Johnson & Johnson win in fiduciary breach lawsuit

A US District Court in Newark, New Jersey, dismissed a lawsuit filed by participants in three Johnson & johnson 401 (k), which alleged that the plan trustees failed to protect their investments in the shares of the company offered as an option to invest in the plan.

Participants argued that the Johnson & Johnson trustees should have acted following allegations that talc and asbestos were found in some of the company’s products, including baby powder, which, claimants in product liability cases against Johnson & Johnson allegedly caused ovarian cancer or mesothelioma. The resulting controversy drove Johnson & Johnson’s stock price down.

On February 26, U.S. Chief District Judge Freda L. Wolfson dismissed a lawsuit representing a consolidation of several claims of declining actions related to infant feeding in the Perrone and al. against Johnson & Johnson et al. The plaintiffs were seeking class action status.

The judge noted that she dismissed an initial lawsuit in April, but gave plaintiffs the opportunity to file an amended lawsuit against the original lawsuit that was filed in January 2019.

Referring to her first dismissal, the judge again wrote that the plaintiffs ‘proposals for the trustees’ response to the baby powder issue did not meet the standards set by the United States Supreme Court in 2014. The court unanimously, in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., Established guidelines for lower courts to determine whether a low stock complaint should be dismissed or allowed to stand trial.

“The plaintiffs acknowledge that, in the prior notice, I felt that issuing a corrective disclosure was not a viable alternative action under Dudenhoeffer,” the judge wrote on February 26. securities disclosures with their fiduciary communications covered by ERISA, Complainants respectfully submit that non-disclosure of non-public information is subject to ERISA’s fiduciary obligations in this case. ‘”

However, the judge reiterated his reasons for the earlier dismissal. “I find, as I did on the previous dismissal motion, that the publication of a corrective disclosure by the SEC revealing the alleged truth about the overinflation of J&J stocks and / or asbestos in the products of company talc, is not a viable alternative action as it is not one that could be taken in a fiduciary capacity, but only in a corporate capacity, ”she wrote.

The judge also dismissed the plaintiffs’ suggestion that the Johnson & Johnson trustees could have increased the amount of cash in the 401 (k) plans stock fund in order to soften the shock of falling stock prices. “The increase in the fund’s cash reserve would have triggered a disclosure under both ERISA and federal securities laws,” she wrote. “To complicate matters further, federal securities laws apparently prevented the defendants from making disclosure limited to only participants in the ERISA plan.”

The strategy would have violated the Dudenhoeffer directive against any corrective fiduciary action that did more harm than good, the judge wrote.

“The defendants would have been required to disclose to the general public what they were doing and to explain that they were doing it because the shares of the company were artificially inflated and / or J & J’s talc products contain l ‘asbestos, “she wrote. .

However, the judge gave the complainants 30 days to file another amended complaint.

Johnson & Johnson announced in May that it would stop selling talc-based baby powder in the United States and Canada, but would continue to sell cornstarch-based baby powder.

“Johnson’s Baby Powder accounts for about 0.5% of total consumer health business in the United States,” the company statement said. “The demand for Johnson’s Baby Powder based on talc in North America has declined largely due to changes in consumer habits and fueled by misinformation about product safety and a constant barrage of forensic advertisements.”

The statement added that Johnson & Johnson “remain firmly confident in the safety of Johnson talc-based baby powder. Decades of scientific studies by medical experts around the world support the safety of our product. We will continue to defend vigorously the product, its safety, and the unfounded allegations made against it and the company in the courtroom. “

According to the latest 10-K statement from Johnson & Johnson, “the number of pending personal injury lawsuits continues to rise” over allegations that body powders containing talc, primarily baby powder, cause the Cancer. “

Most of the cases are pending in federal court, organized into multidistrict litigation in U.S. District Court in Newark, New Jersey, News Release 10-K, filed Feb. 22 with the Securities and Exchange Commission for the year ended January 3.

“In the talc cases that have already been tried, the company has obtained defense verdicts in a number of them, but there have also been verdicts against the company, many of which were overturned on appeal.” , says the 10-K press release.

About Lucille Thompson

Check Also

Marlette launches the Best Egg loan purchase program for the BancAlliance network

Extends access to loans to network of community banks WILMINGTON, Del., May 5, 2022 /PRNewswire/ …

Leave a Reply

Your email address will not be published.