Class Action: Stock-Holding Johnson & Johnson Retirement Plan Participants Lost Millions After Talc Asbestos Revelations

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According to a lawsuit filed in New Jersey federal court, Johnson & Johnson stock prices were for years artificially inflated due to executives’ undisclosed knowledge that the company’s talc baby powder contained asbestos, and participants in J&J’s employee retirement savings plan have lost millions as a result.

The 24-page proposed class action centers on Johnson & Johnson employee retirement plan fiduciaries, in particular, the suit’s two individual defendants, remaining mum while participants continued to purchase and hold J&J stock at allegedly inflated prices. The case singles out April 13, 2017, as the date of no return past which the truth about the presence of asbestos in talc baby powder would find its way to the public. It was on that date, the case explains, that Johnson & Johnson filed its answer to an amended complaint in the multidistrict litigation (MDL) captioned Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litig. From the lawsuit:

“The MDL involves claims against Johnson & Johnson arising out of personal injuries caused by asbestos in Johnson & Johnson’s talc powder. Once Johnson & Johnson’s answer had been filed, discovery would begin, and the large number of Johnson & Johnson’s previously secret internal documents demonstrating the presence of asbestos in the talc powder and efforts to conceal that information would become public.”

On December 14, 2018, the complaint says, a Reuters report that cited internal Johnson & Johnson documents revealed the pharma giant’s executives had known for decades of the presence of asbestos in talc powder and “actively sought to conceal the information from the public.” In the wake of the report’s publication, the case continues, Johnson & Johnson stock sank by more than 10 percent, amounting to a $30 billion loss of the company’s market capitalization.

As the dust settled, Johnson & Johnson’s decline in value, the lawsuit says, was more than the amount of liability it’s likely to face in personal injury lawsuits filed over injuries connected with asbestos in talc products. Hovering over Johnson & Johnson’s self-inflicted harm, the case goes on, is a “loss of faith in Johnson & Johnson itself,” which as recently as December 2017 was valued by the company at $31 billion, 20 percent of its overall value.