Southeastern Pennsylvania Transportation Authority Pension Plan and Teamsters Local 710 have moved to intervene in the Abbott Inc. Derivative Litigation pending in the Northern District of Illinois. The lawsuit, filed in October 2022, alleges wrongdoing by certain officers and directors of Abbott at least during the period from November 19, 2021, through June 8, 2022.
Specifically, the Individual Defendants are alleged to have breached their fiduciary duties and to have violated federal securities laws by concealing lapses in safety protocols at Abbott’s Sturgis, Michigan facility. These lapses resulted in environmental contamination with Cronobacter sakazakii bacteria, a critical issue affecting the manufacturing of infant formula.
In February 2022, the FDA reportedly confirmed Cronobacter contamination at the Sturgis facility, leading to a recall of various infant formula products. According to the complaint, Abbott executives portrayed the recall as a proactive measure to protect the public, not disclosing the FDA investigation.
Abbott eventually closed the Sturgis facility due to safety concerns, causing massive formula shortages in the U.S., Canada, and other markets. The federal government invoked the Defense Production Act to address the shortages.
In May 2022, the Senate Finance Committee launched an investigation into Abbott’s international tax practices and stock buybacks, linking them to the Sturgis facility issues. Not until June 2022 did Abbott disclose that it was aware of the whistleblower complaint in early 2021, contributing to a decline in the company’s stock price.
The actions during the Relevant Period led to significant repercussions, including stock decline, a class action lawsuit, and potential liability exposure for Abbott.
SEPTA and Teamsters Local 710 have moved to intervene in this derivative action, captioned In Re Abbott Laboratories Infant Formula Shareholder Derivative Litigation, 1:22-CV-5513 (N.D. IL), thereby demonstrating their commitment to protecting shareholder interests and holding Abbott’s officers and directors accountable for alleged misconduct.
John A. Kehoe, Partner at Kehoe Law Firm, commented: “We are pleased to see Southeastern Pennsylvania Transportation Authority Pension Plan and Teamsters Local 710 take a stand in intervening in the Abbott shareholder derivative action. Institutional shareholders play a crucial role in holding corporations accountable for their actions and advocating for positive governance reforms. This intervention marks a step towards transparency, accountability, and responsible corporate practices.”
For more information about Kehoe Law Firm and its involvement in this matter, please contact John A. Kehoe at [email protected] or call (215) 792-6676.