[HN Gopher] J&J can't use bankruptcy to resolve talc-injury laws...
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J&J can't use bankruptcy to resolve talc-injury lawsuits, appeals
court rules
Author : DocFeind
Score : 138 points
Date : 2023-01-30 17:56 UTC (5 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| oh_sigh wrote:
| If they can't use bankruptcy to get around this, what exactly
| does the future of j and j look like? They're getting things like
| $400M judgements against them for a single case of a talc-related
| death. And there surely are tens or hundreds of thousands of
| similar cases.
|
| Does the entire ownership just switch over to the litigants?
| anigbrowl wrote:
| _Does the entire ownership just switch over to the litigants?_
|
| This should happen more often imho (albeit in a more thoughtful
| fashion that I have time to address in this HN comment). If you
| choose to invest in a company that profits from negative
| externalities and those later catch up with the firm, your cash
| cow may get confiscated.
| crmd wrote:
| Maybe they don't have a future. I'm a proponent of the
| corporate death penalty under certain circumstances for
| companies found guilty of killing people. I empathize with
| their shareholders, but corporations have free will and their
| death will act as a deterrent to other corporations therefore
| saving many more lives.
| JumpCrisscross wrote:
| > _proponent of the corporate death penalty_
|
| As an insignificantly-minor J&J shareholder, I would be fine
| with a corporate death penalty. The company would be
| disbanded, assets and liabilities together, instead of fines
| and judgements putting it into actual bankruptcy.
|
| Pretty much every formulation of "corporate death penalty" is
| fines, but less severe, or fines, with extra steps.
| infamouscow wrote:
| If such a law existed, I think it would also have to have a
| provision about the shares being destroyed -- not being
| worth 0.
|
| Shareholders ought to have some skin in the game to
| incentivize behavior that does not lead down the road of
| corporate death. If you allow the value to go to zero,
| shareholders will just turn a blind eye and write the
| investment off as a loss on their taxes.
| pifm_guy wrote:
| I think no company should be allowed limited
| liability/bankruptcy protection.
|
| If a company can't pay its debts, the shareholders should
| be required to pay.
| hardtke wrote:
| Monsanto is facing something similar with Glysophate. I think
| their playbook was to make the prospect of appeals so long that
| most of the plantiffs would never see the money, at which point
| most agreed to be part of a large comprehensive settlement.
| zamalek wrote:
| Interesting, Alex Jones is also currently attempting to use
| bankruptcy to dodge his responsibilities. Hopefully we see a
| similar judgement to this.
| passwordoops wrote:
| Good! Now hold execs financially and criminally responsible, and
| you have a chance of saving this wonderful experiment in
| democracy!
|
| Oh, and reverse the rulings that led to the Sacklers keeping
| their fortune
| cscurmudgeon wrote:
| Can we go all the way and fine and punish the govt.,
| politicians and regulators that should have been ultimately
| responsible but were in bed with the companies?
| passwordoops wrote:
| I don't see why not
| Kon-Peki wrote:
| This is the 3rd circuit, which covers Delaware and all of its
| corporations. This is a really big deal, until and if the Supreme
| Court is willing to take it up and reverse (but remember J&J went
| down this path because the Supreme Court refused to hear an
| appeal of a talc verdict against them).
|
| > ... J&J's stated goal was to isolate the talc liabilities in a
| new subsidiary so that entity could file for Chapter 11 without
| subjecting Old Consumer's entire operating enterprise to
| bankruptcy proceedings.
|
| > Two days later, LTL filed a petition for Chapter 11 relief ...
|
| > Talc claimants there moved to dismiss LTL's bankruptcy case as
| not filed in good faith ...
|
| > We start, and stay, with good faith. Good intentions -- such as
| to protect the J&J brand or comprehensively resolve litigation--
| do not suffice alone. What counts to access the Bankruptcy Code's
| safe harbor is to meet its intended purposes. Only a putative
| debtor in financial distress can do so. LTL was not. Thus we
| dismiss its petition.
|
| Page 49:
|
| > Finally, we cannot help noting that the casualness of the
| calculations supporting the [Bankruptcy] Court's projections
| engenders doubt as to whether they were factual findings at all,
| but instead back-of-the-envelope forecasts of hypothetical worst-
| case scenarios.
|
| BURN!
