Federal Court Ruling Frustrates Johnson & Johnson’s Talc Escape Plan: Texas Two-Step Fails for the Final Time
- cplacitella
- Aug 6
- 3 min read
Updated: Aug 8
In a major win for thousands of cancer victims and their families, a federal court has ruled that Johnson & Johnson (J&J) cannot reshuffle corporate assets to escape liability for its talc-based Baby Powder.
The August 5, 2025 ruling clears the way for lawsuits to proceed against the new companies J&J created—Kenvue, Holdco as well as J&J itself. Because J&J used Janssen to transfer the assets, Janssen is also responsible. In total, over 60,000 lawsuits are directly affected.
Even J&J’s own lawyer admitted in court that allowing plaintiffs to proceed against Kenvue will "undo the Texas divisional merger.”— Jessica Davidson, J&J’s attorney. Nov. 2023 hearing pp 94.
The court agreed—and sent a clear message: You can move the assets but that maneuver does not shield the successor from liability.
🧨 A Quick Explainer: What Is the “Texas Two-Step”?
The “Texas Two-Step” is a controversial legal maneuver used by corporations to avoid lawsuits:
Split the company into two—one holds the liabilities (lawsuits), and the other holds the assets (money).
The liability-only company files for bankruptcy.
The asset-holding company keeps operating — lawsuit-free.
J&J used this tactic in 2021, placing all talc-related lawsuits into a shell company named LTL Management, while moving billions of dollars in assets to Kenvue and others.
🧑⚖️ But Here’s the Problem:
Courts Are Not Buying It
In its opinion, the Court highlighted the fact that the Third Circuit twice found that the LTL bankruptcy was filed in bad faith.
J&J didn’t stop there.
After being rejected in New Jersey, J&J went to Texas and tried again.
The Texas Bankruptcy Court also dismissed the case. But now, the federal court in New Jersey has finally shut the door. The history of this litigation makes clear that the corporate restructuring and subsequent bankruptcies were intended to hinder the Plaintiffs’ ability to pursue their claims.
🧭 Why New Jersey Law Matters
Johnson & Johnson wanted to apply Texas or Delaware law, which could have made it easier for them to escape liability. But the judge ruled that New Jersey law governs the case.
Why is that important?
Because New Jersey law includes:
The Product-Line Exception – if a new company continues to sell the same product line, it can inherit the legal responsibility.
The Mere-Continuation Doctrine – if the new company is basically the same business with a new name, it can still be held accountable.
This means that Kenvue, Holdco, and Janssen can be sued, even though they weren’t the original sellers of Baby Powder.
🧪 Baby Powder Is Still Being Sold – Through Amazon and Online
Despite public claims that talc containing Baby Powder was pulled from the U.S. market, the truth is more complex.
Plaintiffs’ attorney Chris Placitella told the court that Kenvue is still selling asbestos-containing Baby Powder, especially online through Amazon and foreign markets. Kenvue talc containing baby powder is being sold " through Amazon over the internet and it’s being sold all over the United States even today.”— Placitella, Nov. 2023 hearing
According to Placitella Kenvue admitted in SEC filings that it might be responsible:
“We may very well be held responsible under whatever theories for the sale and the injuries caused by baby powder.” Placitella, Nov. 2023 hearing pp 28.
⚖️ Why This Ruling Changes the Game
This ruling confirms that corporate legal maneuvers won’t work when lives are on the line. It allows the victims to continue suing all responsible parties—not just a bankrupt shell.
The court reaffirmed that successor liability remains a viable path under New Jersey law when companies benefit from a product line while trying to shed its liabilities.
💬 Bottom Line: Justice Is Back on the Table
Johnson & Johnson tried everything—bankruptcy, corporate name changes, even changing states—to walk away from more than 60,000 lawsuits. Now, the courts have said no. This decision puts accountability back where it belongs.
This decision clears a powerful path forward for those affected by Baby Powder products.
Thank you to our CPR team whose hard work made this possible. Special thanks to Justin Placitella and Eric Pasternak who spent countless hours to bring about a just result. CPR took depositions from corporate executives at the highest levels and fought this battle in Court for years to assure our clients their opportunity for justice.
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