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About the Case

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On August 22, 2003, Abbott Laboratories (Abbott) announced a spin-off of its Hospital Products Division and related businesses (HPD) into a new company called Hospira, Inc. At the announcement, an Abbott human resources executive said that HPD was the “most senior” division in the company with 70% of its employees age 40 or older. Abbott also promised then that HPD employees' compensation and employment benefits would not be changed before the end of 2004.

Abbott spun-off HPD on April 30, 2004. About 14,000 HPD employees worldwide were terminated by Abbott and re-employed by Hospira. Ten thousand of the spun-off HPD employees lived in the United States. When the spin-off was completed, Hospira revealed to its new employees that it would not provide them retiree medical benefits and that, after 2004, they no longer would accrue pension benefits. If Abbott had not terminated them, HPD employees would continue to be eligible to earn hundreds of millions of dollars in additional pension, medical, and other employment benefits as they approach retirement.

Abbott ensured the HPD employees' loss of future benefits by adopting a no-hire policy. That policy precludes HPD employees from being rehired by Abbott for two years after the spin-off. Any spun-off HPD employee who returns to Abbott after the no-hire policy expires will experience a two-year break in service under Abbott’s benefit plans and will be treated by Abbott on re-hire as a new employee for compensation and benefits purposes. Abbott has stated that it will not bridge a returning HPD employee’s past service with future service. Therefore, because of Abbott's no-hire policy, returning HPD employees will earn benefits that are substantially less than what they would have been entitled to if Abbott had not adopted the two-year re-hire ban.

Like Abbott, Hospira adopted a two-year no-hire policy that precludes HPD employees from retiring from Abbott and receiving retirement benefits while working for Hospira. Thus, the policy prevents HPD employees who retired from Abbott from supplementing their retirement annuities by working for Hospira.

Plaintiffs allege that their termination violated of Section 510 of ERISA (the Employee Retirement Income Security Act of 1974). Plaintiffs also allege that Abbott and Hospira violated Section 510 of ERISA when they adopted no-hire policies in order to prevent the terminated HPD employees from receiving benefits or earning additional benefits under Abbott’s employee benefit plans. Plaintiffs have brought their claims on behalf of a class consisting of the approximately 10,000 U.S.-based HPD employees who were terminated because of the spin-off.

Before the spin-off of Hospira, several of Abbott’s senior executives who would assume top positions at Hospira knew that after the spin-off, Hospira would not offer retirement medical benefits and would freeze pension. Abbott’s management, however, failed to inform employees targeted to be spun-off what they knew about future benefits at Hospira.

Case Updates

08/07/2008 / On August 7, 2008, U.S. District Court Judge Gettleman ordered that the bench trial is to begin on April 22, 2009.

07.10.08 / On July 10, 2008, U.S. District Judge Gettleman denied defendants’ motions for summary judgment, clearing the way for a trial on plaintiffs’ class action ERISA claims. We anticipate that a class notice will be sent in the near future, and that a trial date will be set for late 2008 or early 2009.

04.03.07 / On April 3, 2007, U. S. District Court Judge Gettleman certified a Misrepresentation Claim on Behalf of the Class, allowing claims regarding the issue of misrepresentation to proceed as a class.

08.14.06 / On August 14, 2006, U.S. District Judge Gettleman denied Abbott’s motion to dismiss plaintiffs’ claim that Abbott breached fiduciary duties under ERISA by making misrepresentations and failing to disclose what it knew about future benefits at Hospira.

12.30.05 / On December 30, 2005, Judge Gettleman granted plaintiffs' request to certify their lawsuit as a class action . The judge's order allows all of the thousands of former Abbott employees who were terminated by Abbott between August 22, 2003, and April 30, 2004, as a result of its spin-off of Hospital Products Division to participate in and benefit from plaintiffs' lawsuit. The judge also certifed a subclass against Hospira of all the former Abbott employees who were eligible for retirement on their day of termination.

O5.01.05 / On April 27, 2005, U.S. District Judge Gettleman issued an Order, denying Abbott's and Hospira's motions to dismiss in all respects. The Judge found that plaintiffs' claims were supportable under law and that Abbott's and Hospira's arguments were unpersuasive. Therefore, he ordered the parties to the lawsuit to begin fact-discovery activities in preparation for trial.

02.01.05 / In January 2005, Abbott and Hospira filed motions to dismiss plaintiffs' lawsuit, arguing that there was no legal basis for plaintiffs' claims to go to trial.

11.08.04 / On November 8, 2004, three plaintiffs filed a Complaint in the United States District Court for the Northern District of Illinois, alleging that Abbott terminated HPD employees in order to interfere with their rights to receive benefits under Abbott’s employee benefit plans.