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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. J and J

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Speaker 1: and Buyer are giant companies fighting thousands of lawsuits claiming

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Speaker 1: that one of their well known products causes cancer. In

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Speaker 1: J and J's case, that product is its iconic baby powder.

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Speaker 1: In Buyer's case, that product is its popular round up

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Speaker 1: weed killer. Is settlement in the cards for either of

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Speaker 1: those companies? And what would it take? The estimates range

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Speaker 1: from manageable to colossal. Joining me is Peter Heading, a

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Speaker 1: professor at Wayne State University Law School. Peter, let's start

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Speaker 1: with Buyer. Settlement is a one point is it's excuse me?

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Speaker 1: Settlement is a two point five billion dollar question or

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Speaker 1: perhaps a twenty billion dollar question, depending on who you ask.

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Speaker 1: Why is the range so wide? Well, in these mass

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Speaker 1: torque cases, it's hard to estimate what it's going to

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Speaker 1: take to settle everything. Of course, Buyer really wants to

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Speaker 1: see these cases settled. They don't want to get dragged

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Speaker 1: back into a courtroom where they could face They've already

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Speaker 1: seen once getting hit with a I think it was

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Speaker 1: a two billion dollar punitive damage award, and so they

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Speaker 1: really want to get these resolved. Coming up with a

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Speaker 1: number that will settle them, though, is difficult, especially when

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Speaker 1: you have cases filed in state and federal courts. So

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Speaker 1: just figuring out how to get all of these settled,

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Speaker 1: if buyer really wants to do that, is you're gonna

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Speaker 1: have to come up with a number. I suspect it

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Speaker 1: will be north of two billion dollars. I doubt it

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Speaker 1: will be twenty billion, but it's going to be in

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Speaker 1: the billions at least. There's a lot of pressure on

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Speaker 1: buyer CEO. He was the architect the Monsanto takeover, and

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Speaker 1: because of the round up debacle, the company has lost

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Speaker 1: about thirty eight billion dollars in value since buying Montsanto.

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Speaker 1: Did the market read the costs of the litigation correctly? Um?

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Speaker 1: I think, at least what the market really does not

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Speaker 1: like his uncertainty. And so when you're talking about a

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Speaker 1: range of possible settlements from two billion to twenty billion,

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Speaker 1: this is what unsettled investors they want certainty. So for buyer,

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Speaker 1: the key is going to be can they come up

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Speaker 1: with a dollar figure that is going to resolve these

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Speaker 1: cases and really just put them behind them? Um. Of course,

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Speaker 1: the other wild card in all of this, too, is

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Speaker 1: that cancers take a while to develop, and so even

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Speaker 1: if they were able to settle every case that's out

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Speaker 1: there now, they don't know for sure if there are

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Speaker 1: other ones coming down the pike, and so I suspect

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Speaker 1: acquiring monsanto um is something that they are going to

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Speaker 1: regret for a while. Let's turn to J and J now,

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Speaker 1: with more than fourteen thousand lawsuits over its talent products

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Speaker 1: over the past three years, jurors have a word a

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Speaker 1: total of more than five billion to plaintiffs, but some

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Speaker 1: cases have resulted in hung juries or outright wins for

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Speaker 1: J and J, and some verdicts have been thrown out

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Speaker 1: on appeal. Now sources tell Bloomberg that the Justice Department

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Speaker 1: is pursuing a criminal investigation into whether J and J

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Speaker 1: lie to the public about the possible cancer risks of

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Speaker 1: its talcum powder. So a lot of different factors to consider.

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Speaker 1: How do they play into settlement possibilities. Well, certainly, if

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Speaker 1: I'm a plaintives attorney, I think I want to see

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Speaker 1: how the criminal investigation is going to play out. Will

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Speaker 1: Johnson and Johnson have to, for example, plead guilty um

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Speaker 1: having made false statements or making maybe perhaps filing false

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Speaker 1: documents with the government. So at this point, if I'm

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Speaker 1: a plantiffs attorney, I may want to sit back and

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Speaker 1: wait and watch to see how this plays out. Because

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Speaker 1: while Johnson and Johnson disclosed that it had received a

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Speaker 1: subpoena from the Justice Department, you didn't say it was

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Speaker 1: a grand jury subpoena, And of course that means that

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Speaker 1: there is a criminal investigation taking place. So if I'm

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Speaker 1: a plaintiffs lawyer, I think I want to wait and

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Speaker 1: watch and see how is this going to play out?

