Firm Probing Abbott Over Possible Violations Involving Recalled Powdered Baby Formula

NORTH CHICAGO, IL — A shareholder rights law firm is investigating possible breaches of fiduciary duty or violations of state law by leaders of Abbott Labs. And a local member of Congress wants the Food and Drug Administration to explain why it waited to issue a warning about contaminated baby formula produced by the company.

The announcements from San Diego-based firm Johnson Fistel and U.S. Rep. Raja Krishnamoorthi (D-Schaumburg) followed this week's release of reports from federal food safety inspectors that revealed harmful bacteria and unsanitary conditions were found at Abbott Nutrition's Sturgis, Michigan, manufacturing facility.

Powdered baby formula produced at the Sturgis plant has been linked to reports of Cronobacter sakazakii illnesses. Certain Similac, Alimentum and EleCare branded infant formulas were recalled in February.

According to the Food and Drug Administration, as of last month, five infants with exposure to formula produced at the facility had been hospitalized — four with Cronobacter and one with Salmonella Newport infection — and Cronobacter may have contributed to death in two babies.

Abbott faces more than a half-dozen proposed class action lawsuits from parents who purchased the recalled formula or who were sickened after previously consuming the formula.

This week, the FDA this week released inspection reports of the facility from September 2019, September 2021 and the first quarter of 2022.

FDA investigators reported Cronobacter was found in the powdered infant formula production area of the plant on eight occasions between October 2019 and Feb. 2, 2022. Then, during root cause analysis from Feb. 6 to Feb. 20, the firm identified the bacteria on 20 occasions.

Among the findings from last month's round of inspections prompted by reported of babies sickened by the formula, investigators reported that Abbott "did not establish a system of process controls covering all stages of processing that was designed to ensure that infant formula does not become adulterated due to the presence of microorganisms in the formula or in the processing environment" and that it "did not ensure that all surfaces that contacted infant formula were maintained to protect infant formula from being contaminated by any source," according to the FDA.

"Once the immediate public health risk is minimized, FDA will conduct a programmatic review to ensure the maximum effectiveness of agency programs and policies related to infant formula and special medical food complaints, illnesses, and recalls," FDA representatives announced.

"Conducting this review is a top priority for the FDA and will be done as efficiently as possible, and we can ensure this effort will not interfere with the immediate recall response activities," they continued. "We will and must continue focusing on taking all steps possible to protect the health of those who rely on safe powdered infant formula."

Abbott said in a statement it is "taking this very seriously and working closely with the FDA to implement corrective actions."

Johnson Fistel, the shareholder rights firm, is soliciting owners of Abbott stock to retain it to investigate potential legal claims on behalf of the company and "certain of its key insiders and/or directors," according to the retention letter.

Shareholders who have held Abbott stock since September 2019 may have standing to hold the firm harmless by making the company's officers or directors personally responsive for alleged harm, according to representatives of the law firm.

"You may also be able to assist in reforming the Company's corporate governance to prevent future wrongdoing," they told stockholders.

The company is due to hold its annual meeting next month. According to a notice of the meeting, the company's board of directors recommends shareholders vote against all five shareholder proposals due to be introduced, which include requirements for an independent board chairman, increased lobbying disclosures and a lower threshold for calling special shareholder meetings.

On Thursday, Krishnamoorthi, who chairs the Economic and Consumer Policy Subcommittee of the House Oversight and Reform Committee, sent a letter to FDA Commissioner Robert Califf asking for information about what he described as the "delayed response" of food safety regulators.

"According to public reporting, FDA learned in September 2021 about contaminated formula produced at an Abbott Nutrition facility in Sturgis, Michigan, but failed to issue a public warning until February," Krishnamoorthi said. "Newly released FDA inspection reports show that Abbott Nutrition failed to maintain sanitary conditions and procedures at the plant for years. FDA must do more to protect vulnerable infants from foodborne illnesses and warn their caregivers of potential dangers."

Related:

• Unsanitary Conditions At Michigan Plant Behind Baby Formula Recall
• Parents File Class Actions Over Abbott's Recalled Baby Formula
• Longtime Chief Of Abbott Labs Steps Down From Board
• Abbott, AbbVie Pause Some Russian Business Over Ukraine Invasion