A federal judge has ruled that Johnson & Johnson (J&J) shareholders can pursue a class-action lawsuit accusing the company of fraudulently concealing asbestos contamination in its talc products. U.S. District Judge Zahid Quraishi in Trenton, New Jersey, granted shareholders from February 22, 2013, to December 13, 2018, the right to pursue securities fraud claims collectively. The judge rejected J&J's request to shorten the class period.
The lawsuit alleges that J&J fraudulently hid information about asbestos contamination in its talc products, including the iconic baby powder. The company, which ceased global sales of talc-based baby powder this year, denies the allegations, asserting the safety of its talc products. J&J contends that it provides accurate and truthful disclosures.
The judge's decision allows shareholders to proceed with their claims related to events between 2013 and 2018, when J&J's stock price reportedly fell due to revelations about asbestos in talc products. Events such as a jury awarding $4.69 billion to women linking ovarian cancer to asbestos in July 2018 and a Reuters report later that year revealing J&J's knowledge of asbestos risks led to stock price declines.
Class actions make it more convenient for shareholders to pursue legal action collectively, potentially resulting in higher recoveries at lower costs compared to individual lawsuits. The judge's ruling enables a longer class period, potentially increasing the amount that shareholders could recover.
J&J faces significant legal challenges, including over 50,000 lawsuits related to its talc products. The company's decision to switch to corn starch as the main ingredient in baby powder reflects ongoing concerns and legal scrutiny over talc safety. Despite J&J's assertions, the judge's decision underscores the seriousness of the allegations and the need for the company to address shareholder claims collectively in court.
This development adds to J&J's legal woes, as it faces not only shareholder lawsuits but also a broader mass tort litigation involving tens of thousands of cases related to talc products. The court's rejection of J&J's attempts to limit exposure through bankruptcy processes further highlights the complexity and severity of the legal challenges the company is navigating.
The decision signals that legal battles over talc safety and alleged corporate misconduct will continue to unfold, shaping the landscape for accountability and transparency in the pharmaceutical and consumer goods industries.