Mondelez International has become the latest large US employer targeted in the accelerating wave of ERISA class actions challenging health plan tobacco surcharges, according to Bloomberg Law. The snack food giant, whose brands include Oreo, Ritz, and Cadbury, joins a list of defendants that now includes Target, Nestlé, Amgen, PepsiCo, Progressive, Campbell Soup, Waffle House, and Compass Group. Specific details of the complaint, including the plaintiff, court, and alleged surcharge amount, were not available in open-access sources at the time of publication.
The litigation wave began in late 2024 and has grown steadily. More than 50 substantially similar class actions have been filed in federal courts across the country, with more than 30 filed in 2026 alone, according to Groom Law Group, a Washington, DC-based employee benefits law firm that has tracked the cases closely.
Plaintiffs allege that an employer’s tobacco surcharge violates ERISA when the wellness program fails to meet one of three requirements. Those are: offering a compliant reasonable alternative standard, such as a tobacco cessation course; disclosing that alternative in all required plan materials; and providing what the statute calls the “full reward” when an employee completes the cessation program mid-year.
The litigation trend has broadly favored employers at the district court level. Federal courts in Ohio, Missouri, Minnesota, and New Jersey have dismissed tobacco surcharge cases. Several held that removing the surcharge prospectively once an employee completes a cessation program satisfies ERISA’s full reward requirement, with no retroactive refund owed. Courts have also generally found that designing a wellness program is a plan sponsor function, rather than a fiduciary one, which limits the theories available to plaintiffs.
The picture, however, is not entirely settled. At least one Missouri court has allowed a case to proceed, and appeals in the First, Second, Sixth, and Seventh Circuits are pending. The Compass Group case in the Eighth Circuit has drawn amicus briefs from major employer groups, including the ERISA Industry Committee (ERIC). ERIC warned that broad class certification rulings could pressure employers to settle even defensible claims and ultimately lead them to scale back wellness programs or pass costs to workers.
On August 26, the Departments of Labor, Health and Human Services, and Treasury jointly issued FAQ guidance known as Part 74. It clarifies that plans are not required to retroactively reimburse surcharges when an employee completes a cessation program mid-year, and addresses when disclosure of the reasonable alternative standard is required in plan materials. Notably, the guidance reverses positions the DOL had previously taken in enforcement actions, giving plan sponsors stronger footing to defend against retroactive reimbursement claims in active litigation.
The guidance is useful for plan sponsors defending existing litigation, but it is guidance that is unlikely to slow the pace of new filings. It also does not protect plans whose surcharge programs were never properly designed in the first place.
The most common vulnerability is not the surcharge itself but the plan documentation around it. Cases have proceeded where enrollment guides and summary plan description materials failed to describe the tobacco surcharge, explain the reasonable alternative standard, or confirm that a physician’s recommendation would be accommodated. Those are documentation failures, not fundamental plan design problems, and they are correctable. Plan sponsors that have not recently reviewed their wellness program disclosures against current ERISA requirements are carrying a litigation risk that a document audit could meaningfully reduce.
