A U.S. federal judge declined to give preliminary approval to a proposed $117 million settlement between Altria Group and shareholders in a lawsuit over the company’s investment in Juul Labs, calling the deal “inadequate,” reports Law360.
The lawsuit contends that Altria’s executives threw caution to the wind when they bought a 35 percent stake in Juul for $12.8 billion in 2018.
According to the shareholders, the Altria executives also engaged in illegal and anti-competitive conduct that cost Altria billions of dollars as Juul faced an increasing number of legal battles over the alleged health risks of its products and alleged marketing to underage consumers—problems that the plaintiffs say Altria knew about at the time of the investment but ignored.
The value of Altria’s investment has declined steadily as Juul Labs faced litigation and increased regulatory scrutiny.
The plaintiffs argued for approval of the settlement, saying the recovery is fair and reasonable when weighed against the costs and risks of further litigation. U.S. District Judge David J. Novak did not explain why he considered the settlement inadequate.