A court ruling allowing Johnson & Johnson to use a controversial bankruptcy strategy to force cancer victims into potential settlement talks has raised the odds that other companies facing costly product-liability claims like 3M Co., and Dow Inc. may follow suit, analysts and legal experts say.
A judge in February cleared J&J to employ a legal tactic known as the Texas Two-Step in which it shunted almost 40,000 claims into a purposely created unit that then filed for bankruptcy under a business-friendly Texas law. The ruling temporarily halted the litigation over J&J’s iconic baby powder while the company tries to negotiate settlements.
