Abbott Laboratories ($ABT) Investor Settlement

The parties have reached an agreement to settle the case, but the terms are still being finalized. You can submit your application now, and it will be processed once claims filing opens.

N.D. Illinois

Court

1:22-cv-04661

Case number

02/19/2021

Class period Start

10/19/2022

Class period End

Abbott Laboratories has reached a settlement to resolve investor claims that it concealed unsanitary conditions at its Sturgis, Michigan infant formula plant that led to a nationwide recall and shortage.

Outline:

Throughout the Class Period, Abbott represented that its infant formula manufacturing met the highest safety and quality standards, while its Sturgis, Michigan facility suffered from long-standing, undisclosed CGMP violations, including standing water, cracked dryers, and confirmed Cronobacter contamination dating back to 2019. A whistleblower notified Abbott of these violations by February 2021, at the start of the Class Period, but the company failed to correct them. Following a February 2022 recall tied to infant illnesses and deaths, and a series of damaging FDA disclosures through 2022, Abbott's stock declined sharply on multiple occasions. The case has now reached a tentative settlement, subject to a signed settlement agreement and court approval.

Timeline:
September 2019: The FDA inspected the Sturgis facility and found Abbott was not testing a required representative sample of infant formula for microbiological contamination.
June 2020: Abbott again confirmed Cronobacter in a finished product batch at Sturgis.
February 16, 2021: A whistleblower filed a complaint with OSHA alleging falsified safety records and other violations at Sturgis; the complaint was forwarded to Abbott and the FDA.
September 20, 2021: The FDA received a report of an infant seriously ill from Cronobacter linked to Sturgis-produced formula; by this same date, Abbott had already received complaints of infant deaths linked to its infant formula.
September 20–24, 2021: An FDA inspection found Abbott failed to maintain the Sturgis facility "in a clean and sanitary condition."
October 19, 2021: The whistleblower filed a second, more detailed complaint directly with the FDA.
February 17, 2022: The FDA announced it was investigating infant illnesses and deaths tied to Sturgis formula; Abbott recalled Similac, Alimentum, and EleCare products. Stock fell from $120.58 to $116.79 (-3.14%).
March 22, 2022: The FDA publicly released its 2019, 2021, and 2022 Form 483 inspection reports detailing the unsanitary conditions at Sturgis. Stock fell from $121.89 to $116.92 (-4.08%).
May 16, 2022: The DOJ filed a complaint and Consent Decree alleging Abbott had been "unwilling or unable" to correct the conditions at Sturgis.
October 19, 2022: Abbott disclosed a significant, unanticipated decline in pediatric nutrition sales tied to the Sturgis shutdown and announced leadership changes at the plant. Stock fell from $104.98 to $98.11 (-6.54%).
Background:

Abbott is one of the largest suppliers of infant formula in the United States, with its Sturgis, Michigan facility manufacturing roughly 40% of the company's U.S. supply. Abbott represented in its SEC filings, sustainability reports, and public statements that its manufacturing facilities were "deemed suitable," that its nutrition business "ensures food safety through a tightly controlled manufacturing process," and that it maintained rigorous testing and compliance with FDA Current Good Manufacturing Practice regulations.

In reality, Abbott had been on notice of severe, unaddressed sanitation problems at Sturgis for years. As early as September 2019, the FDA found Abbott was not adequately testing its formula for microbiological contamination, and internal company records confirmed Cronobacter in finished product batches in both 2019 and 2020. 

On February 16, 2021, three days before the start of the Class Period, a whistleblower who had worked in Sturgis's Quality Assurance unit filed a formal complaint alleging falsified safety records, the release of untested formula, and deception of FDA inspectors. 

By September 20, 2021, Abbott had received complaints of infant deaths linked to its formula, and an FDA inspection that same month found the facility was not being maintained in "a clean and sanitary condition." Abbott took no meaningful corrective action.

The truth began to emerge in February 2022, when the FDA announced an investigation into infant illnesses and deaths tied to Sturgis-produced formula, and Abbott issued a sweeping recall. 

Subsequent disclosures — including the FDA's March 2022 release of its inspection reports, the DOJ's May 2022 complaint and Consent Decree, and, on June 8, 2022, revelations that Abbott had known of the whistleblower's allegations a full year before the recall and that a total of nine infant deaths (not the four previously disclosed) were linked to Sturgis formula — caused Abbott's share price to decline repeatedly throughout the Class Period. In its own annual Global Sustainability Reports, Abbott had told investors that its "nutrition business ensures food safety through a tightly controlled manufacturing process that encompasses all steps from accepting materials from suppliers through to final product distribution," that it "monitor[s] and verify microbiology, packaging integrity, and nutrient and lot control," and that it "complete[s] extensive finished product testing before releasing it for commercial distribution" — representations investors allege were materially false in light of the undisclosed conditions at Sturgis. The case has now reached a tentative settlement, subject to a signed settlement agreement and court approval.

What Can Investors Expect Now?

Abbott Laboratories has reached a settlement to resolve investor claims that it concealed unsanitary conditions at its Sturgis, Michigan infant formula plant that led to a nationwide recall and shortage.

If you were damaged due to this situation, you can check if you are eligible and get more details in the FAQ section once the settlement is finalized.

Case Type

US Securities Class Action

Case Status

Tentative Settlement

Alleged Offence

Mismanagement,

Misleading Statements,

Financial Misrepresentation,

Failure to Disclose,

Negligence,

Omissions

Suspected Party

Directors,

Management,

Service Provider

Security Type

Stocks

Trade Direction

Long

Filing date

08/31/2022

Plaintiffs

Quoniam Asset Management GmbH; KBC Asset Management NV

Attorneys

Bernstein Litowitz Berger & Grossmann LLP; Motley Rice LLC

Defendants

Robert B. Ford; Robert E. Funck, Jr.; Christopher J. Calamari

Trades matching type

FIFO

Abbott Laboratories ($ABT) Investor Settlement

Frequently Asked Questions