The manoeuvre has a nickname: the Texas Two-Step. A company facing mass tort claims splits itself, assigns the liabilities to a newly created entity, and puts that entity into Chapter 11. The lawsuits stop, even though the operating company is solvent and not in bankruptcy. Johnson & Johnson did it with its talc claims. The Senate Judiciary Committee called the company’s worldwide vice president for litigation to answer for it.
Stakeholder capitalism
KennedyMr. Haas, you're with Johnson & Johnson. Is that right?
HaasYes, sir.
KennedyHow is that stakeholder capitalism working out for you?
HaasHow is it working for Johnson & Johnson? It's one of the greatest honors of my life.
KennedyYou all pledged $50 billion to, quote, "be a force for social change and fight injustice"--$50 billion is a lot of money. How is that commitment consistent with what you're asking us to do here today?
HaasSir, I'm not aware of the particular commitments you're referencing, but I could say dispositive----
KennedyTry to give me an answer--it's got to be right.
HaasI could say dispositively that the consistency is, in the end, to ensure that each and every act that the company takes is consistent with our credo----
HaasAnd our credo puts the public and our patients first.
[Hearing transcript, questioning by Sen. Kennedy.]
Forty-two verdicts
KennedyHow many talc cases have you tried to verdict?
HaasThere have been 42 cases that have gone to verdict. Of those, we have prevailed in 32.
KennedyOkay. So you've lost 10?
HaasYes.
KennedyOkay. And what were the total damages in the 10 that you lost?
HaasThe damages range dramatically----
KennedyJust give me a total.
HaasI don't know the total. I can give you an approximate. The highest one was in the billions.
[Hearing transcript, questioning by Sen. Kennedy.]
One question, five times
Senator Hawley asked about the Missouri case, and then about a finding he said he had read in a federal appellate opinion.
HawleyMr. Haas, if I could just come back to you. Let me ask you about the Ingham case. I'm sure you remember that case. That was the one litigated in my State, in the State of Missouri, 22 plaintiffs who alleged that your baby powder caused ovarian cancer. By the way, didn't the FDA find that there were traces of asbestos in your baby powder?
HaasThe FDA outsourced to a lab that found asbestos--a trace amount of asbestos in one lot. And 150 studies thereafter were done of that batch and found no asbestos.
HawleyOkay. That's a lot of--that's quite the word salad, but if we just compress, I think the answer is yes. Right? Did the FDA find that there were traces of asbestos in your baby powder test?
HaasNo. Ultimately----
HawleyNo?
HawleyThe Third Circuit got that wrong? I just read it in their opinion.
HawleyWait, wait, wait. Answer my question. The Third Circuit was wrong about that? I just read it in their opinion. They said the FDA found traces of asbestos in your baby powder.
HaasThe FDA outsourced to a lab that found a trace amount of asbestos----
HawleyOkay, then the answer is yes.
[Hearing transcript, questioning by Sen. Hawley.]