Abbott Brass Can’t Nix Investors’ Formula Recall Suit

Aug 10, 2024 | News

On August 7, 2024, a Chicago federal judge rejected the defendants’ arguments that tossing the lawsuit accusing Abbott Laboratories leaders of concealing known safety issues related to recalled infant formula was in shareholders’ “best interest.”

U.S. District Judge Sunil R. Harjani wrote that current and former directors and senior officers seemingly misunderstood the complaint and”potentially the purpose of derivative litigation more broadly.” According to Judge Harjani, the leaders had essentially argued that the case should be dismissed because going forward with the suit could uncover evidence that could harm the company in future lawsuits. But such an argument “could be made in any derivative suit,” Judge Harjani wrote.

He said tossing the suit for the suggested reason would “in effect nullify all derivative ligation because the directors could always argue that allowing shareholders to bring a derivative litigation that could uncover illicit conduct is not in the best interest of the company.”

“Defendants’ assertion is akin to an academic argument about the true value of derivative litigation, but that is certainly not grounds to dismiss this case under governing law,” Judge Harjani wrote.

In July 2023, the Southeastern Pennsylvania Transportation Authority (SEPTA) and the International Brotherhood of Teamsters Local No. 710 Pension Fund moved to consolidate related derivative cases. U.S. District Judge Manish S. Shah granted the motion, as well as their request to appoint them as co-lead plaintiffs. Kehoe Law Firm represents SEPTA in this action.

SEPTA and Local No. 710 had alleged that the directors repeatedly failed to implement and monitor a compliance and safety program related to Abbott’s infant formula, disregarded their duty to investigate red flags and remedy misconduct, and covered up safety and compliance risks related to the manufacturing and selling of the formula products. “Here, plaintiffs allege that the director defendants failed to exercise their oversight function over acritical safety compliance function which allegedly led to the death of several customers,” JudgeHarjani wrote.

The case is In re Abbott Laboratories Infant Formula Shareholder Derivative Litigation, case number 1:22-cv-05513, in the U.S. District Court for the Northern District of Illinois.

Have You Held Slack Technologies Stock Continuously Since June 2019?

Apr 28, 2020 | Securities Class Action Archive

Kehoe Law Firm, P.C. Investigating Slack Technologies For Potential Breach of Fiduciary Duty Claims

Kehoe Law Firm, P.C. is making investors aware that on April 27, 2020, a shareholder derivative action was filed in United States District Court for the District of Delaware seeking to remedy alleged wrongdoing committed by certain directors and officers of Slack Technologies (“Slack Technologies” or the “Company”) (NYSE: WORK) from June 20, 2019 through the present (the “Relevant Period”) based on misleading statements and omissions made in connection with Slack Technologies’ June 2019 initial direct stock offering (“the Offering”), the subsequent failure to correct them, and insider sales made in connection with and after the Offering. 

According to the complaint:

The Individual Defendants breached their fiduciary duties by personally making and/or causing the Company to make a series of materially false and misleading statements in the Offering Documents regarding the Company’s business, operations, and prospects. Specifically, the Individual Defendants willfully or recklessly made and/or caused the Company to make false and misleading statements that failed to disclose, inter alia, that: (1) the Company’s Slack App contained certain vulnerabilities that had already caused significant service outages and other disruptions in the past; (2) the Company had already failed to meet its promised 99.99% uptime guarantee during seven out of the twelve months in 2018, and would be unable to meet its 99.99% uptime guarantee in the future; (3) the Company’s SLAs [“service level agreements”] were highly punitive and unusual for the industry, and during service disruptions provided credits to users worth approximately 100 times the value of lost service, even to users who did not experience the disruptions or request service credits; (4) as a result of the foregoing, the Company’s financial results and overall prospects would be heavily impacted; and (5) the Company failed to maintain internal controls. As a result of the foregoing, the Company’s public statements were materially false and misleading.

After the Offering, the Individual Defendants failed to correct these false and misleading statements and omissions of material fact, rendering them personally liable to the Company for breaching their fiduciary duties.

Also in breach of their fiduciary duties, the Individual Defendants failed to maintain internal controls.

Furthermore, not only did six of the Individual Defendants breach their fiduciary duties by engaging in lucrative insider sales in connection with the Offering while the price of the Company’s common stock was artificially inflated due to the false and misleading statements of material fact, but three of the Individual Defendants continued to engage in insider transactions after the Offering, while the price of the Company’s stock remained artificially inflated, and before the truth was exposed. In total, the Individual Defendants collectively sold over 14.7 million shares of Company stock during the Relevant Period, obtaining proceeds of over $579 million. [Emphasis added.]

Slack Technologies investors who have owned their shares continuously since June 2019 are encouraged to contact either Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], or John Kehoe, Esq, (215) 792-6676, Ext. 801, [email protected], to discuss the investigation or potential legal claims.
Kehoe Law Firm, P.C.