How Nestlé, Danone got off the hook in US toxic baby food litigation

Nestle SA, Danone SA and Hero AG were stricken off the defendants’ list of a multi-district litigation (MDL) alleging their subsidiaries knowingly sold baby food tainted with toxic heavy metals.

The three manufacturers were being pursued because of their affiliation with the accused baby food brands Gerber Products Company (owned by Nestlé), Nurture LLC (Danone SA) and Beech-Nut Nutrition Company (Hero AG).

The plaintiffs are children who have been diagnosed with neurological disorders such as ADHD, allegedly as a result of consuming the products.

But the three food majors – who were initially accused alongside other baby food makers such as Plum and grocery chains Walmart and Sprout – have successfully argued they had no part in the health and safety processes at their subsidiaries.

Alarming findings predate the lawsuit

Leading up to the multi-district lawsuit were two major discoveries – a study revealing tainting of commercially sold baby foods; and a Congressional investigation that discovered manufacturers played fast and loose with their own safety limits.

The first study was carried out by ‘Happy Babies Bright Futures’, a group of non-profits, scientists and donors who found that of the 168 commercially available products they tested, all but 9 had at least one metal, and most contained more than 1.

The Congressional investigation then found that a substantial number of products, including those made by Gerber, Nurture and Beech-Nut, were tainted with lead, arsenic, mercury and cadmium.

Moreover, Congress concluded that companies would routinely flout their own safety limits, allowing unsafe products to enter the market.

How the food majors got off the hook

The parents of the three companies that still stand accused are all based overseas – Danone being headquartered in France; Nestlé and Hero in Switzerland.

All three firms argued the US courts had no jurisdiction over them.

Nestlé told the court it was the parent of ‘hundreds of separate corporate entities…all over the world’ and was not registered to do business in the US.

The company highlighted it did not ‘control the manufacturing, advertising, distributing, marketing, contracting or sales activities’ of its subsidiary, the Gerber Products Company.

The Swiss CPG major also pointed out the two companies operated separately and the parent was not involved in how Gerber’s heavy metal safety limits were set or enforced.

Hero made a similar argument, telling the court it had no presence in the US; did not control ‘the day-to-day management of Beech-Nut nor supervise[d] the operations’ of the baby food company.

Shared marketing and branding materials ‘do not suffice to establish personal jurisdiction over a parent entity’, Hero said, later establishing that evidence submitted by the plaintiffs – including Beech-Nut staff testimonies that the parent ‘set the quality policy for all companies’ – did not specifically link Hero with control over the baby food company’s quality agenda.

Danone followed a similar route, stating it was ‘the ultimate parent company to 291 food-related subsidiaries across 70 countries and five distinct entities exist between Danone SA and Nurture LLC’.

The French multi-national also claimed it did not have a part in Nurture’s day-to-day operations nor does it control what Nurture products are sold in the US.

“Indeed, Danone SA does not source ingredients from Nurture, contract with co-manufacturers on Nurture’s behalf, set standards related to heavy metals…, monitor for the presence of heavy metals…, or train any other individual to do so,’ the firm said.

Why Beech-Nut and others couldn’t exit the litigation

Unlike their parent companies, the three baby food subsidiaries remained accused after the plaintiffs demonstrated their ‘manufacturing defect’, i.e. that the companies made products in substandard condition.

“Throughout the Master Complaint, Plaintiffs allege various Manufacturer Defendants prepared internal product specifications for heavy metals in ingredients and completed products,” the judge said.

“Plaintiffs also allege Manufacturer Defendants failed to consistently adhere to those specifications. This alleged inconsistent application meant different batches of a product may have had different levels of heavy metals based on which ingredients were deemed acceptable.

“These allegations lay out a plausible theory that one instance of a product may differ from another in the amount of heavy metals, depending on whether the product specification was actually applied.

“Accepting the truth of these allegations, the manufacturing defect claim advances.”

Skadden Arps Slate Meagher & Flom LLP represents Hero; Wachtell Lipton Rosen & Katz represents Danone; and Mayer Brown LLP represents Nestlé.

Wagstaff Law Firm and Wisner Baum LLP represent the plaintiffs.