Category: Litigation

  • Creditors Approve Canadian Litigation Deal

    Creditors Approve Canadian Litigation Deal

    Creditors have approved a proposed litigation settlement that would require three leading tobacco companies to pay billions to Canada’s provinces and territories, reports CBC.

    The proposed CAD32.5-billion deal between JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada and their creditors was announced in October after more than five years of negotiations.

    Representatives for the creditors, which include provincial governments seeking to recover smoking-related health-care costs as well as plaintiffs in two Quebec class-action lawsuits, voted on the plan in a virtual meeting Dec. 12.

    The proposed settlement includes $24 billion for provinces and territories, $4 billion for tens of thousands of Quebec smokers and their heirs, and more than $2.5 billion for smokers in other provinces and territories. It also includes more than $1 billion for a foundation to help those affected by tobacco-related diseases.

    If approved in court, the proposed deal would end more than a decade of litigation.

    In 2015, a Quebec court ordered the three companies to pay about $15 billion in two class-action lawsuits involving smokers in the province who took up the habit between 1950 and 1998 and either fell ill or were addicted, or their heirs.

    Four years later, the landmark ruling was upheld by the province’s Appeal Court. The companies then sought creditor protection in Ontario in order to negotiate a global settlement with their creditors.

    All of the legal proceedings against them were put on hold during the talks. That order has now been extended until Jan. 31, 2025.

    The court is scheduled to review the proposed settlement toward the end of January.

  • PMI Settles D.C. Flavor Ban Violations Case

    PMI Settles D.C. Flavor Ban Violations Case

    Image: PMI

    Swedish Match North America (SMNA) will pay $1.2 million to settle an investigation into violations of Washington D.C.’s flavored tobacco ban, reports Reuters.

    The District of Columbia attorney general’s office accused SMNA of facilitating online sales of “tens of thousands” of flavored Zyn nicotine pouches to D.C. consumers between Oct. 1, 2022, when the ban was enacted, and June 30, 2024.

    SMNA parent company Philip Morris International must now monitor its distributor’s compliance with D.C.’s ban quarterly and stop sales of flavored Zyn pouches through Zyn.com and related e-commerce platforms.

    Nicotine pouches became the second most commonly used tobacco product in the U.S. after combustible cigarettes, according to the Centers for Disease Control and Prevention.

    PMI suspended sales on Zyn.com after it had been issued a subpoena by the D.C. attorney general earlier this year.

    Swedish Match would continue to focus on its brick-and-mortar stores, PMI said in a statement e-mailed to Reuters.

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  • Justices Appear Divided on Triton’s PMTA Denials

    Justices Appear Divided on Triton’s PMTA Denials

    The hearing took just over an hour. Today, the United States Supreme Court heard oral arguments in FDA v. Wages and White Lion Investments, LLC, a pivotal case concerning the Food and Drug Administration’s rejection of applications to market flavored nicotine vaping devices.

    The case is about much more than saving the vaping industry; it is also a landmark case for regulatory accountability related to public health and consumer choice. A decision is expected by the end of the Supreme Court’s term in June.

    At issue is whether the FDA acted arbitrarily and capriciously when denying numerous premarket tobacco product applications (PMTA), as alleged by the manufacturers and affirmed by the U.S. Court of Appeals for the 5th Circuit, which accused the FDA of a “regulatory switcheroo”. 

    Elizabeth Hicks, US Affairs Analyst of the Consumer Choice Center, stated that the case underscores the need for “fairness and transparency” in regulatory processes. “The FDA’s blanket denials have placed enormous hurdles on firms providing harm-reduction alternatives, potentially decimating an industry that millions of adult consumers rely on to transition away from smoking traditional cigarettes,” she said.

    The court heard the FDA’s defense of the agency’s rejection of two companies’ premarket tobacco product applications (PMTAs) to sell flavored vape products that it has determined pose health risks for young consumers. The justices took up the FDA’s appeal filed after a lower court ruled that the agency had failed to follow proper legal procedures under federal law when it denied the applications to bring their nicotine-containing products to market.

