Reckitt Benckiser Faces Class Action Lawsuit Over Enfamil NEC Risks

Investors indicate shares plummeted after a 2024 NEC Enfamil lawsuit against company’s Mead Johnson subsidiary resulted in a $60 million jury verdict.

A group of investors have filed a lawsuit against Reckitt Benckiser Group, claiming they were purposefully misled about the safety of Enfamil infant formula products sold by its recently acquired subsidiary, Mead Johnson.

The complaint (PDF) was brought in the U.S. District Court for the District of New York on June 5, indicating the company and some of its officers hid the fact that Enfamil increased the risk of a potentially deadly condition known as necrotizing enterocolitis (NEC), particularly in products designed for preterm infants.

The lawsuit was filed by Elevator Constructors Union Local No. 1 Annuity & 401(K) Fund, seeking class action status to pursue damages on behalf of all other similarly situated investors in Reckitt Benckiser Group, indicating that substantial financial losses resulted from the company’s failure to disclose the Enfamil NEC risks.

NEC is a devastating gastrointestinal disease experienced by newborn babies, which occurs when harmful bacteria breaches the walls of the intestines, causing portions of the tissue to become inflamed or die. In many cases, infants who contract the condition require emergency surgery while still in the neonatal intensive care unit (NICU) after birth. Many babies do not survive the disease, and those that do often experience lifelong effects.

There has been mounting scientific evidence published in recent years, which established that cow’s milk-based formula products like Enfamil and Similac dramatically increase the risk of preterm infants developing the disease.

As a result of the manufacturer’s failure to adequately disclose those risks to parents and the medical community, Abbott Laboratories and Mead Johnson already face more than 700 Similac lawsuits and Enfamil lawsuits, alleging that the manufacturers knew or should have known about these risks for decades, but continued to promote use of their formula among vulnerable premature infants.

Following years of litigation and pretrial proceedings, the first Enfamil NEC lawsuits began going before juries in state courts last year.

In March 2024, an Illinois jury ordered Mead Johnson to pay $60 million in damages in an Enfamil lawsuit brought by Jasmine Watson. After hearing evidence and information about what the manufacturer knew about the Enfamil NEC risks, the jury awarded the family $25 million more in damages than their attorneys had asked for, highlighting the compelling weight of the evidence that will be presented in future trials.

In July 2024, a separate jury in St. Louis ordered competing Abbott Laboratories to pay $495 million in a Similac lawsuit, including a massive punitive damages award intended to punish that manufacturer for disregarding the health and safety of premature infants and families.

A series of federal NEC lawsuits are expected to start going before juries throughout 2025, raising concerns about the total liability the manufacturers may face.

Investor Lawsuit Blames Enfamil NEC Risks

Although the manufacturer was able to succeed in one trial held in Missouri late last year, plaintiffs in this investor’s class action lawsuit indicate that the damage has already been done to the company’s reputation and stock value, as a result of the failure to honestly and accurately disclose the NEC risks from Enfamil.

“Throughout the Class Period, Defendants touted the purportedly conclusive science on which Enfamil is based to assure investors and consumers of Enfamil’s safety,” the lawsuit states. “Unbeknownst to investors, Reckitt failed to warn investors and consumers (1) that preterm infants were at an increased risk of developing NEC by consuming Reckitt’s cow’s milk-based formula, Enfamil, and (2) of the attendant impact on Reckitt’s sales of Enfamil and Reckitt’s exposure to legal claims.”

The result has been a “precipitous decline” in the company’s market value and significant financial losses for investors, plaintiffs claim. On the same day as the Watson verdict was announced, the company’s American Depository Share (ADS) price fell more than 14%. After the July verdict, shares dropped again, nearly 9%, according to the complaint.

However, like families who have filed personal injury lawsuits over Enfamil NEC risks, the investors say the company knew or should have known about the NEC risks and their potential impacts on the company’s value years before those trials were held. Instead, the lawsuit alleges that company officers intentionally misled investors during earnings calls since at least 2021 about the safety of Enfamil and the science supporting it.

The lack of disclosure about the risks of NEC linked to Enfamil consumption were materially false and misleading statements, plaintiffs claim, that led to Reckitt’s shares being traded at artificially inflated prices.

“These material misstatements and/or omissions had the effect of creating, in the market, an unrealistically positive assessment of the Company and its financial well-being and prospects, thus causing the Company’s ADSs to be overvalued and artificially inflated at all relevant times,” the lawsuit states. “Defendants’ materially false and/or misleading statements during the Class Period resulted in Plaintiff and other members of the Class purchasing the Company’s ADSs at artificially inflated prices, thus causing the damages complained of herein when the truth was revealed.”

The investment fund presents claims of violations of the Exchange Act and seeks compensatory damages.

Reckitt Benckiser Group acquired Mead Johnson in 2017.

Federal Enfamil and Similac NEC Lawsuits

While the three previous trials were handled at the state level, most claims have been filed in federal courts, and have been consolidated in the Northern District of Illinois as part of an infant formula NEC lawsuit MDL (multidistrict litigation) since 2022, with U.S. District Judge Rebecca R. Pallmeyer presiding over coordinated pretrial discovery and preparing a small group of “bellwether” cases for early trial dates.

The first federal trial was originally scheduled to begin last month, but that case was dismissed after the judge determined that the plaintiff lacked sufficient evidence to move forward. The trial for the second case is currently slated to begin on August 11, 2025, with additional trial dates scheduled for November 3, 2025, and February 2, 2026. 

While the outcome of these early trials will not have any binding impact on NEC injury lawsuits being pursued by other families, the average payouts awarded by juries will likely have a substantial impact on the amount that Abbott and Mead Johnson may be required to pay in NEC injury settlements to avoid hundreds of additional claims going before juries.

If the parties fail to resolve the litigation following the federal bellwether trials, Judge Pallmeyer may start remanding dozens of individual claims back to U.S. District Courts nationwide for separate trial dates.

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