A federal judge ruled Johnson & Johnson cannot use bankruptcy for its baby powder product to stop a lawsuit against it that claims the company concealed evidence that its industrial talc operations exposed workers to asbestos.

LTL Management's bankruptcy judge sided with the family members of a man who had sued Johnson & Johnson back in 1986. According to court documents, the man accepted to drop his lawsuit. The company provided sworn testimony that said no tests had ever shown J&J's industrial Talc contained asbestos. He died in 1994.

Johnson & Johnson is now being sued by the family, claiming that their testimony was false and citing new evidence. The family's lawyers claim that J&J failed to file thousands of asbestos lawsuits against them because they provided false information.

Asbestos, an industrial material, is known to cause deadly lung diseases. The product was used in insulation and automobile brakes until it was discovered to be toxic. It also forms near a less deadly mineral: talc. Talc can potentially be contaminated by asbestos during the mining process. Companies have paid hundreds of thousands to victims of the product over the years, ranging from billions of dollars in the 1980s to hundreds of millions today.

Johnson & Johnson used to own Windsor Minerals, a talc mine that produced baby powder and other products. Johnson & Johnson has long denied that the talc used in its consumer products contained asbestos. The company currently faces over 40,000 claims that baby powder talc causes cancer. These allegations are corroborated by an FDA recall of Johnson & Johnson talcum powder due to asbestos contamination.

Johnson & Johnson sent an email statement stating that it would fight the pending suit.

"We stand behind the safety of Windsor Minerals' talc, which was once a Johnson & Johnson affiliate. In the late 1980s, the company was sold to a non-Johnson & Johnson entity. Johnson & Johnson has denied the claims in the suit and will defend it if the case proceeds.

Johnson & Johnson created LTL Management last year and declared it bankrupt to settle all claims. A trust was established with at least $2B to pay alleged victims. The baby powder lawsuits were put on hold while the bankruptcy proceedings are proceeding.

U.S. Bankruptcy Judge Michael Kaplan ruled Tuesday that the lawsuit alleging Johnson & Johnson hid evidence was sufficiently different from the baby powder cases for it to proceed. Kaplan allowed Johnson & Johnson the possibility of arguing in the future that the suit should not be halted.