NEW BRUNSWICK (dpa-AFX) - Johnson & Johnson (JNJ) shares dropped over 5 percent on Tuesday after a U.S. bankruptcy judge rejected the company's $10 billion plan to settle thousands of lawsuits alleging its talc-based products caused cancer.
The decision, delivered by Judge Christopher Lopez in Houston, marks the third failed attempt by JNJ to resolve these claims through bankruptcy proceedings.
Lopez ruled that JNJ's proposed settlement lacked sufficient support from claimants and improperly extended legal protections to non-bankrupt entities, including retailers and Kenvue, its consumer health spinoff.
He also criticized the company's rushed process of gathering votes from plaintiffs, stating that many were improperly cast and should not be counted. Despite having secured what it claimed was 83 percent approval from plaintiffs, Lopez estimated that at least half of those votes were invalid.
JNJ, which maintains that its talc products are safe and free of asbestos, stated it will not appeal the decision but will instead fight the lawsuits in civil court. The company faces over 60,000 claims from individuals alleging its baby powder caused ovarian cancer.
Following the ruling, JNJ's stock fell to $157.11, moving it about 6 percent below a key technical entry point.
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