing the bankruptcies.”

J&J, in a statement, said Smith’s support, if followed by his clients, would put the bankruptcy vote “well above” the 75% threshold.

Smith joins 18 other plaintiffs firms that have lined up behind J&J’s bankruptcy plan. Smith’s joining is “icing on the cake,” said Jim Onder, of OnderLaw in St. Louis, Missouri.

Onder said, “I have worked closely with Allen Smith since the inception of this litigation and appreciate his efforts to address concerns and reach an enhanced and meaningful resolution, as he joins the ranks of ad hoc supporting counsel.”