A federal judge in Texas rejected Johnson & Johnson's (JNJ, Financials) third attempt to use bankruptcy to resolve lawsuits alleging that its talc-based products caused cancer. The decision forces the pharmaceutical giant to return to the traditional legal system to fight tens of thousands of claims.

U.S. Bankruptcy Judge Christopher Lopez made the decision after a two-week trial in Houston. He said that J&J's plan to have a company, Red River Talc, file for bankruptcy was not a good one. J&J had planned to give the company about $9 billion to settle the claims without going to court. The company said that 83% of claims agreed with the move, which is more than the 75% level needed by U.S. bankruptcy law. However, Lopez found that J&J had given claims a "unreasonably short voting time" to get approval "at any cost," as reported by Bloomberg.Instead of appealing, J&J said it would stop going through bankruptcy and instead go to court for each case. The company will also take back about $7 billion that was set aside for the bankruptcy settlement.J&J says the claims have no basis in fact and points the finger at plaintiff lawyers and ads that are based on cases. "This is a fake claim created by greedy plaintiff lawyers looking for another deep pocket to sue," Erik Haas, J&J's worldwide vice president of litigation, said in a statement.This is the third time that J&J has tried to use the controversial "Texas two-step" bankruptcy strategy. This strategy lets businesses put their debts on a subsidiary, which then files for bankruptcy. The company's first two tries were turned down in New Jersey, which is home to J&J.