|
| https://www2.ca3.uscourts.gov/opinarch/222003p.pdf
| albatross13 wrote:
| [flagged]
| jnwatson wrote:
| They didn't make any manufacturing mistakes. It turns out that
| putting talc on your sensitive parts isn't good for you in the
| long term, especially for women.
|
| That J and J is responsible for that is just the American legal
| system.
| selimthegrim wrote:
| I believe that comment was the tongue-in-cheek variety of
| "pro-vax"
|
| Not to mention most if not all of J&J's vaccines used in the
| US were made in the Netherlands, at least initially the ones
| made in the USA at Baltimore's Emergent Biosciences did
| indeed suffer from manufacturing mistakes and were never
| distributed.
| anoonmoose wrote:
| What do you mean? According to the sources I'm reading- not
| this paywalled one, of course- the lawsuits allege the
| presence of asbestos in their talc, detected in-product by
| the FDA as recently as 2019. Are you saying that was
| intentional? Because that would seem to be even more damning
| than what's alleged.
| wtetzner wrote:
| I thought their talc was contaminated with asbestos?
| ok_dad wrote:
| I, too, wish I could just give my friend all my assets sans my
| liabilities, jump into a new body, then have them give it back to
| me and avoid paying for my mortgage and other loans. I am glad to
| see this ruling and hope it sticks as hard as possible, and new
| laws are written to prevent this in the future. I've always
| believed that corporations should be subordinate to humanity and
| even individual humans in law, or else what are corporations for?
| They should be serving humans, not vice versa. If a corporation
| starts to harm people, it should be taken out back and shot.
| yieldcrv wrote:
| well you can do that, you should have had the LLC before you
| accumulated assets and debts in your personal name. then you
| can get the same privilege, to an extent.
|
| LLCs are more of a deterrent to an effective judgement than an
| absolute shield. But there is still tons you can do with a few
| thousand dollars, instead of imagining this is the playground
| for multimillion/billion dollar corporations.
| lotsofpulp wrote:
| As far as I understand, LLC's shield from contractual
| obligations, not from things like negligence or fraud.
| rgbrenner wrote:
| That doesnt work in practice though. Personal guarantees are
| virtually always required for small business debt. It's not
| until you reach a certain size that you can push back on that
| requirement.
| yieldcrv wrote:
| When the state you formed your LLC in lets you register it
| to a PO box nearby, and the state your PO box and the
| plaintiff is in doesn't let them serve a PO box
|
| It costs them more to get around that
|
| all for them to find out its own by a trust, or a
| retirement plan, or something they'll need further help in
| leveraging a judgement against
|
| Its a deterrent, like I wrote
|
| If they're dedicated you may have liens against your
| personal assets
|
| Its lightyears better than someone showing up at your
| doorstep and serving you personally and everything
| immediately being vulnerable
| Gibbon1 wrote:
| I feel like we need to back off the shareholders are immune
| from liability by a quarter turn. In particular fine the
| shareholders with voting rights not the company. And not the
| ones that currently own the stock, the ones that did when the
| company did something bad.
| themitigating wrote:
| Shouldn't the current shareholders be responsible for looking
| into potential liabilites?
|
| If I buy stock in a game company and the next day it releases
| a new game that tanks I didn't own stock when the game was
| developed.
| marcosdumay wrote:
| If you don't limit the liability, you will see the stock
| market die.
|
| This would be more a case of you buying stock on the game
| company, and the next day somebody discovering that the
| previous dividends were fraudulent and only happened
| because the company stole 100 times more than its market
| value, and then you being on the hook for paying 100 times
| more than the stock price as restitution.
|
| I do agree that the liability limitation is currently too
| strict. But it can't just be removed.
| themitigating wrote:
| But that's new information. The talc issue has been known
| for years. How serious or what the monetary outcome would
| be was not known but should have been a calculated risk
| for those purchasing stock
| kps wrote:
| Yes, limited liability is an unfair subsidy to corporations
| over individuals.
| pessimizer wrote:
| Well that's an incentive/reward for private people taking
| on risky ventures to accomplish the objectives of the
| state. Too bad they took out the work requirement and it
| just became welfare.
| sokoloff wrote:
| If I was short the company at the time of the bad behavior,
| presumably I should get a pro-rated share of the fine paid
| directly to me (because there are more long shareholders who
| would each owe a portion of the fine).