    In January, the full slate of 5th Circuit judges ruled 10-6 that the FDA had been arbitrary and capricious, in violation of a federal law called the Administrative Procedure Act, by denying the applications without considering plans by the companies to prevent underage access and use.

    Associate Justice Clarence Thomas called the FDA guidance “a moving target” that shifted throughout the process. Also, Associate Justice Neil Gorsuch stated that applicants were not granted conditions for jury trials in administrative cases, as the court outlined in SEC v. Jarkesy. Gorsuch also wondered if the agency had failed to give applicants fair notice that the rules had changed.

    The court has a 6-3 conservative majority that is often skeptical of federal agency decision-making.

    Their lawyers argue that the FDA changed its standard for considering flavored vapes in the middle of the process without giving applicants adequate warning.

    Kavanaugh also seemed to have sympathy for the FDA’s case. He said it was clear from the outset what the FDA’s position on issuing denial orders was: a focus on the harm to young people that flavored vape products bring. He noted that under the Tobacco Control Act, the FDA has the power to regulate tobacco products, with a special focus on youth.

    If, after weighing the evidence, the FDA rejects an application, “It’s kind of the end of it, isn’t it?” Kavanaugh asked.

    Hicks said the FDA’s rejection of Triton and Vapetasia’s applications demonstrates a failure to balance or even understand public health priorities and opportunities provided by less harmful nicotine products.

    “While we all agree on the need to keep these products out of the hands of young people, denying adult smokers access to safer alternatives like flavored vaping devices could have dire consequences for harm-reduction efforts,” Hicks said in a press release. “Regulatory decisions should be evidence-based, not rooted in unachievable or shifting standards that are unreasonable to provide.”

     Justice Elena Kagan said that applicants know that the FDA believes that flavored vapes are especially appealing to children and that they would need to overcome that presumption in their PMTA submissions.

    “I mean, there’s just not a lot of mystery here about what FDA was doing. You might disagree with that, because you think that, in fact, the world of 40-year-olds really wants to do blueberry vaping, but you can’t say that FDA hasn’t told you all about what it’s thinking in this respect,” Kagan told the companies’ lawyer, Eric Heyer.

    Heyer told the justices that if his clients win the case, there could be a change in the FDA’s approach, citing comments Trump has made that he would “save vaping.”

    Just before the hearing began, Tony Abboud, executive director of the Vapor Technology Association. said the High Court has the opportunity to examine and critique the farcical “wild goose chase” manufacturers have been led on over the years due to the FDA’s illegal and bad faith actions.

    “While VTA eagerly awaits the SCOTUS decision, VTA knows that a favorable ruling will not fix the systemic and ideological failures at FDA. VTA will continue to work closely with the incoming Trump Administration, which can quickly and decisively end all current litigation – and all future litigation that will follow a SCOTUS decision favorable to industry – by implementing a new tobacco products standard which establishes clear scientific guidelines for the authorization of products and a real pathway to a broad and diverse U.S. vaping industry,” Abboud said. “Biden FDA’s illegal actions, which have deprived Americans of less harmful nicotine alternatives and are crushing an innovative industry, must be comprehensively addressed immediately through the bold and decisive leadership of President-elect Trump.” 

  • Supreme Court Won’t Hear Graphic Warning Challenge

    Supreme Court Won’t Hear Graphic Warning Challenge

    The U.S. Supreme Court won’t hear a challenge to a federal requirement that cigarette packages and advertising include graphic images demonstrating the effects of smoking.

    The nation’s top court declined to hear the case in a brief written order handed down Monday.

    R.J. Reynolds appealed to the high court after the 5th U.S. Circuit Court of Appeals found the warnings do not violate the First Amendment, the AP reports.

    They include pictures of smoke-damaged lungs, feet blackened by diminished blood flow and a picture of a woman with an immense growth on her neck and the caption “WARNING: Smoking causes head and neck cancer.”

    Nearly 120 countries worldwide have adopted more prominent, graphic warning labels. Studies from those countries suggest that image-based labels are more effective than text warnings at publicizing smoking risks and encouraging smokers to quit. The U.S. has not updated its labels since 1984.

