Abbott and Hospira Spinoff Litigation
Nauman, et al. v. Abbott Laboratories and Hospira Inc., No. 05-C-7199 (N.D.Ill.)
Our office, with the law firm of Sprenger & Lang, currently represents a class of plaintiffs against Abbott Laboratories and Hospira, Inc., alleging that the companies violated ERISA, the federal law governing retirement benefits, when Abbott spun off its Hospital Products Division to form a new company called Hospira. Sprenger & Lang also maintains a website with information, updates, and downloadable documents regarding this case at http://www.abbottlabscase.com.
This case was filed in 2004 in federal court in Chicago, IL. On April 28, 2005, the court denied Abbott's and Hospira's motions to dismiss the case and ruled that the case should proceed. Read the opinion here. Abbott then asked the court to reconsider its decision, which the court declined to do here. The plaintiffs then moved to have the case certified as a class action, which the court granted on December 30, 2005 (click here to read the opinion). Two classes were certified:1. All employees of Abbott who were participants in the Abbott Benefit Plans whose employment with Abbott was terminated between August 22, 2003, and April 30, 2004, as a result of the spin-off of the HPD/creation of Hospira announced by Abbott on August 22, 2003.
2. All employees of Abbott who were participants in the Abbott Benefit Plans whose employment with Abbott was terminated between August 22, 2003, and April 30, 2004, as a result of the spin-off of the HPD/creation of Hospira announced by Abbott on August 22, 2003 and who were eligible for retirement under the Abbott Benefits Plans on the date of their terminations.
In the summer of 2006, the plaintiffs added a claim to their complaint for breach of fiduciary duty, alleging that Abbott misled employees by telling them that their benefits would be determined after they went to Hospira, when, in fact, the company had already decided that Hospira would freeze the pension plan and eliminate retiree medical benefits at the end of 2004. Abbott and Hospira both moved to dismiss htis claim. The court rejected Abbott's arguments (click here to read the opinion) and allowed this claim to proceed against the company. Plaintiffs then moved the court to certifiy Count IV as a class claim, which the court granted on April 4, 2007, certifying that claim on behalf of all Abbott employees who were participants in the Abbott Benefits Plans and whose employment with Abbott was terminated between August 22, 2003 and April 30, 2004 as a result of the spin-off of the HPD/creation of Hospira announced by Abbott on August 22, 2003. The Court rejected Abbott's arguments that there was no "commonality" among the plaintiffs' claims, noting that the "appropriate focus in a breach of fiduciary duty claim is the conduct of the defendants, not the plaintiffs." The Court also rejected Abbott's argument that the plaintiffs had not alleged economic harm, noting that "there is evidence that some future Hospira executives were offered a 'transition bonus' equal to the amount of their lost benefits. Had the class members known of such payments, they could have, either individually or as a group, demanded similar payments." Read Judge Gettleman's entire opinion here.
In the spring of 2007, the parties completed the discovery phase of the case. Both plaintiffs and defendants exchanged thousands of documents, and the plaintiffs took depositions of all the highly-placed Abbott and Hospira executives who were involved in the spinoff. Both plaintiffs and defendants also hired experts who prepared reports regarding liability and damages.
On May 9, 2007, Abbott and Hospira filed motions for summary judgment, asking the court to enter judgment in their favor short of going to trial. Read Abbott's brief here, and read Hospira's brief here. On June 26, 2007, plaintiffs filed their response to Abbott's and Hospira's motions for summary judgment. Click here to read plaintiffs' response brief. Note that because Abbott and Hospira designated many of the documents that they produced in this case as "confidential," the plaintiffs were required to redact the portions of the brief discussing these documents and to file the exhibits that defendants marked "confidential" under seal.
To view the public exhibits to plaintiffs' response brief, please click on the links below:Exhibit Index
Exhibits 1-5
Exhibits 6-10
Exhibit 11 Part 1 of 2
Exhibit 11 Part 2 of 2
Exhibits 12-20
Exhibits 21-23
Exhibits 24-37
Exhibits 38-47
Exhibits 48-49
Exhibits 50-57
Exhibits 58-67
Exhibits 68-74
Exhibits 75-82
Click here to read Abbott's reply, and here to read Hospira's reply.
Excellent news! On July 14, 2008, the court ruled on Abbott's and Hospira's motions for summary judgment, denying them in full and allowing the entire case to proceed toward trial. Read the full opinion here.