| gabereiser wrote:
| that's not how fines are supposed to work. Fines aren't
| monies owed. Fines are monies as deterrent. Since a
| corporation's purpose is to acquire monies. I'm for fining
| the voting shareholders in proportion to their holdings but
| to pay the shorters is not something I would get behind.
| Those that are shorting are betting against the company and
| so fines/bad pr/etc are already movements in their favor.
| sokoloff wrote:
| But the shorts have _created_ additional shares (and
| therefore additional proportions of fines). If there are
| 100 shares of a company outstanding and the company is
| fined $1M, each shareholder owes $10K to cover the fine.
|
| Now, in a world where someone has shorted 10 shares,
| there are now 110 shares held long, meaning the total
| fines paid would be $1.1M, leaving $0.1M available to pay
| to the shorts.
| gabereiser wrote:
| My point about proportion of holdings is that if a
| company is fined $1M to the shareholders and there are
| 1,000 voting shares held, not every holder is holding 1.
| Some are holding more than 1. Some are holding 400 or
| more. So the formula would be:
|
| owed = ($1M / total_voting_shares) * (holding_shares /
| total_voting_shares)
| kyralis wrote:
| Shorts do not create shares that way; they're shares that
| have been borrowed, which means they've temporarily
| changed hands. Consider for voting. If you've borrowed
| shares from someone else over the time period that
| determines voting rights, only one of you gets to
| actually vote - you haven't magically created new votes
| in the process.
| iakh wrote:
| The shares are borrowed, but not always with the
| knowledge of the original shareholder. So should one
| owner get excluded from the fine just because their
| broker happened to loan out their shares and not the
| shares of another equally eligible holder? Opposite thing
| happens with dividends and the original holder is still
| entitled to those.
| sokoloff wrote:
| (And the original holder is due the dividends because the
| short is required to pay the dividends.)
| JumpCrisscross wrote:
| > _fine the shareholders with voting rights not the company_
|
| This would turn every fine into a Madoff-trustee clusterfuck.
| Instead of collecting a fraction of the fine at a multiple of
| the cost, just fine the company more. Practically every
| creative solution to corporate malfeasance (apart from fraud)
| is inefficient in comparison to bigger fines.
| albntomat0 wrote:
| As an investor, how am I supposed to know about various
| pieces of malfeasance by a company? Is it in their quarterly
| earnings announcements? Are they required to give me tours of
| their factories to whatever extent I feel?
|
| I agree with your concern and aims, but there really isn't a
| window between when normal investors find out, and when the
| general public does. The board, executives, etc. are a
| different story.
| PuppyTailWags wrote:
| I think if you have enough influence to vote in policies
| the company performs, you should have some responsibility
| if it can be proven you're benefiting from illegal behavior
| from the company. Potentially in the form of having those
| returns taken back from you, because they're effectively
| stolen from society, in the same way that I shouldn't get
| to keep a stolen TV because someone I loaned money to
| regularly decided to pay me back via this cool new TV that
| I didn't inquire the source of.
| albntomat0 wrote:
| All corporate structures that I'm aware of give voting
| rights to all shareholders, in proportion to the number
| of shares they have. Some companies like Google and Meta
| give more votes to different types of shares.
|
| With the popularity of ETFs and mutual funds, any
| American with a retirement fund has voting rights in the
| 500, and probably more public companies.
|
| The proper way to do things is properly penalizing the
| company sufficiently to affect the share price.
| anm89 wrote:
| Great to hear. Stuff like this degrades basically belief that we
| presently have rule of law in America.
|
| Imagine trying to pull this shit as an individual. You burn down
| some apartment complex and then just create an empty company and
| assign all of your liabilities to that company and say "you've
| got to sue them, I've got no liability here". You'd get laughed
| out of the courtroom. But this came pretty close to working for J
| & J.
|
| When I see looters lighting businesses on fire or breaking
| windows, I tend to think back to stuff like this or civil
| forfeiture and say "seems fair". I think the establishment
| underestimates the extent to which normal people hold this
| doctrine and feel ok with an all means are justified attitude
| because they've heard too many stories like this where the law
| doesn't apply to powerful interests.
| rippercushions wrote:
| In Australia, it's fairly common for builders to incorporate a
| company for the sole purpose of putting up a shitty building,
| then have it file bankruptcy once the repair bills and lawsuits
| start flying, leaving property owners holding the bag. Rinse
| and repeat.
