Attorney General Ken Paxton has filed a motion to stop Tylenol from disbursing shareholder payouts while Texas’ pending lawsuit is being considered. The suit, filed last week, accuses Kenvue and Johnson & Johnson of deceptively marketing Tylenol to pregnant women.
By asking the court to block dividend payments and other asset shifts, Paxton is trying to ensure that funds remain available for potential penalties or settlements if Texas prevails in court.
According to the new motion, Kenvue, which owns Tylenol, is accused of violating the Texas Uniform Fraudulent Transfer Act (TUFTA) by planning to pay out $400 million to shareholders, even while facing the potential costs of multiple Tylenol-related lawsuits.
Shareholders payouts would use funds needed to pay creditors. Plaintiffs argue the State of Texas would be considered a creditor under TUFTA.
“Texas sued Kenvue just nine days ago, with the expected value of Texas’s suit alone vastly exceeding Kenvue’s total equity value,” reads the motion. “And the ‘threat’ of future, similar suits—from both injured individuals and other state sovereigns—is a real one that is almost certain to materialize.”
The state is also seeking an injunction to stop these drug companies from continuing their alleged illegal and misleading marketing practices.
Both Kenvue and Johnson & Johsnon have been accused of deceptively and illegally marketing Tylenol to pregnant women despite evidence suggesting that exposure to acetaminophen, the drug’s only active ingredient, can cause autism and other neurological issues in children.
The original lawsuit also seeks to hold Johnson & Johnson accountable for allegedly creating an illegal corporate spinoff to evade financial responsibility.
A Kenvue spokesperson told Texas Scorecard the company is taking legal action to stop Texas from continuing to advance “reckless” and “scientifically unsound” theories. They called the attorney general’s actions “politically and financially motivated” and argued they will impact public health.
Paxton said in a statement that he “will not allow Big Pharma to ruin the lives of Texans and then refuse to pay the bill when it’s brought into account.”
“Kenvue very well may be insolvent because of its own reckless actions, and it should no longer pay fraudulent dividends as a way to avoid paying future civil penalties,” Paxton added.
The case against Kenvue and Johnson & Johnson is working its way through the legal process.
