A federal judge's ruling in Trenton, New Jersey, has paved the way for Johnson & Johnson (NYSE: JNJ) shareholders to collectively proceed with a lawsuit alleging the company concealed information about asbestos contamination in its talc products.
U.S. District Judge Zahid Quraishi granted permission for shareholders to pursue securities fraud claims as a group, spanning from February 22, 2013, to December 13, 2018, dismissing J&J's argument for a shorter class period.
Rejecting J&J's plea for a reduced class period, the judge emphasized that certain events causing the company's stock price decline were not devoid of crucial information.
The lawsuit targets allegations that J&J and its executives deliberately obscured details concerning asbestos in their talc-based products.
J&J's talc products have been at the center of controversy.
Despite the company's global transition to using corn starch instead of talc this year and affirmations about product safety, the ongoing litigation challenges these claims.
The lawsuit's authorization as a class action could significantly impact shareholders' ability to recover damages more efficiently and cost-effectively.
The judge's decision follows events in 2017 and 2018, including a substantial jury award to plaintiffs alleging talc-induced ovarian cancer and a Reuters report revealing internal documents suggesting J&J's knowledge of asbestos risks over decades.
Despite J&J's claims that the events did not contain new information altering earlier disclosures, the judge emphasized the significance of the Reuters report's detailed analysis and contextual clarity, denying J&J's argument.
Price Action: JNJ shares are up 1.51% at $159.10 on the last check Tuesday.