> Johnson & Johnson created LTL in 2021 in a maneuver to shield itself from the talc litigation, but an earlier bankruptcy filing by the unit was challenged by the plaintiffs and dismissed this year by a U.S. appeals court, which ruled that a bankruptcy wasn’t the right way to resolve the matter.
I'm unsure of the criteria for the reward, but it appears that they considered it an impressive effort to defend an unsympathetic client.
The public benefit from presenting a vigorous defense in all cases (not just ones with sympathetic defendants) is to require the prosecution, as a matter of course, to actually prove their case in accordance with the law, something which should be required in a fair court system.
How does a corporation filing a sham bankruptcy to avoid paying out a legally mandated penalty improve justice?
I can just as easily say that this tactic degrades prosecutorial effectiveness because it disincentives lawyers from taking cases. The corporations will just spin off and kill a business unit and no one gets compensated.
Because Captailism has corrupted our institutions to the point that money rules everything. Democracy and Justice is only for those with enough cash. Like the big4 accounting firms, they arnt the big 4 because they serve the public the public interest. They are the goto because they have the influence and the knowledge to extract as much cash as possible from democracies.
Her performance as a trial lawyer in these cases has been nothing short of average. It’s shocking that she managed to eek out any defense verdicts at all in the underlying litigation.
If the law is the primary obstacle preventing the majority from beating unscrupulous CEOs to within an inch of their life, then perhaps the majority should consider passing legislation that permits this as the current set of laws has abjectly failed.
This tactic wasn't as bad as you imply. J&J put the greater of $61.5 billion or the value of its consumer division (as determined when the paperwork was done) in LTL to cover claims and added itself as a creditor in last place. The idea was they would get back any value less than that after a result of the bankruptcy.
In this case, they would have recovered over $50 billion from the bankrupt company after the suit was paid off (assuming this deal covers all parties).
You'd only go to that extra work and complexity if you believed it would potentially be beneficial. Presumably, they feared the possibility of a multi-hundred billion dollar verdict.
That they didn't need the tactic in the end doesn't make it any less sleazy to have attempted it.
Like I said, I don't actually think it protects more money. It was pretty much secured by the value of the subsidiary responsible.
On the contrary, doing that much extra work and complexity pays off mostly in organizational ways. Letting the current business operate without overly worrying about the progress of the trial (instead just having value removed by it), managing multiple plaintiffs, etc.
And if the total amount of lawsuits exceeds the value of the company, it prevents the earlier plaintiffs from getting 100% and the last plaintiffs from getting 0% (which results in more expensive lawsuits).
> It was pretty much secured by the value of the subsidiary responsible.
Which is less than the value of all of J&J, which should all be at risk for egregious misconduct.
> And if the total amount of lawsuits exceeds the value of the company, it prevents the earlier plaintiffs from getting 100% and the last plaintiffs from getting 0% (which results in more expensive lawsuits).
Sure, but it prevents everyone from getting what they should get from J&J in that scenario.
> Sure, but it prevents everyone from getting what they should get from J&J in that scenario.
There's no way to give everyone what they're owed if there isn't enough money to go around. An orderly procedure is better than everyone rushing in with sharp elbows, and that's exactly why we have bankruptcy laws and courts - a system that works very well on the whole.
> There's no way to give everyone what they're owed if there isn't enough money to go around.
There's at least more money (significantly so!) in J&J as a whole than one of J&J's subsidiaries.
If my teenager had a car accident and injured you, I don't get to spin them off into a new standalone family unit and say "gee, sorry, you can't sue me!"
> There's at least more money (significantly so!) in J&J as a whole than one of J&J's subsidiaries.
No there isn't. 61.5 billion in this subsidy, while the equity value of the whole company is 76.8 billion.
> If my teenager had a car accident and injured you, I don't get to spin them off into a new standalone family unit and say "gee, sorry, you can't sue me!"
Depends where you are; in a lot of states you wouldn't be liable.
J&J's market cap is a bit over $400B, with assets in the nearly $200B range. I guarantee you the talc subsidiary isn't 80% of J&J's total value.
> Depends where you are; in a lot of states you wouldn't be liable.
Take one of those states, then. In California, the parent is civilly liable if they granted the teen permission to drive the car. Should disowning your kid be a viable way out of that?
> In California, the parent is civilly liable if they granted the teen permission to drive the car. Should disowning your kid be a viable way out of that?
I mean, we have plenty of stories of people divorcing to avoid liability for their partner's medical/end-of-life care costs. So this stuff isn't limited to companies.
"The Texas two-step allows solvent companies to shield their assets from litigants using protections that are normally reserved for bankrupt companies"
So I find your claims highly dubious that "wasn't as bad"
So I have an observation - when someone says we should be 'tough on crime', they never seem to be talking about corporate malfeasance and fraud. They always mean 'little people' crime.
How can we make a campaign slogan specific to shit like this?
Should we call it 'tough on some crime'? 'Tough on big crime?'
I'm extremely glad this tactic failed.