With respect to plaintiffs' Claims I, II and III, which alleged a violation of ERISA section 510, the court noted that "plaintiffs' position is that the termination alleged in Count I, coupled with the policies challenged in Counts II and III, constitute a 'scheme' that Abbott conceived, and that the defendants jointly adopted, with the specific intent of avoiding the payment of projected benefits." Opinion, p. 18. The court went on to state that "the court ... finds that the defendants' intent can best be ascertained by considering their conduct as a whole. Accordingly, evidence that Abbott compared the financial implications of continuing to provide plaintiffs' benefits under the Abbott plans with the implications of eliminating or reducing those benefits - even if conducted after preliminary approval of the [Board of Directors] - is relevant to the ultimate issue of whether defendants had the specific intent of interfering wtih the plaintiffs' attainment of benefits." Opinion, p. 20. The court concluded, with respect to Counts I, II and III, that "[t]aken together, plaintiffs' allegations and evidence are sufficient to raise a genuine issue of material fact as to defendants' intent in carrying out the series of transactions and agreements that effected a change in plaintiffs' employment status and forever preclude them from exercising the 'bridging rights' to which other Abbott employees would be entitled if they opted to leave Abbott and later returned." Opinion, p. 22.
As for Count IV, in which plaintiffs alleged that Abbott breached its fiduciary duty by lying to Hospira employees about their future benefits, the court found that "the trier of fact could conclude from this evidence that Abbott knew Hospira would reduce or eliminate benefits but deliberately concealed this information from plaintiffs." Opinion, p. 24. The court noted that "Abbott's position is not helped by the evidence that at the time Abbott's management was structuring the spin-off transaction, confidential, lump-sum 'transition bonuses' were offered to several 'key' Abbott executives to compensate them for their lost benefits arising out of their transfer to Hospira." Id. Finally, the court concluded that "plaintiffs' evidence is sufficient to raise triable issues as to whether they were harmed by Abbott's alleged misrepresentation." Opinion, p. 25.
UPDATE August 11, 2008: The Court set a trial date of April 20, 2009. The pretrial order (which is a blueprint for the trial and is prepared jointly by us, Abbott and Hospira) will be due on December 12, 2008 and the Court will conduct a pretrial conference on December 17, 2008. The Court stated that if its schedule permits, it wiill attempt to reset the trial date to an earlier date. With all the hurdles of motion practice and discovery behind us now, we begin our trial preparations with great enthusiasm.
Update November 7, 2008: The Court has approved the Class Notice to be mailed to all potential class members. The notice was mailed during the week of November 3-7. If you believe you are a class member and did not receive a notice, please call Christopher Romer at 312-263-0272 or email him at cromer@mmmglaw.com and update your name and address for our files. You can also read a copy of the notice here. There is nothing that you need to do at this time. Class counsel will provide you with updates as they are available.
Update November 17, 2008: We are looking for information from potential class members who went to Hospira and then returned to Abbott to work after the two-year no-hire period expired. If you fit this description, please call Jamie Franklin at 312-263-0272 or email her at jsfranklin@mmmglaw.com.
Update May 4, 2009: The first three days of the trial ran for three days during April 22-24, 2009. Three witnesses were called: Michael Loughery, a plaintiff; Christopher Begley, the CEO of Hospira; and Karl Arbaugh, an actuary with Hewitt Associates, a firm that provided assistance to both Abbott and Hospira in conjunction the spin and with benefits design. The Court has scheduled the remainder of the trial to take place on July 27-29, 2009. You can read more about the first part of the trial here and here.
Update September 1, 2009:
The trial recommenced on July 27, 2009 and ran for three additional days. Several witnesses were heard, including plaintiffs' expert, David Feinstein, and Mary Moreland, a consultant for Abbott and Hospira.
You can read the transcript from the first two phases of the trial here and here.
Update October 12, 2009:
The last phase of the trial took place October 6-8, 2009. Miles White, the CEO of Abbott, testified, as well as several other Abbott and Hospira executives. Many class members attended this session, and we had a packed courtroom on the first day. Thanks to everyone who came out to watch the trial - your presence meant a lot to the attorneys and the named plaintiffs, and it showed the court that this case is important to many people.
You can read the transcript for the last phase of the trial here.
Update December 2009: The Department of Labor filed an Amicus ("friend of the court") brief in support of the plaintiffs and the class in this case. The brief focuses on the subject of remedies. You can read the full brief here.
Update February 15, 2010: the Court vacated the December 21 ruling date several weeks ago and we are now awaiting a ruling. We do not know when it will come. We will update the website as soon as further information is available.
Update April 23, 2010: the Court has issued a decision in this case. You can read it here. The court entered judgment in favor of Abbott and Hospira and against the plaintiffs and class as to each of the claims. We will provide more information regarding a potential appeal in the upcoming days.
Update May 24, 2010: the plaintiffs will be appealing this case to the Seventh Circut Court of Appeals. We filed our notice of appeal on May 21, 2010, and in the coming weeks, a schedule will be set by the appellate court regarding briefs and oral argument. We will update this site once those dates have been received.
Update July 27, 2010: the plaintiffs' opening brief is due on September 7, 2010. Nothing else will happen in this case until the appeal is fully briefed and argued.
