Johnson & Johnson's strategy to use bankruptcy to resolve its multibillion-dollar litigation over claims its talc products cause cancer was rejected by a federal appeals court Monday, which dismissed a bankruptcy petition by its talc subsidiary.

The ruling by the U.S. 3rd Circuit Court of Appeals in Philadelphia removed from bankruptcy the company's LTL Management unit, which was facing more than 38,000 legal claims tied to products such as it baby powder.

J&J, which maintains its talc products are safe, created and spun off LTL and assigned its talc liabilities to the unit and placed it in bankruptcy.