    It’s not clear when new labels might appear. Some legal claims remain, and the FDA has said it doesn’t plan to enforce any new requirements until at least December 2025.

  • Top Court to Hear Triton Vaping Case

    Top Court to Hear Triton Vaping Case

    The U.S. Supreme Court will next week hear the U.S. Food and Drug Administration’s defense of the agency’s rejection of two companies’ premarket tobacco product applications (PMTAs) to sell flavored vape products that it has determined pose health risks for young consumers.

    The live audio of the hearing can be found here.

    The justices took up the FDA’s appeal filed after a lower court ruled that the agency had failed to follow proper legal procedures under federal law when it denied the applications to bring their nicotine-containing products to market.

    The Supreme Court is due to hear the case in its next term, which begins in October, according to Reuters.

    Two e-cigarette liquid makers, Triton Distribution and Vapetasia, filed premarket tobacco product applications in 2020 for products with flavors such as sour grape, pink lemonade, and crème brulee and names such as “Jimmy The Juice Man Strawberry Astronaut” and “Suicide Bunny Bunny Season.”

    The FDA rejected the companies’ applications, along with more than 1 million other products.

    Triton and Vapetasia in 2021 asked the New Orleans-based 5th U.S. Circuit Court of Appeals to review the FDA’s denial of their applications.

    In January, the 5th Circuit ruled that the FDA had been arbitrary and capricious by denying the applications without considering plans by the companies to prevent underage access and use.

  • Zyn Sued for Overcharging

    Zyn Sued for Overcharging

    TR Archive Photo

    Swedish Match North America is being sued for allegedly overcharging U.S. customers for its popular tobacco-free Zyn nicotine pouches.

    The class action lawsuit, filed on Monday in federal court in Richmond, Virginia, alleges that the Philip Morris International subsidiary is violating federal and state antitrust laws concerning the market for modern oral nicotine pouches.

    The plaintiff, a resident of Florida, claimed that Swedish Match illegally gained monopoly power through various business practices aimed at eliminating rival Dryft from the market, Reuters reports.

    Swedish Match now has an estimated 80 percent of the market for nicotine pouches, which the company sells in different flavors and strengths for about $6 a tin, according to the lawsuit.

    In a statement, Philip Morris, which was not named as a defendant, said, “We believe the plaintiff’s claims are without merit, and we intend to vigorously defend against them.

    Marlboro maker Philip Morris, in 2022, acquired the Swedish tobacco and nicotine products company for $16 billion. Philip Morris has stated an ambition to move away from health-harming cigarettes.

    The consumer lawsuit seeks class action status for Zyn consumers and damages of more than $5 million.

  • Top Court Strikes Down Vape Import Ban

    Top Court Strikes Down Vape Import Ban

    Image: nanoenomar

    Mexico’s ban on imports of e-cigarettes and related products is unconstitutional, the nation’s top court ruled, reports Meganoticias.

    The First Chamber of the Supreme Court of Justice of the Nation determined that the prohibition imposes excessive restrictions on commercial freedom of Philip Morris Mexico.

    The ruling is limited to Philip Morris Mexico and does not affect similar products that could be brought to market in the future.

    It protects Philip Morris Mexico from future restrictions and sets a legal precedent that could influence future litigation. The judgment specifies that this protection will be maintained until the government amends its General Import and Export Taxation Act.

    According to the Mexican government, an estimated 938,000 teenagers have tried electronic nicotine delivery systems, and about 160,000 use them regularly

    Despite the import ban, vaping has spread rapidly. In 2023, there were an estimated 2.1 million e-cigarette users in Mexico, compared with 975,000 in 2019.

    The Philip Morris Mexico case stems from an October 2022 Supreme Court ruling that deemed some prohibitions on ENDS unconstitutional and allowed certain groups to apply  for permission to continue the import and sale of these products.