| xxpor wrote:
| If J&J ultimately wins this, maybe I should form an LLC to take
| ownership of my car and house just in case I do something in
| the future where I have massive liability just so I can pull
| this stunt.
| dave78 wrote:
| That exact strategy is very common for owners of small
| general aviation aircraft. From what I understand it is
| primarily for liability reasons just like you propose.
| sokoloff wrote:
| There's a secrecy reason as well for some (the FAA registry
| will show "N1234, LLC" as the owner) as well as a sales tax
| avoidance reason for others. ("I didn't buy an airplane for
| which I'd owe sales tax on; I bought a company for which no
| sales tax is due.")
|
| In the case of liability avoidance, it's hard to do if the
| (real-world human) owner of the airplane is also the pilot
| at the time of any accident. They might not be able to sue
| you _as the owner_ , but they can still sue you/your estate
| _as the pilot_ , or the person who oversaw the maintenance,
| etc.
| [deleted]
| asah wrote:
| FYI landlords routinely put their apartments into single-
| purpose LLCs precisely to cordon-off the liability, while
| allowing profits to flow back.
| anm89 wrote:
| this is different, the actual underlying asset is at stake
| for liabilities it causes. This is the whole point of
| corporations.
|
| The analogy would be if a landlord created a shell company,
| and then only gave that company it's legal liabilities
| without any assets. That's what J&J did here and why this
| case is so obviously egregious.
|
| If you could do that, it would be a get out of jail free
| card for all legal liability in all cases. It's essentially
| renouncing rule of law
| nimos wrote:
| I was actually just wondering what is stopping companies
| from forming separate LLCs for every product line or even
| product? I mean at some point the administrative overhead
| is not worth it but 100-1000 individual LLCs seems pretty
| trivial to manage for a fortune 500 company and that cuts
| your liability massively if you are able to effectively
| distribute assets.
| kasey_junk wrote:
| I've worked in environments where legal entities were
| kept in a database because there were enough of them to
| make it worthwhile.
| icelancer wrote:
| This is effectively how all real estate works. I'm not
| quite sure why this doesn't work for things like
| software, but from my understanding owning actual
| property makes it significantly more possible / legal.
| Kon-Peki wrote:
| For a corporation with thousands of employees and R&D
| labs, etc, the administrative overhead has to be massive.
| Like working for Alphabet times 100. An employee would be
| switching their legal employer every few months, every
| time they switch teams, all the time; new payroll, new
| health plan enrollment, etc. People would just Nope the F
| out of that place.
| Xcelerate wrote:
| Sounds like you've made a valid prediction for a future
| consisting of high frequency individual tax loopholes to
| me.
| paragraft wrote:
| Surely you'd just be employed by the internal HR company
| and on the books each product company would be
| contracting your services according to timesheets.
| Kon-Peki wrote:
| Yeah, but then the internal HR company has all the money
| and also has all the liability. So you've gained nothing
| for all that administrative headache.
|
| Real estate is a special situation with lots of
| subcontracting. They can make it work. In big multi-unit
| residential cities like NYC and Chicago, the doorman in
| that high-rise is in a union that provides all his
| benefits and has a set pay scale. The building ownership
| just contracts all that stuff out to the union. But that
| doorman can go work in some other building owned by some
| other owner too. You don't want that happening with your
| corporate employees developing and managing your consumer
| products.
| treis wrote:
| It's pretty easy to pierce the corporate veil for these
| separate but not really separate LLCs. They have to be
| bona fide separate companies to enjoy the LLC protection.
| KMag wrote:
| It's pretty common in the financial world. The US
| government doesn't offer zero-coupon bonds, so the big
| banks create special purpose vehicles that buy US
| government bonds, split the cash flows into the strips
| and the zero-coupon bonds, and sell them separately. If
| some pork belly futures trader wipes out the bank, at
| least in theory, the special purpose vehicle outlives the
| rest of the bank and keeps paying out those cash flows,
| and the pork belly creditors don't get those zero-coupon
| bonds you bought.
|
| At least, I think that's the way it's supposed to work. I
| used to work at Goldman, and at some point, someone told
| me that the number of legal entities was roughly the
| number of employees. I'm not sure how true that was, but
| I'd believe it.
