Appellate judges zero in on corporate twists of bankruptcy shield

Federal appeals judges have expressed skepticism about the scheming by Big Pharma and other big corporations to twist U.S. bankruptcy laws to let wealthy, powerful defendants shield themselves from major claims of harms filed by plaintiffs seeking justice in civil courts.

The U.S. Court of Appeals for the Third Circuit in Philadelphia has been asked to rule on the “Texas two-step” that Johnson & Johnson resorted to when hit with an avalanche of lawsuits over its legendary baby powder and claims by tens of thousands of patients who assert that asbestos-tainted talc contributed to or caused their cancer, NPR reported, noting:

“An attorney for Johnson and Johnson faced probing questions … over the corporation’s use of a controversial bankruptcy maneuver that has frozen tens of thousands of lawsuits linked to Johnson’s baby powder. During the hearing, members of a three-judge panel of the United States Court of Appeals for the Third Circuit in Philadelphia asked whether J&J had used the legal strategy to gain ‘a litigation advantage’ over roughly 40,000 cancer patients who have sued the company.”