Paxton Seeks to Block Tylenol Maker’s Dividend, Citing Risks to Texas Lawsuit Recovery

Texas Attorney General Ken Paxton is taking action to prevent Tylenol manufacturer Kenvue from distributing a shareholder dividend, contending that the payment might jeopardize the state's chances of reclaiming billions in potential penalties from a lawsuit concerning alleged misleading marketing directed at pregnant women.

This week, Paxton submitted a motion requesting that a court stop Kenvue from distributing a planned dividend on November 26 or executing any significant asset transfers during the ongoing litigation. He expressed concerns that the dividend might deplete the company's resources required for settling future judgments or civil penalties.

“I will not permit large pharmaceutical companies to destroy the lives of Texans with their deceit and then evade responsibility when it’s time to face the consequences,” Paxton stated.

A lawsuit was initiated earlier this year against Kenvue and its former parent company, Johnson & Johnson. The complaint alleges that both entities promoted Tylenol to expectant mothers while hiding research that indicates acetaminophen, the drug’s active component, could be associated with increased rates of autism and ADHD in children.

Paxton argues that Johnson & Johnson’s 2023 spinoff of Kenvue was a calculated move designed to protect assets and reduce financial liability for possible consumer injuries. The attorney general contends that the dividend payment, which marks Kenvue’s inaugural full year as a publicly traded entity, constitutes a “fraudulent transfer” that may render the company insolvent should Texas win in court.

“Kenvue must cease the payment of fraudulent dividends to evade future civil penalties,” Paxton stated.

The motion additionally requests an injunction to stop what Paxton describes as “ongoing misleading marketing practices” associated with the company’s products. His office asserts that Kenvue persists in marketing to expectant mothers with safety assertions that minimize possible dangers, even as public apprehension grows and legal actions loom.

If the court approves the injunction, it would halt dividend distributions and block significant financial transactions until the court makes a final ruling. Paxton’s office asserts that without these actions, the company might escape financial responsibility for reportedly prioritizing profits over the well-being of Texans.

The attorney general’s filing marks a bold move in Texas’ ongoing legal battle against pharmaceutical companies alleged to engage in misleading marketing practices—a position that aligns with Paxton’s recent initiatives to take action against prominent drug manufacturers concerning opioids and various consumer health products.

Kenvue, a company that emerged from Johnson & Johnson in 2023, is known for its range of household brands such as Tylenol, Motrin, and Benadryl. The organization has yet to provide a public statement regarding the motion.

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