|
| There are some good reasons to allow these separate legal
| entities, to allow orderly partial collapses of
| businesses to reduce the risk of cascading systemic
| failures. There's also something to be said about either
| keeping businesses small enough that failure of a handful
| of them won't collapse markets, or else single-purpose
| enough that they have less direct effects on multiple
| markets. The flip side is that diversification across
| markets should tend to stabilize firms, and larger firms
| are also more able to effectively diversify.
| nonfamous wrote:
| This is essentially what movie studios do: a separate,
| new company produces each film. (Here though the main
| goal isn't liability, it's to insulate the BigCo from
| losses, and avoid paying those that made the film that
| don't have star contracts.)
| gruez wrote:
| >When I see looters lighting businesses on fire or breaking
| windows, I tend to think back to stuff like this or civil
| forfeiture and say "seems fair"
|
| It seems "fair" that some random business owner has their place
| of business burned down because of the shenanigans that Johnson
| & Johnson is up to? The only way this can remotely be
| considered "fair" is if looters only set Johnson & Johnson
| buildings on fire, and somehow the employees working in those
| buildings aren't affected.
| luckylion wrote:
| No, but it seems "fair" that the looters and criminals don't
| get punished. If we choose to not enforce the law for some,
| we're choosing not to enforce the law period.
|
| If society wants the laws to not apply to corporations beyond
| some market capitalization, we'll have to explicitly write
| that into the laws.
| [deleted]
| folsom wrote:
| Sure, then it should seem fair that when I sit in my bagel
| shop and shoot people who break out my windows that the law
| does not punish me.
|
| Come on this is a downward spiral that we don't want to get
| started on right?
| luckylion wrote:
| That's the point. We don't want to abandon the law,
| therefore we must not allow corporation to get away with
| obvious law-breaking.
| gruez wrote:
| > No, but it seems "fair" that the looters and criminals
| don't get punished. If we choose to not enforce the law for
| some, we're choosing not to enforce the law period.
|
| What's your line of reasoning here? Because we're not
| properly enforcing civil judgements on J&J, it's therefore
| "fair" for unrelated people to suffer losses, and for
| criminals to commit property crimes with impunity? If I
| pulled a gun on you right now and demanded that you hand me
| your phone and laptop, would you also consider that fair
| for the same reason?
| jasonlotito wrote:
| > If I pulled a gun on you right now and demanded that
| you hand me your phone and laptop, would you also
| consider that fair for the same reason?
|
| Pretty sure threatening to shoot and shooting someone is
| not merely a property crime. Especially not one against a
| business, which seems to be critical to the context here.
|
| A better comparison that would related to what we likely
| do around here would be something like "I 'hack' into
| your Git server and copy your source code and ransom it
| off." This is also criminal.
|
| Indeed, if you want to change the scope and context, then
| one could argue that companies are already out there
| killing people, and by participating and supporting the
| system that upholds the companies doing that, you are
| therefore contributing to that killing. Meaning you are
| not innocent. But I wouldn't want to do that, so let's
| not.
| gruez wrote:
| >Pretty sure threatening to shoot and shooting someone is
| not merely a property crime. Especially not one against a
| business, which seems to be critical to the context here.
|
| Fair point. How about I burgle your house instead?
| s1artibartfast wrote:
| There has to be some limitation to this principle when you
| live in a country of 350 million plus individuals.
| Spooky23 wrote:
| It's a rhetorical example.
|
| The absurdity of the looting example illustrates the
| absurdity of modern jurists channeling the original intent of
| people who died 200 years ago or selectively granting the
| rights of citizenship (without responsibility) to fictitious
| legal entities. Or in this case, playing a shell game with
| assets.
|
| J&J's officers chose to continue to sell a product that was
| known to be harming people. They could have stopped or
| limited the sale of the product and replaced it with a less
| hazardous version. But they chose not to. Why would the
| failure of the company's board and management to manage risk
| be rewarded?
|
| They probably figured they would get away with it is a
| similar strategy to how Phillip Morris bought Kraft Foods
| years ahead of litigation and spun out Altria to own the
| tobacco business.
| gruez wrote:
| >The absurdity of the looting example illustrates the
| absurdity of modern jurists channeling the original intent
| of people who died 200 years ago or selectively granting
| the rights of citizenship (without responsibility) to
| fictitious legal entities.
|
| 1. Contrary to all the "corporations are people too" memes
| you see everywhere, corporations definitely do not have
| "the rights of citizenship".
|
| 2. If you're talking about "Citizens United v. FEC", the
| reason behind the ruling isn't that "corporation are people
| too", it's that "corporations and unions are composed of
| people, and the federal government can't limit speech of
| people just because they're in an organization".
