Johnson & Johnson (NYSE:JNJ) shares moved almost 5% lower after a US bankruptcy judge rejected its $10 billion settlement proposal which sought to resolve tens of thousands of lawsuits alleging its talc-based products caused ovarian cancer.
Judge Christopher Lopez of the US Bankruptcy Court for the Southern District of Texas, Houston, dismissed the bankruptcy claim filed by J&J subsidiary Red River Talc, citing flaws in the voting process for personal injury claimants.
J&J said it would not pursue an appeal but would return to the civil law system to “litigate and defeat these meritless talc claims.”
“We prevailed in 16 of 17 ovarian cases tried in the last 11 years and will devote our efforts to defeating these fake claims,” J&J Worldwide vice president of litigation Erik Haas said in a statement.
It also plans to reverse $7 billion previously reserved for bankruptcy settlements.
The company said that it has settled 95% of filed mesothelioma lawsuits, concluded all state consumer protection claims, and all talc-supplier disputes.
This marks the third bankruptcy case for a J&J company regarding the talc matter.
Shares of J&J traded down 4.9% at about $158 on Tuesday morning.