Texas has launched a high-stakes legal offensive against Kenvue Inc., the maker of Tylenol, seeking to block the company from distributing $400 million in dividends to shareholders as a lawsuit unfolds over claims that acetaminophen use during pregnancy could be linked to autism and other developmental disorders. The move, announced on November 6, 2025, by Texas Attorney General Ken Paxton, marks an extraordinary escalation in a legal battle that has already drawn national scrutiny and rattled the pharmaceutical and business communities.
At the heart of the lawsuit is an allegation that Kenvue failed to adequately warn consumers about potential risks associated with acetaminophen use during pregnancy. According to filings reported by GeneOnline and The Texas Tribune, Texas argues that if Kenvue is allowed to distribute such a large sum to its shareholders, it could hinder the company’s ability to pay damages should it lose the case. The state’s motion seeks to prevent any financial distributions while litigation continues, aiming to ensure that sufficient funds remain available to satisfy potential legal liabilities.
“I will not allow Big Pharma to ruin the lives of Texans with their lies and then refuse to pay the bill when it’s brought to account,” Paxton said in a statement, underscoring his office’s determination to hold the company accountable. The lawsuit, filed last month in Panola County, Texas, alleges that Kenvue has not sufficiently informed consumers about a purported risk of having a child with autism if Tylenol is taken during pregnancy.
However, the scientific underpinnings of the lawsuit are hotly contested. Major medical associations have pushed back, saying that Paxton’s allegations overstate the unsettled science regarding a possible link between autism and acetaminophen. While some large studies have suggested a correlation, others—especially those examining genetic factors or sibling outcomes—have found no such connection. As The Texas Tribune notes, the claims remain unproven in scientific research, and the debate has become a flashpoint for both public health and legal experts.
Still, Paxton’s legal strategy is aggressive and, according to legal experts, highly unusual at this stage of litigation. “Presumably, there hasn’t been a huge amount of evidence marshalled about this, so it would be relatively difficult to spitball whether the plaintiff is likely to win,” said James Spindler, a corporate law professor at the University of Texas at Austin. “It would also be relatively difficult to spitball whether the company is going to be insolvent if it makes its payment.”
Corporations typically enjoy broad discretion over how and when they distribute dividends. State intervention is rare, especially before a court has determined liability or damages. But Texas is invoking a narrow exception in state law that allows intervention if a company is on the brink of insolvency and might need the funds to pay creditors. Paxton’s office argues that the sheer size of the potential payout and the uncertainty surrounding the litigation justify this extraordinary request.
Kenvue, for its part, has come out swinging against Texas’s legal maneuvering. In a statement, a spokesperson for the company said, “These politically and financially motivated actions will have a detrimental impact on public health for our consumers in this state. We will do everything in our power to stand up for sound, credible science.” The company is also taking immediate legal action to counter what it calls “reckless and scientifically unsound theories.”
The lawsuit comes amid heightened public attention to acetaminophen and its safety. Just a month ago, U.S. Health Secretary Robert F. Kennedy Jr. announced plans to change drug labels to warn pregnant women about taking Tylenol or its generic equivalent. However, Kennedy later moderated his stance, saying, “The evidence on Tylenol is not sufficient to say it definitely causes autism. But it’s very suggestive.” He recommended that women consult with their physicians to decide which medications to take, highlighting the ongoing uncertainty and the need for individualized medical advice.
The case is being heard in Panola County, a rural area on the Texas-Louisiana border with a population of about 22,000. The county’s sole judge, LeAnn Rafferty, a Republican who has served since 2016, will preside over the proceedings. No hearing date has yet been set for the motion to block dividend payments, but the state has requested an expedited timeline.
Adding another layer of complexity, Kenvue is currently in negotiations to acquire consumer products giant Kimberly-Clark for $40 billion—a relative bargain given the slate of brands it oversees. Kenvue’s stock has already fallen 30 percent since comments from Kennedy and former President Donald Trump about acetaminophen risks sent shockwaves through the market. If the company is barred from paying dividends, legal experts say the stock price could tumble even further, potentially pressuring Kenvue to settle the lawsuit. “This would put a lot of pain on the company in the short term,” Spindler observed. “The only real reason to own [stock in a] corporation is because it pays dividends, and if it can’t pay dividends, no one would ever want to buy it.”
The lawsuit also seeks to prevent Kenvue from airing advertisements that claim Tylenol is safe to consume while pregnant, a move that highlights the broader battle over public messaging and consumer trust. Ashley Keller, a private attorney hired by the state to handle the case, expressed confidence that Judge Rafferty would “see through Kenvue’s smokescreen and grant our injunction.” Keller is also overseeing dozens of consolidated lawsuits against Kenvue and its parent company, Johnson & Johnson, brought by parents who believe their child’s autism was caused by Tylenol.
Political dynamics are also at play. Paxton, who is running to unseat U.S. Senator John Cornyn in the 2026 Republican primary, has made the case a centerpiece of his campaign, positioning himself as a champion for Texas families against what he calls the “lies” of Big Pharma. Yet, this aggressive push against a major multinational corporation stands in contrast to the state’s broader efforts to attract businesses by promising a friendly legal climate. In 2023, the Texas Legislature created specialized business courts to offer “predictability and certainty” to corporations, as Governor Greg Abbott described it. However, Paxton’s office appears keen to keep this case in local courts, where a sympathetic jury might be more likely to award large damages.
As the legal drama unfolds, all eyes are on Panola County. With no hearing date set and the science still unsettled, the outcome remains uncertain. But the stakes—for Kenvue, for Texas, and for the millions who rely on acetaminophen—could hardly be higher.
While the legal and scientific debates rage on, the case has already reshaped the landscape for pharmaceutical litigation and corporate accountability in Texas, leaving investors, consumers, and public health officials anxiously awaiting the next move.