Abbott jumps as jury says company, Reckitt not liable in infant formula case

Abbot Laboratories (NYSE:ABT) rose 6% in after hours trading after a jury found the company and a Reckitt Benckiser (OTCPK:RBGPF) unit are not liable over claims the companies’ baby formula caused a potentially deadly illness.

The jury reached the verdict on Thursday in a St Louis court, according to a Bloomberg report. The closing arguments in the case were on Wednesday.

The latest jury verdict comes after a jury in St. Louis in late July awarded a plaintiff $495 million in compensatory and punitive damages over claims the company’s baby formula caused a potentially deadly bowel disease.

Abbott Labs (ABT) and competitor Reckitt Benckiser’s (OTCPK:RBGPF) Mead Johnson business are facing more than 1,000 lawsuits that allege that the companies failed to warn parents about the NEC risks with cow’s-milk-based products.

“We are pleased with the jury’s decision,” Abbott said in a statement emailed to Seeking Alpha. “The decision reinforces what we, the medical community and regulatory bodies have said: that preterm infant nutrition products are safe, and there is no reliable scientific evidence that they cause or contribute to cause NEC. Abbott stands by the vital role its preterm infant formula and human milk fortifiers serve in the hospital in nourishing premature babies.”

A lawyer for the Missouri mother suing Abbott and Reckittt asked the jury to make Abbott pay $5 billion in punitive damages, and Mead Johnson pay $1 billion, based on the companies’ sizes, according to a Reuters report on Wednesday.

In the first case to go to trial in March, Reckitt Benckiser was ordered to pay $60 million in damages to a mother whose premature child died after consuming the company’s Enfamil baby formula. The verdict sent Reckitt Benkiser’s shares tumbling 15% on March 15, while Abbott shares dropped 2.8%.