By Tina Bellon
NEW YORK (Reuters) - A Missouri Supreme Court ruling on talc lawsuits could reduce the liability and number of large trials Johnson & Johnson faces over allegations its talc products, including baby powder, cause cancer.
The ruling will likely offer some respite to the healthcare conglomerate as it deals with growing pressure over the safety of its talc products, some defence lawyers said. The company revealed in its annual report on Wednesday that it had received subpoenas from the U.S. Justice Department and the Securities and Exchange Commission related to talc litigation.
Some plaintiffs' lawyers, however, played down the impact of the ruling.
It was a trial in St. Louis's 22nd Circuit Court, brought by 21 plaintiffs from outside of the city whose cases were joined to that of a single St. Louis resident, that in July produced a record $4.69 billion talc verdict against J&J. The company is facing several more such lawsuits in St. Louis.
However, Missouri's high court on Feb. 13 ruled in a separate talc case that allowed a non-resident to participate in joined cases was "a clear and direct violation" of state law barring the use of joinder - combining two or more cases - to allow courts to hear cases they otherwise could not.
Most state courts can only hear cases involving plaintiffs or defendants from that state or alleging injuries occurring within their jurisdiction. The U.S. Supreme Court strengthened those restrictions in a 2017 decision.
But the St. Louis court had allowed out-of-state residents to continue to sue New Jersey-based J&J through liberal use of joinder. In the case that produced the July verdict, 18 of the plaintiffs were from outside Missouri and three were from outside the city of St. Louis. Of the roughly 700 talc cases filed in St. Louis, only 40 involve Missouri residents, according to court filings.
If the Feb. 13 ruling closes off the St. Louis court to non-resident claims, J&J may have a stronger hand defending itself in smaller talc cases spread out among other, potentially less plaintiff-friendly state and federal courts.
"There's no real way of reading this decision other than this court clearly saying you can't join claims if the injury did not occur in the venue," said Mark Cheffo, a New York-based product liability defence lawyer not involved in talc litigation.
J&J in a statement said it was pleased with the decision. "One claim that is properly before a court cannot provide a basis for drawing into a trial other claims that are not. We believe that decision is clearly correct, and we continue to believe that the science doesn't support plaintiffs' claims," the company said, declining further comment.
Some plaintiffs' lawyers said the Feb. 13 ruling was not as definitive as Cheffo suggests.
"If defendants are celebrating this ruling as the end of St. Louis mass tort, they have not read the entire Missouri case law," said Eric Holland, a St. Louis-based plaintiff lawyer involved in the talc litigation.
Holland pointed to a 2016 Missouri Supreme Court decision that upheld a $38 million verdict in a pharmaceutical product liability case the defendant claimed had been improperly joined. The court let the result stand, saying that even an improper joinder did not render the trial unfair to defendants.
Though the 2016 ruling involved a case already decided, Holland and other plaintiffs' lawyers said they planned to argue its fairness analysis also applies to out-of-state talc claims in cases yet to go to trial. They said they would also argue joining the cases was the most efficient use of judicial resources.
Defence lawyers said the Feb. 13 decision would likely mean dismissal or severing of the out-of-state claims from four upcoming multi-plaintiff cases scheduled for trial in St. Louis. Two of the cases were halted by the Missouri Supreme Court ahead of its ruling.
Holland and other plaintiff lawyers said they would challenge J&J requests to sever or dismiss talc cases by arguing the Feb. 13 decision did not overrule the 2016 ruling.
Cheffo said the 2016 ruling could make it harder for J&J to overturn the July verdict and its record penalty because the company would have to prove the joinder led to an unfair trial.
'FORUM SHOPPING' BY OUT-OF-STATE PLAINTIFFS
The St. Louis court has been a venue for more talc trials and has seen larger verdicts than any other jurisdiction. Outside of St. Louis, the only other significant talc verdicts against J&J to date have come in lawsuits filed by individual plaintiffs in New Jersey and California, where the company is currently facing jury verdicts totalling $142 million.
A Los Angeles jury delivered a $417 million talc verdict against J&J in 2017, but the judge threw out the award weeks later as unsupported by the evidence. All talc verdicts against J&J are on appeal.
The St. Louis court has a history of issuing large punitive damages against companies and has often been criticized by business groups as allowing "forum-shopping" by out-of-state plaintiffs.
While J&J faces some trials brought by individuals in other jurisdictions, the multi-plaintiff St. Louis cases are the largest and have the most potential to produce additional billion-dollar verdicts.
Plaintiffs allege that the talc in Johnson's baby powder and other J&J products causes ovarian cancer, or that asbestos contamination in the talc causes ovarian cancer and mesothelioma. Asbestos is a known carcinogen linked to mesothelioma.
J&J and its talc supplier, Imerys Talc America, a co-defendant in the litigation, deny the allegations, saying numerous studies and tests by regulators worldwide have shown their talc to be safe and asbestos-free.
Reuters on Dec. 14 published a report detailing that J&J knew that the talc in its raw and finished powders sometimes tested positive for small amounts of asbestos from the 1970s into the early 2000s - test results it did not disclose to regulators or consumers. (https://reut.rs/2Gh88KO)
J&J is currently facing roughly 13,000 lawsuits over talc, most of which have been consolidated in federal court in New Jersey. Many plaintiff's lawyers have fought to keep cases out of federal court, which they feel favours corporate defendants.
Three juries have rejected claims that Baby Powder was tainted with asbestos or caused plaintiffs' mesothelioma. Five other juries have failed to reach verdicts, resulting in mistrials.
In a statement, Imerys Talc America said the Missouri ruling affirmed legal arguments it has made in litigation for the last four years. The company filed for Chapter 11 bankruptcy on Feb. 13, saying it lacked the financial clout to defend against talc lawsuits.
(Reporting by Tina Bellon; Editing by Anthony Lin and Bill Berkrot)