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Abbott wins dismissal in infant formula recall shareholder lawsuit
A federal judge said shareholders did not show Abbott intended to deceive investors tied to the February 2022 Similac, Alimentum and EleCare recall.
Insurance Journal reports a federal judge dismissed a shareholder lawsuit accusing Abbott Laboratories of securities fraud tied to its February 2022 recall of powdered infant formula brands including Similac, Alimentum and EleCare produced at its Sturgis, Michigan plant.
U.S. District Judge Steven Seeger said the shareholders, led by two European asset managers, failed to prove Abbott intended to deceive them or that it inflated its share price in connection with the recall. The decision concluded that the complaint, at best, alleged the company mishandled the Sturgis plant and the FDA inspection.
The court also cited the plant closure after reports of severe bacterial infections in infants and after investigators found traces of potentially deadly bacteria. The recall and closure worsened a baby formula shortage that began during the COVID-19 pandemic.
Court papers said Abbott’s U.S. infant formula market share exceeded 40% before the recall. In the 141-page decision, Seeger said mismanaging a plant that makes infant formula is bad, but not securities fraud, and both sides did not immediately respond to requests for comment.