Legal
J&J’s Court Loss Weakens Controversial Legal Tactic Used by Big Companies
- Ruling makes it harder to fight costly lawsuits in bankruptcy
- Corporations may take their strategy to Supreme Court
Johnson & Johnson baby powder
Photographer: Justin Sullivan/Getty Images
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A courtroom loss by Johnson & Johnson is threatening a legal maneuver developed by a handful of the most profitable companies in the world to fight lawsuits.
A federal appeals court in Philadelphia found that J&J is too rich to use bankruptcy to resolve more than 40,000 cancer claims over its baby powder. The company has vowed to appeal in order to preserve a legal tactic known to critics as the Texas Two-Step that has been tried by industrial conglomerate 3M Co. and lumber giant Georgia-Pacific.