  • Canada’s  Tobacco Deal not ‘Doomed’: Judge

    Canada’s Tobacco Deal not ‘Doomed’: Judge

    An Ontario judge says any outstanding issues regarding a proposed $32.5 billion settlement between three major tobacco companies and their creditors should be solvable in the coming months. Ontario Superior Court Chief Justice Geoffrey Morawetz released his reasons for approving a motion last week to have creditors’ representatives review and vote on the proposal in December.

    One of the companies, JTI-Macdonald Corp., said last week it objects to the plan in its current form and asked the court to postpone scheduling the vote until several issues were resolved. The other two companies, Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd., didn’t oppose the motion but said they retained the right to contest the proposed plan.

    The proposal announced last month includes $24 billion for provinces and territories seeking to recover smoking-related healthcare costs and about $6 billion for smokers across Canada and their loved ones.

    If a majority of creditors accept the proposed deal, it will move on to the next step: a hearing to obtain the court’s approval, tentatively scheduled for early next year. In a written decision released Monday, Morawetz said it was clear that not all issues had been resolved at this stage of the proceedings.

    He pointed to “outstanding issues” between the companies regarding their respective shares of the total payout and debate over the creditor status of one of JTI-Macdonald’s affiliate companies. In order to have creditors vote on a proposal, the court must be satisfied the plan isn’t “doomed to fail” either at the creditors or court approval stages, court heard last week, media reports.

    Lawyers representing plaintiffs in two Quebec class actions, those representing smokers in the rest of Canada, and 10 out of 13 provinces and territories have expressed their support for the proposal, the judge wrote in his ruling. While JTI-Macdonald said its concerns have not been addressed, the company’s lawyer “acknowledged that the issues were solvable,” Morawetz wrote.

    “At this stage, I am unable to conclude that the plans are doomed to fail,” he said. “There are a number of outstanding issues as between the parties, but there are no issues that, in my view, cannot be solved.”

    The proposed settlement is the culmination of more than five years of negotiations in what Morawetz has called one of “the most complex insolvency proceedings in Canadian history.”

  • Dutch Flavor Ban Lawful: Court

    Dutch Flavor Ban Lawful: Court

    Image: promesaartstudio

    The Dutch ban on flavored vapes is lawful, a court in The Hague ruled, arguing that the harmfulness of e-cigarettes and the “attractive effect” of sweet flavors on young people have been sufficiently established, reports The NL Times.

    The verdict came in response to a legal challenge brought by British American Tobacco and Nicoventures.

    In 2020, the government prohibited all vape flavors other than tobacco, citing not only the receptiveness of young people to such tastes, but also the risk that sweet-tasting e-cigarettes would encourage people to transition to regular cigarettes.

    According to the court, any gateway effect does not need to be scientifically proven to justify a ban. The harmfulness vaping and the appeal of sweet flavors to young people are sufficient to justify the measure, the judges noted.

    In their appeal, BAT and Nicoventures argued that the measure disrupts the free traffic of goods within the European Union. They also said there was no evidence to suggest that the ban would benefit public health, and they warned that it would discourage smokers from trying to quit cigarettes with the help of e-cigarettes.

    The court, however, ruled that the state has the “political discretion to give more weight to the interests of the youth and of a future smoke-free generation in the context of public health.”

    And while acknowledging that the ban infringes on the free movement of goods, the court noted that this is permitted to protect public health if it is “appropriate, necessary and proportionate.”

  • JTI Opposes Canada Settlement

    JTI Opposes Canada Settlement

    Image: helgidinson

    JTI-Macdonald Corp. opposes a proposed multi-billion-dollar settlement of long-running tobacco litigation announced earlier this month, reports Financial Post, citing a company filing made to an Ontario court.

    As part of a court-appointed mediator’s plan, Canada’s three leading cigarette manufacturers would pay CAD32.5 billion ($23.6 billion) to provinces and territories and more than CAD4 billion to tens of thousands of Quebec smokers and their heirs.

    Before it can be implemented, the proposed plan must be voted on by creditors, which include plaintiffs in two class-action lawsuits in Quebec as well as provincial governments seeking to recover smoking-related health costs. It must also be approved by the court.

    In its court filing, JTI-Macdonald Corp. indicated it does not support the proposal due to “critical outstanding issues.”