Project Plato: J&J’s Secret Formula to Keeping Its Cancer Victims Out Of Jury Awards
Johnson & Johnson created a plan last year to limit the financial bleeding from billions of dollars in jury awards. Their final solution: Project Plato – a legal scheme so controversial that a company lawyer warned the team to tell no one, not even their spouse. The covert team would go on to evaluate a strategy to shift all the liability from about 38,000 settled and pending cases onto a newly created subsidiary, which would immediately declare bankruptcy.
The strategy seeks to ensure the pending cases never reach a jury and instead be handled in a bankruptcy court, which would deny the costs of US$3.5 billion in existing verdicts and settlements and preserve J&J’s credit rating by limiting the award debtors to a mere tenth of the initial amount owed. This strategy also served another purpose in crippling ongoing proceedings against J&J by plaintiffs who alleged the company’s Baby Powder and other talc products caused deadly cancers, including the temporary halting and nullification of an ongoing lawsuit’s US$27 million jury award.
Despite the leak of its plans, Johnson & Johnson went ahead with the plan in October 2021, offloading responsibility for the cases to the new subsidiary, which then immediately filed for bankruptcy. The successful execution of this plan has set a worrying precedent for big companies facing liability crises to routinely pursue related-party bankruptcies to escape accountability. J&J’s bankruptcy strategy is the latest example of Corporate America’s tireless efforts to manage liability amid mounting allegations of unsafe products, but this isn’t the first time that big companies like J&J have attempted to hide from accountability. This attempt is also unlikely to be its last.
Due to the anticipated “warm reception” of the public for its latest legal solution to “crushing obligations” (Judgement debts of US$$3.5 billion for a company with US$31 billion cash on hand), J&J hasn’t sat on its hands at the news of this leak. Last week, it has sought a temporary restraining order from the bankruptcy judge to block Reuters and other news agencies from publishing this article, which, the company claims, uses information from confidential court documents. Whether their attempts to take down this article succeeds remains to be seen.
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