CONTINGENCIES

12 Months Ended

Dec. 31, 2011

CONTINGENCIES

CONTINGENCIES

19. CONTINGENCIES

        In the ordinary course of business, the Company is subject to lawsuits, investigations, government inquiries and claims, including, but not limited to, product liability claims, advertising disputes and inquiries, consumer fraud suits, other commercial disputes, premises claims and employment and environmental, health, and safety matters.

        The Company is not aware of any environmental, health or safety-related litigation or significant environmental, health and safety-related financial obligations or liabilities arising from current or former operations or properties that are likely to have a material impact on the Company's business, financial position or results of operations. Liabilities or obligations, which could require the Company to make significant expenditures, could arise in the future, however, as the result of, among other things, changes in, or new interpretations of, existing laws, regulations or enforcement policies, claims relating to on- or off-site contamination, or the imposition of unanticipated investigation or cleanup obligations.

        On November 14, 2011, the Company's subsidiary Mead Johnson & Company, LLC (MJC) obtained final court approval of a nationwide class settlement with plaintiffs in eight putative consumer class actions that had been consolidated and transferred to the U.S. District Court for the Southern District of Florida. The suits all involved allegations of false and misleading advertising with respect to certain Enfamil LIPIL infant formula advertising, and the settlement will resolve all claims in all of the pending suits. In its final order approving the class action settlement (the Final Order), the court found the settlement to be fair, reasonable and adequate. The settlement allows consumers who purchased Enfamil LIPIL infant formula between October 13, 2005, and March 31, 2010, to receive infant formula or cash. The amount each consumer can receive depends on how long the consumer purchased the formula; consumers who received their formula through the Women, Infants and Children (WIC) program are not eligible to participate. The period within which class members could file claims expired on November 25, 2011. As of the close of the claims period, the total amount claimed by class members was less than $8.0 million. As a result and consistent with the Company's previously recorded obligations under the settlement agreement, MJC received court approval on January 9, 2012, to distribute the difference between $8.0 million and the total amount claimed in the form of infant formula to Feeding America, the nation's largest domestic hunger-relief charity. MJC also agreed not to oppose, and the court approved in its Final Order, attorneys' fees and expenses to plaintiffs' counsel of $3.5 million and $140,000, respectively. As previously reported, MJC agreed to pay costs of notice and settlement administration. Two class members have separately appealed the court's Final Order to the U.S. Court of Appeals for the Eleventh Circuit. Briefing in the appeal has not yet started. Until the appeal has been resolved, distribution of benefits to class members will be delayed. MJC expects distribution of benefits would begin shortly after a successful resolution of the appeal.

        The Company records accruals for such contingencies when it is probable that a liability will be incurred and the loss can be reasonably estimated. Although MJN cannot predict with certainty the final resolution of these or other lawsuits, investigations and claims asserted against the Company, MJN does not believe any currently pending legal proceeding to which MJN is a party will have a material effect on the Company's business or financial condition, although an unfavorable outcome in excess of amounts recognized as of December 31, 2011, with respect to one or more of these proceedings could have a material effect on the Company's results of operations or the periods in which a loss is recognized.