|
| >Or in this case, playing a shell game with assets.
|
| In what sense is this a constitutional matter? AFAIK the
| reason why J&J can pull this off is due to a loophole in
| texas corporation law. I'm not sure whether "the original
| intent of people who died 200 years ago " is relevant here.
|
| >J&J's officers chose to continue to sell a product that
| was known to be harming people. They could have stopped or
| limited the sale of the product and replaced it with a less
| hazardous version. But they chose not to. Why would the
| failure of the company's board and management to manage
| risk be rewarded?
|
| How does this have anything to do with whether it's "fair"
| for "looters lighting businesses on fire or breaking
| windows"?
| anm89 wrote:
| No, I don't think that's fair. I'm talking when it's large
| businesses. Keep in mind, I'm not espousing a legal doctrine
| here. I'm just saying that's what my gut reaction is.
|
| So I feel bad for a small business owner who get's affected
| and just see them as collateral damage in the other issue
| gruez wrote:
| > No, I don't think that's fair. I'm talking when it's
| large businesses.
|
| That seems like a pretty important point to omit, don't you
| think? Moreover, I addressed this point in my original
| comment. Sure, the business loses a few million dollars in
| damages, but what about all the previous employees that
| were displaced? Were they acceptable collateral damage?
| What about "large businesses" that won't engage in such
| behavior? Do you think they're acceptable collateral damage
| as well and/or that all "large businesses" would engage in
| such behavior?
|
| >Keep in mind, I'm not espousing a legal doctrine here. I'm
| just saying that's what my gut reaction is.
|
| Don't you think, we as a society should expect that
| whatever people are espousing something publicly, that they
| should have given thought/consideration that's above "gut
| reaction"?
| acdha wrote:
| One egregious example of this are the mining companies which
| create a toxic mess and then let the shell company go bankrupt.
| I can't imagine going into any community downstream of that and
| saying that the law protects them knowing that not a single
| penny of the extracted value will be recovered.
| anm89 wrote:
| yeah, great example
| treis wrote:
| This one isn't quite like that. The evidence for a link
| between talc and cancer is mixed. Some have found a link but
| the best quality study did not:
|
| https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4200058/
| acdha wrote:
| Yeah, I'm not saying there's a 1:1 correspondence in the
| level of harm but rather that the corporate structure to
| shirk legal responsibility seems very similar. They had the
| opportunity to make the case that the scientific evidence
| was weak repeatedly and were unsuccessful, so it seems like
| they should be expected to honor the rules of the court or
| stop doing business in the United States.
|
| Our entire legal system is based on the idea that both
| parties respect the court's decision (or appeal it, of
| course) and it seems really dangerous to allow the party
| with the most power to unilaterally opt out of that when
| it'll save them money.
| FireBeyond wrote:
| Honestly, I don't really see the relevance. It's mixed, but
| that being said, J&J (sorry, LTL) have been found in
| multiple civil courts to be, by the rules of those courts,
| to be liable.
|
| It's a cake-and-eat-it. "Oh, we are more than happy to use
| the letter of the law to create a shell company with the
| intent to bankrupt it for liability sake", but "oh, just
| because we went to trial and lost, repeatedly, doesn't mean
| that we're actuaaaaally liable".
| bsagdiyev wrote:
| https://archive.is/M5EQc
| rgoldfinger wrote:
| From the opinion, some encouragement from the judge for others to
| try a similar approach again:
|
| > That said, we mean not to discourage lawyers from being
| inventive and management from experimenting with novel solutions.
| Creative crafting in the law can at times accrue to the benefit
| of all, or nearly all, stakeholders. Thus we need not lay down a
| rule that no nontraditional debtor could ever satisfy the Code's
| good-faith requirement.
| fsh wrote:
| As far as I know, there is still no good evidence that talc usage
| leads to a significant increase in cancer risks. This is despite
| the product having been used by many millions of people for
| decades. There are also plenty of large-scale studies that didn't
| result in statistically significant signals. If the effect was
| real, it should really have shown up by now.
|
| Nonetheless, J&J keeps losing trial after trial which results in
| completely ridiculous fines that are now threatening the
| existence of the company. I guess this is one of the failure
| modes of the archaic US legal system. You just have to convince
| the jury, regardless of what is actually true.
