Similac Lawsuits, Enfamil Lawsuits Weigh on Formula Makers’ Stock Price Due to Mounting Liability for NEC Injuries

Following a $60 million verdict in an Enfamil lawsuit last week, investor are expressing serious concerns over the amount of damages infant formula manufacturers may be forced to pay to families of preterm infants left with a devastating intestinal injury known as necrotizing enterocolitis (NEC), which has been linked to both Enfamil and Similac.

On Friday, the stock prices dropped subtantially for both Abbott Laboratories, the makers of Similac infant formula, and Reckitt Benckiser, the parent company of Mead Johnson, which sells Enfamily formula. Collectively, the companies face several hundred NEC lawsuits alleging that families and the medical community were not adequately warned about risks associated with use of the cow’s milk infant formula products.

The investor sell-off came after an Illinois jury returned a massive damage award in one lawsuit brought by Jasmine Watson, whose premature child, Chance Dean, died shortly after birth due to NEC complications caused by Enfamil formula. The case was being closely watched, since it was the first NEC lawsuit to go to trial in the United States, and may signal how juries will respond to similar evidence and testimony that may be repeated throughout other claims being pursued by families nationwide.

Plaintiffs each raise similar claims, indicating that the makers of Enfamil and Similac placed their desire for profits ahead of the safety of babies, by aggressively marketing their products and driving many families away from safer breastfeeding or donor milk alternatives.

Following publication of the verdict, Reckitt Benckiser’s stock dropped about 10%, as investors raised concerns about the potential liability the company could face if the verdict is a typical outcome of the NEC infant formula lawsuits going to trial. Observers say the drop in stock price is out of proportion with the size of this one verdict, suggesting investors are more worried about future Enfamil lawsuits that will be going before juries over the next few years.

Abbott Laboratories’ stock also suffered on Friday, dropping 2.8%, even though its Similac products were not at issue in the trial. Some observers indicated that Abbott, which faces more than 900 Similac lawsuits, could face $60 billion in damages and legal fees if it does not resolve the litigation.

Watson’s son was born prematurely at 31 weeks and developed NEC shortly after being fed Enfamil. The child later died from the injuries, and Watson argued at trial that her loss could have been avoided if Mead Johnson had warned her or her doctors about the increased risks of NEC linked to the infant formula products.

During the trial, Watson’s attorneys pointed to numerous studies and experts who have warned for decades that cow’s milk-based infant formula products, like Enfamil and Abbott’s Similac, have been linked to an increased risk of NEC.

Not only did the jury quickly find in Watson’s favor, but the $60 million reward was $25 million higher than Watson originally sought. Mead Johnson’s parent company has indicated it will appeal the decision.

March 2024 Infant Formula NEC Lawsuits Update

NEC is a condition that often results in the need for emergency surgery while the baby is still in the NICU, and a growing body of research has found that cow’s milk-based infant formula like Enfamil and Similac greatly increases the risk among premature infants. However, the formula manufacturers have faced sharp criticism in recent years for withholding known information about the risk, and even promoting certain versions of their products for use among preterm infants.

While the Watson trial was held at the state level, most Similac lawsuits and Enfamil lawsuits are currently pending in the federal court system, where claims brought nationwide have been consolidated before U.S. District Judge Rebecca R. Pallmeyer in the Northern District of Illinois, as part of an MDL, or multidistrict litigation.

Families allege that the makers of Similac and Enfamil knew about the baby formula NEC risks for premature infants, yet continued to market and promote their products to hospitals, doctors and parents, without warning about the problems.

Last year Judge Pallmeyer had the parties select four infant formula NEC lawsuits for an initial bellwether trial pool, to serve as early test cases to see how juries will respond to common evidence and arguments likely to be repeated in hundreds of similar claims.

While the date the first NEC bellwether trial in the federal court system not yet been scheduled, Judge Pallmeyer has previously indicated the cases will be spaced about 12 weeks apart, and prior scheduling orders suggested the claims would be ready to go before juries by the end of 2024.

As the bellwether trial process continues, baby formula lawyers are continuing to review and file new claims for families nationwide, and the size of the litigation is expected to continue to grow throughout 2024. Following the four early trial dates, if the parties fail to negotiate NEC lawsuit settlements for families, it is then likely that Judge Pallmeyer will start remanding dozens of individual claims back to U.S. District Courts nationwide for separate trial dates.