A federal appeals panel agreed a lower court correctly blocked class actions seeking to make Abbott Labs pay for allegedly selling contaminated Similac baby formula products, when the plaintiffs couldn’t demonstrate actual harm resulting from tainted baby formula.
U.S. District Judge Matthew Kennelly dismissed a complaint from a group designated by the court as “economic loss plaintiffs” whose lawsuit followed a voluntary product recall and claimed financial loss based on a potential risk linked to an Abbott manufacturing facility in Sturgis, Michigan.
The group was designated as "economic loss plaintiffs" because the court determined they could only prove they spent money on Similac formula products, when they might not have done so if they had known the formula allegedly might be contaminated.
U.S. Seventh Circuit Court of Appeals Judge Michael Brennan
| Federalist Society
The U.S. Food and Drug Administration issued an inspection report in September 2021 looking at more than a dozen complaints regarding bacteria in Sturgis-made formula dating to 2019. Immediately after the report, the FDA began learning of illnesses in infants, and in February 2022 that agency and the Centers for Disease Control launched an investigation into consumer complaints, while warning consumers not to use Similac products with codes indicating it was made at the Sturgis plant between October 2020 and January 2022.
Claims related to medical injuries to children remain pending in federal court in Chicago.
But Kennelly dismissed the economic loss claims for lack of standing.
Those plaintiffs challenged that ruling before the U.S. Seventh Circuit Court of Appeals. Judge Michael Brennan wrote the panel’s opinion, filed April 2; Judges Ilana Rovner and Thomas Kirsch concurred.
On appeal, as before Judge Kennelly, the plaintiffs argued they wouldn’t have bought the formula had they known of a substantial contamination risk. But Brennan explained those allegations are “hypothetical or conjectural."
"When purchasing the infant formula, plaintiffs received what they asked for. At that point, there was no known risk of contamination and no loss of the benefit of the bargain or premium price paid," Brennan wrote. "Once plaintiffs learned of the unsanitary conditions at the Sturgis facility and potential risk of contamination, then they were told not to use the formula, and Abbott offered a refund. So, there was not a time when plaintiffs were at a risk of harm.”
The panel further noted this group of plaintiffs doesn’t allege its individual members bought contaminated formula or allege the problems were so widespread any given container might have been tainted, but rather hinged their position on the potential risk. Similar class litigation that advanced, Brennan explained, covered products with universal defects or fundamental flaws. But “the potential risk of contamination is not enough to confer standing,” he wrote.
Brennan said the Similac lawsuit is more similar to a 2014 U.S. Eighth Circuit Court of Appeals opinion, Wallace v. ConAgra Foods, which concerned hot dogs marketed as 100% kosher, although it later became clear some of ConAgra’s beef products did not meet that standard. That court held up the plausibility ConAgra “sold the consumers exactly what was promised: a higher quality, kosher meat product,” and dismissed the complaint for lack of standing.
Other examples included lawsuits about breakfast cereal that might have contained glyphosate contamination, baby powder linked to increased risk of ovarian cancer and anti-inflammatory drugs connected to fatal liver injuries.
“A hypothetical shows why plaintiffs’ theory of injury not confer standing,” Brennan wrote. “Consider a popular restaurant at which a diner gets food poisoning. An investigation reveals the restaurant did not meet the sanitation code, so its food was at risk of contamination.
"The sick diner had a real, particularized injury. But any patron who has ever eaten at the restaurant does not have a real, particularized injury. The risk that other patrons’ food could have been contaminated because it was prepared and served at a restaurant that did not meet the sanitation code does not mean that the other patrons’ food was ever contaminated.
"Any injury to those other patrons is hypothetical or conjectural, and they have no particular or individual harm. So, the other patrons would not have standing to sue the restaurant under a risk-of-harm theory of injury, unlike the diner with food poisoning who suffered an actual harm.”
Abbott declined to respond to a request for comment.
Plaintiffs in the action have been represented by attorneys Kiley Grombacher, of the firm of Bradley Grombacher, of Westlake Village, California; and Timothy J. Becker and Stacy K. Hauer, of the firm of Johnson Becker, of St. Paul, Minnesota.
Abbott has been represented by attorneys John C. O’Quinn, P.C. and Michael A. Glick, of Kirkland & Ellis, of Washington, D.C.