| user3939382 wrote:
| Who says what's true? Juries don't become scientists on issues
| like this, they listen to expert testimony. Technically you
| have to convince the experts that are testifying.
|
| It's not perfect, but of all the problems our (largely corrupt)
| government has this is the least.
|
| Corporate interests run roughshod over our entire democracy,
| the contemporary "justice" system is basically designed to
| protect them. I don't think we have to lose any sleep over them
| not getting a fair shake.
| fsh wrote:
| I don't think it is acceptable that the legal system is
| punishing someone for causing damages that are probably not
| real, even if that someone is some evil corporation.
| user3939382 wrote:
| My primary point is, who decides they're probably not real,
| if not a jury informed by expert testimony?
| fsh wrote:
| My point is that countries whose legal systems don't rely
| on juries appear to be less affected by such
| counterfactual rulings. Maybe it is simply easier to
| manipulate jurors than professional judges.
| FireBeyond wrote:
| Hang on. You've gone from "well, -I- have seen no evidence,
| and juries are just finding J&J guilty, regardless of
| evidence" to now your assumption that evidence doesn't
| exist and that this issue "probably isn't even real".
|
| Law firms make their money on judgments.
|
| I have little concern for their ability to do so.
|
| But it's a pretty big risk for a law firm to take on a
| $100B/year company with their legal backing with no
| evidence of a problem that "probably isn't even real", and
| standing up against their expert testimony and thinking "oh
| yeah, we got this, payday time".
| mox1 wrote:
| I'm not an expert here, but the working theory I believe is
| that Talc mines also had asbestos in _some_ of them. Like
| basically unseen veins of asbestos. So you mine for 100 days
| and get 100% Talc, then on 101 day you hit an asbestos vein,
| and contaminate some of the Talc.
|
| That asbestos ends up in a meaningful concentration in a small
| % of bottles of talc powder. But not reproducible and hard to
| catch.
|
| Some even smaller % of people use the contaminated powder A
| LOT, get cancer.
|
| Basically, its complicated and lots of factors.
| fsh wrote:
| I know the theory, but again there seems to be no good
| evidence for it. Some of the studies I found were quite
| large. If this had happened, they should really have seen it.
| dekhn wrote:
| You are correct; there is no truly strong case linking
| J&J's leadership to having specific knowledge that they
| were selling a product that was likely to cause serious
| harm.
|
| This is a common problem in the press and the courts; they
| play fast and loose with the science, and it's not really
| that hard to influence the public into thinking a corporate
| executive did something evil for monetary gain. Since this
| is such an easy narrative to believe, it's fairly
| straightforward to convince people just by making the
| suggestion.
| Dalewyn wrote:
| >You just have to convince the jury, regardless of what is
| actually true.
|
| More people need to understand that truth and fact are two
| seemingly similar but actually very different things.
|
| Truth is whatever the majority of people agree on.
|
| Fact is whatever the universe declares and understood by us as
| best we can.
|
| You can factually have two apples on a plate, but if the
| majority of people say there is only one apple on the plate the
| truth is there is only one apple on the plate.
| fsh wrote:
| That is a very unusual definition. Wikipedia defines truth as
| "the property of being in accord with fact or reality". In
| that sense truth exists independently of what people agree
| on.
| FireBeyond wrote:
| We're in civil court, where the balance of probability
| applies. It's also civil court that is being used to try
| this farcical "create a company with the intent of filing
| bankruptcy two days later to ... deflect ... liability". So
| civil court rules are good enough for the latter, but
| unacceptable for the former?
| thfuran wrote:
| That isn't true.
| PuppyTailWags wrote:
| It's not talc, it's the asbestos that the talc is contaminated
| with. We know J&J knew that its talc was contaminated with
| asbestos since the 1950s. We know J&J have tested their own
| talc and found it was contaminated with asbestos, but never
| informed the public and still denies their internal
| investigation exists.
| fsh wrote:
| Could you give a reference for these claims? I couldn't find
| anything conclusive.
| PuppyTailWags wrote:
| Reuters was able to uncover undisclosed reports in court
| that J&J failed to disclose finding asbestos in their own
| talc to the public.
|
| https://www.reuters.com/article/us-johnson-johnson-cancer-
| sp...
|
| "The earliest mentions of tainted J&J talc that Reuters
| found come from 1957 and 1958 reports by a consulting lab.
