WWXI on some unconscionable facts and the ruling:
The company tried to short-circuit the lawsuits in 2021, using a controversial legal tactic known as the "Texas Two Step." It first assigned liability for the baby powder complaints to a spin-off company, called LTL Management, then immediately put that company into bankruptcy.
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Other big companies including Georgia Pacific and 3M have tried similar tactics to limit their exposure to widespread lawsuits. Legal experts and policymakers are watching the cases closely.
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The 3rd U.S. Circuit Court of Appeals dismissed a bankruptcy filing by a Johnson & Johnson spinoff company, ruling that the company was not in genuine financial distress. The court noted that the spinoff company still has access to Johnson & Johnson's assets, worth an estimated $61.5 billion.
(Matt Levine wrote about the nuances in today's newsletter, but it just seems impossible for a reasonable person to hear what J&J tried and even momentarily think it tolerable.)