Top 10 Texas Legal News for 2022: #7

Texas was once again at the forefront of some of the biggest legal stories of the year. The following are the state’s top stories of 2022 as determined by the staff of Androvett Legal Media & Marketing.  

Cancer Victims Cry Foul as ‘Texas Two-Step’ Dances into National Scrutiny

Legal observers across the nation are anxiously awaiting a Third Circuit Court of Appeals ruling on the legitimacy of a corporate bankruptcy strategy that’s come to be known as the “Texas Two-Step.”  

The case before the Philadelphia-based court involves a move by Johnson & Johnson, one of the world’s largest and most profitable corporations, to briefly incorporate its consumer products division in Texas before splitting into two separate companies.  

Under the Texas statute, one entity has retained all operations and revenue while the other, known as LTL Management LLC, is saddled with all liabilities, including, most notably, pending litigation and hundreds of millions of dollars in jury verdicts awarded to cancer victims. LTL filed for federal bankruptcy protection in late 2021 in North Carolina, before the case was moved to J&J’s home state of New Jersey. The court has issued a blanket stay on all litigation and has generally sided with Johnson & Johnson in its rulings, leading to the appeal that was heard earlier this fall.  

Critics say the “Two-Step” is being used unfairly to push more than 35,000 lawsuits claiming that longtime use of J&J’s talc-based body powders led to ovarian cancer and mesothelioma out of civil courts and into the bankruptcy system. Proponents of the strategy – which even its legislative authors concede was not envisioned for this purpose – say that the bankruptcy courts provide a more efficient and fair means to resolve mass torts.  

A ruling from the Third Circuit is expected at any time and will likely provide further guidance on whether the “Two-Step” may be used by other companies as a way to avoid large-scale civil litigation.  

Are you ready to get started?