| They describe contaminants in talc from J&J's Italian
| supplier as fibrous and "acicular," or needle-like,
| tremolite. That's one of the six minerals that in their
| naturally occurring fibrous form are classified as
| asbestos.
|
| At various times from then into the early 2000s, reports by
| scientists at J&J, outside labs and J&J's supplier yielded
| similar findings. The reports identify contaminants in talc
| and finished powder products as asbestos or describe them
| in terms typically applied to asbestos, such as "fiberform"
| and "rods."
|
| In 1976, as the U.S. Food and Drug Administration (FDA) was
| weighing limits on asbestos in cosmetic talc products, J&J
| assured the regulator that no asbestos was "detected in any
| sample" of talc produced between December 1972 and October
| 1973. It didn't tell the agency that at least three tests
| by three different labs from 1972 to 1975 had found
| asbestos in its talc - in one case at levels reported as
| "rather high.""
| natroniks wrote:
| Can someone here clarify: Is today's ruling about the legitimacy
| of structuring JNJ's talc liabilities into LTL? Or is it saying
| that LTL can't file for bankruptcy AT THE MOMENT because the firm
| (LTL) is not yet in financial distress? I don't see this as a
| loss for JNJ's "Texas Two-Step" strategy, but rather the judges
| are saying "LTL can't declare bankruptcy preemptively, LTL needs
| to be under actual financial distress before declaring
| bankruptcy."
| Kon-Peki wrote:
| That's a good question. The court opinion I linked in a
| different comment addresses this.
|
| They are merely saying that LTL can't declare bankruptcy
| preemptively, because it is in amazing financial health. The
| "Texas Two-Step" structure they created was enormously friendly
| to LTL because LTL was intended to immediately go bankrupt.
|
| Does the Texas law used to create this kind of corporate
| structure require such friendly terms? Is quick bankruptcy the
| loophole? That is something I don't know.
| natroniks wrote:
| Thanks for your input. The main downside I could imagine is
| if the courts rule that JNJ must provide open-ended financial
| backing to LTL. JNJ initially provided $2B to LTL to cover
| liabilities, but made clear they wouldn't be shocked if it
| were somewhat more than $2B. What's not being judged here is
| whether LTL can ever declare bankruptcy. In a confusing turn,
| many comments (here and elsewhere) seem to be taking the next
| step and claiming that the court's decision today implies the
| courts will rule the whole Texas Two Step" structure is "in
| bad faith." As of now, the only "bad faith" move is LTL
| declaring bankruptcy while they're still solvent. Should
| there be enough judgments against LTL such that they run out
| of money, then they might indeed be able to declare
| bankruptcy and shield JNJ from further costs (though, as I
| state, there has been previous discussion of adding to the
| the initial $2B pot).
| Kon-Peki wrote:
| The court doesn't need to force J&J to provide open-ended
| backing. LTL already have it:
|
| > The Funding Agreement merits special mention. To recap,
| under it LTL had the right, outside of bankruptcy, to cause
| J&J and New Consumer, jointly and severally, to pay it cash
| up to the value of New Consumer as of the petition date
| (estimated at $61.5 billion) to satisfy any talc-related
| costs and normal course expenses. Plus this value would
| increase as the value of New Consumer's business and assets
| increased. App. 4316-17 (Funding Agreement 4-5, SS 1
| Definition of "JJCI Value").15 The Agreement provided LTL a
| right to cash that was very valuable, likely to grow, and
| minimally conditional. And this right was reliable, as J&J
| and New Consumer were highly creditworthy counterparties
| (an understatement) with the capacity to satisfy it.
|
| My question, inspired by yours, is why? Why did J&J provide
| such a generous funding agreement if it didn't have to? Or
| did it? The only thing I can think of is that they needed
| to do so, but it wasn't supposed to matter as LTL filed
| bankruptcy two days later.
| ethbr0 wrote:
| To shield JNJ leadership and ownership, including
| shareholders.
|
| If you make an agreement to pay an unlimited amount of
| money to a spin-off, obviously you're not doing it to
| save money.
|
| You're doing it to retain control, even when you have to
| pay extremely large amounts of money.
| puffoflogic wrote:
| Let's just wait and see whether (should I say, "when"?)
| LTL mysteriously breaches the terms of, or simply
| renegotiates, that very funding agreement. Not until
| after appeals options are exhausted, of course, but soon
| thereafter.
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