How does the old adage go? It’s not the crime that’s the problem, but the cover-up? The litigation currently being levied against Johnson & Johnson (NYSE:JNJ) may have just pivoted in that direction, sending JNJ stock lower to the tune of 10% on Friday, and getting JNJ shares started on the wrong foot this week as well.

The response is certainly understandable. Headlines suggesting the company suspected its talcum powder may have contained asbestos are dire. Even if they’re mischaracterizing the truth, there’s still clearly something to them.

On the other hand, even if the claims don’t overstate Johnson and Johnson’s role in manufacturing a cancer-causing product, its legal liability may not be as great as the beat-down of JNJ stock suggests.

If there’s a willful cover-up, however, everything about the story changes.

Past Verdicts Against JNJ

The matter’s developed into quite the drama, almost as if scripted by Hollywood.

With whispers finally turning into lawsuits beginning in 2016, it’s become quite clear that at least at some point in J&J’s history it was suspected by the company that its talcum powder may have contained measurable amounts of carcinogen asbestos. Since then, more than 11,000 individuals have filed related lawsuits against the company, mostly via a handful class-action suits being fought in a variety of jurisdictions.

Initially, individual plaintiffs bringing their cases against the company were somewhat successful, indicating larger-scale class action suits would find similar, scalable success. The movement’s success hasn’t remained consistently successful, however. In October, a New Jersey jury determined a lone plaintiff had not proven Johnson & Johnson’s talcum powder was the cause of her ovarian cancer. In November, a South Carolina jury — in a case that had been repeated due to deadlocked jury with the first trial — once again wasn’t able to conclude J&J was responsible for the now-deceased litigant’s cancer.

So far, Johnson & Johnson has won more of these cases or appeals than it’s lost.

The game may have changed on Friday of last week, however.

Upgraded to a Cover-Up?

It wasn’t brought to light within a courtroom, but rather, by Reuters’ investigative reporting and a story penned by Lisa Girion: Johnson & Johnson may have known for years that it was potentially liable for asbestos found in its talcum powder.

Examining a massive number of documents, including internal memos and information not used as evidence in any court cases to date, the Reuters commentary concluded “that from at least 1971 to the early 2000s, the company’s raw talc and finished powders sometimes tested positive for small amounts of asbestos, and that company executives, mine managers, scientists, doctors and lawyers fretted over the problem and how to address it while failing to disclose it to regulators or the public.”

The in-depth look from Reuters was shocking, given the setback Johnson and Johnson stock dished out to shareholders, though it was neither a surprise nor a proverbial smoking gun.

It’s been largely accepted there’s something to the story, but it’s also been made clear that convincing a jury Johnson & Johnson is culpable will be a tricky matter. If Reuters’ assertion that J&J knew its talcum powder products might contain asbestos and failed to properly warn consumers of that possibility prove true, however, the nature of the legal argument could change.

Failures to disclose even all plausible, even if not proven, risks has often resulted in punitive awards to plaintiffs above and beyond the legal damages associated with a merely dangerous product.

The uncertainty from here is whether or not the documents reviewed by Reuters will become part of future legal arguments. So far the company has been able to keep certain documents from being introduced as evidence. Now that they’ve been made public though, it becomes more difficult to prevent them from surfacing.

Bottom Line for JNJ Stock

For the record, Wells Fargo analyst Larry Biegelsen says the recent plunge from JNJ stock is overdone even if the worst-case scenario applies. That is, if J&J is determined to have inadvertently manufactured a dangerous product, past awards in such cases would suggest a financial liability of $3.3 billion. Biegelsen highlights the fact that Johnson & Johnson is sitting on $19 billion worth of liquidity.

Also for the record though, that figure is relatively small compared to other recent rulings against the company. In July, a St. Louis jury determined Johnson & Johnson owed $4.7 billion to a group of just 22 women, most of which was awarded as punitive damages related to arguments that the company knowingly sold a potentially dangerous product.

That’s the X-factor that should worry owners of JNJ stock more than any other. Different juries and judges can decide wildly different things. So at this time, it’s hard to gauge just how much Johnson & Johnson’s cover-up will cost them.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.