A class action lawsuit was filed against Reckitt Benckiser Group (RBGLY) by Levi & Korsinsky on June 5, 2025. The plaintiffs (shareholders) alleged that they bought Reckitt American Depositary Shares (ADS) at artificially inflated prices between January 13, 2021, and July 28, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Reckitt Benckiser stock during that period can click here to learn about joining the lawsuit.
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Reckitt Benckiser is a British multinational consumer goods and healthcare company. In 2017, Reckitt acquired Mead Johnson Nutrition, including its two leading infant and child nutrition brands, Enfa and Nutramigen.
The alleged ill-effects of Reckitt’s cow’s milk-based formula, Enfamil, the resulting impact on sales, and the company’s exposure to legal claims are at the heart of the current complaint.
Reckitt Benckiser’s Misleading Claims
According to the lawsuit, Reckitt and five of its current and/or former senior executives (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about the risks that its cow’s milk-based formula, Enfamil, posed to preterm infants, and ancillary issues, from SEC filings and related material.
During the Class Period, the company consistently emphasized its commitment to quality in its Infant Formula business. For instance, during the April 22, 2022 earnings call, the former CEO noted that Reckitt’s primary focus in manufacturing and supply chain for its Infant Formula business was quality. The company was dedicated to producing and supplying products it could confidently stand behind in the market.
Additionally, during the March 1, 2023 earnings call, Reckitt’s President of the Health segment highlighted that the company was the #1 infant formula brand in the U.S. and Canada. Notably, Enfamil had become the most trusted brand by both parents and healthcare professionals.
Finally, in a February 28, 2024 press release, Reckitt stated that it was able to deliver trusted, high-quality products to the market, thanks to its leading scientists and key partnerships.
However, subsequent events (detailed below) reveal that the defendants failed to disclose the risks associated with the Enfamil product. Some preterm infants developed necrotizing enterocolitis (NEC) after consuming similar formula. NEC is a serious and potentially life-threatening gastrointestinal disease that primarily affects preterm or very low birth weight infants.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the potential risks associated with consuming their cow’s milk-based formula and the resulting legal claims.
The information became clear on two separate occasions, with multi-million-dollar verdicts issued on March 15, 2024, and July 29, 2024.
In the first case, a jury in St. Clair County, Illinois, determined that “Mead Johnson was negligent and failed to warn the decedent’s mother of the increased risk her preterm infant could develop NEC by consuming cow’s milk-based formula.”
In the second case, a panel seated in St. Louis, Missouri, concluded that Abbott’s (ABT) specialized formula for premature babies caused a baby to develop NEC, awarding the plaintiff $495 million. Following the news, RBGLY stock fell 4.9% on July 29, 2024.
To conclude, the defendants misled investors about the risks and legal claims associated with their Enfamil product. These cases led to a drastic decline in Enfamil’s sales. Despite these issues, RBGLY stock has surged 27.6% so far this year.