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Speaker 1: And perhaps I could use any kind of criminal resolution

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Speaker 1: to my advantage. As far as the criminal investigation, there

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Speaker 1: is a regulatory investigation already going on, and it's a

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Speaker 1: it's just a company involved. How how would the penalties differ. Well,

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Speaker 1: because it's a corporation, so all that can be imposed

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Speaker 1: on a corporate ration are fines or civil monetary penalties.

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Speaker 1: But if I'm a plaintiffs lawyer, for example, I want

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Speaker 1: to see how Johnson and Johnson is going to resolve it.

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Speaker 1: And if there is a criminal resolution, what's going to

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Speaker 1: go into what's called the statement of facts, in which

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Speaker 1: the Justice Department can quite often just dictate the terms

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Speaker 1: of what a company will agree to. So they are

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Speaker 1: likely on the hook for some type of penalty, whether

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Speaker 1: it be civil or criminal. And then of course they

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Speaker 1: also have all these lawsuits out there that they're going

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Speaker 1: to have to resolve. They want a few and they've

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Speaker 1: lost a few. But again, this is where the uncertainty

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Speaker 1: comes into play. And we've seen today Johnson and Johnson

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Speaker 1: stock has taken a real hit because of what Bloomberg reported.

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Speaker 1: And this is again what investors don't like. They don't

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Speaker 1: like the uncertainty that comes with a criminal investigation. How

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Speaker 1: will the criminal investigation itself differ from the regulatory investigations. Well,

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Speaker 1: with a criminal investigation, um, you are the federal prosecutors

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Speaker 1: can threatened individuals, and indeed the company is expected to

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Speaker 1: cooperate and if necessary, to offer up individuals who engaged

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Speaker 1: in wrongdoing. And so that puts enormous pressure on a

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Speaker 1: company to cooperate, that they have to cooperate. Nobody wants

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Speaker 1: to appear to be uncooperative, and if they want any

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Speaker 1: credit for cooperation, they're going to have to offer up

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Speaker 1: any individuals who might have made either false statements or

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Speaker 1: misstatements in any kind of public filings or regulatory filings. So, Peter,

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Speaker 1: there have been turning back to the settlements. J and

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Speaker 1: Jay's payout could total five to fifteen billion of corps

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Speaker 1: in Bloomberg Intelligence. That was before news of these criminal investigation.

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Speaker 1: There have been settlements, huge massive settlements before in bax

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Speaker 1: In fen Fen. When you look back on them, is

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Speaker 1: there anything in particular in those cases that moved the

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Speaker 1: company to settle. Was it a string of you know,

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Speaker 1: jury losses or jury awards that we're getting bigger, or

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Speaker 1: just too many plaintiffs. Well, I think part of it

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Speaker 1: is that, you know, there there is a reputational risk

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Speaker 1: to a company like Johnson and Johnson. I mean, they

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Speaker 1: are very much built around and when we've all seen

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Speaker 1: their ads that you know you can trust us, well

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Speaker 1: maybe we can't trust them. And so getting these cases

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Speaker 1: resolved lets them at least put it into the past.

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Speaker 1: And again at the public has a fairly short memory

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Speaker 1: for these types of things, and so if they can

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Speaker 1: get them resolved. Two years from now, some people might

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Speaker 1: remember Calcolm Powder, but a lot of people are going

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Speaker 1: to be paying that much attention to it, and you

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Speaker 1: just move forward. So I think for them, the better

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Speaker 1: thing is to get them resolved, to put this behind it,

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Speaker 1: and that gives Wall Street the certainty that it wants

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Speaker 1: that all right, this is a one time payment. They

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Speaker 1: made the payment. Now we can move forward. You're so right,

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Speaker 1: because when I was looking at this, I was going, oh,

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Speaker 1: fen fen, I forgot about that litigation. Thanks so much, Peter.

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Speaker 1: As always, that's Peter Henning, Professor at Wayne State University

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Speaker 1: Law School. Thanks for listening to the Bloomberg Law Podcast.

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Speaker 1: You can subscribe and listen to the show on Apple podcast, SoundCloud,

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Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.

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Speaker 1: This is Bloomberg