Category: Litigation

Gold Leaf Tobacco’s Assets Remain Frozen

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A South African court on Nov. 7 postponed a hearing about the frozen assets of Gold Leaf Tobacco until Jan. 30. 2023, reports News24.
At the end of August, the South African Revenue Service (SARS) secured a provisional preservation order in court against Gold Leaf and its directors Simon Rudland and Ebrahim Adamjee. The tax agency suspects Gold Leaf and its directors underpaid tax and hidden assets.
The preservation order prevents the tobacco group and its directors from selling any assets while the tax agency investigates the case.
Gold Leaf and Rudland denied any wrongdoing.
According to the provisional preservation order, the initial return date for the case was Nov. 7. At this hearing, the respondents get to argue why the order should not be made permanent.
Gold Leaf holds the distribution rights for brands such as Voyager, RG, Chicago, Sahawi, Sharp and Savannah.
November 7, 2022
Activists Demand Removal of Cigarettes From Dutch Stores

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Anti-smoking activists have demanded the removal of all cigarettes from Dutch store shelves following a court ruling on emissions, reports Dutch News.
On Nov. 4, judges in Rotterdam said there are “strong indications” that filter cigarettes on sale in the Netherlands may break EU limits on tar, nicotine and carbon monoxide.
The ruling gives the Dutch food and product safety board, NVWA, six weeks to start ensuring that the law is followed properly and that cigarettes do not exceed EU limits.
Tests carried out by the RIVM public health institute in 2018 showed the amount of tar in a cigarette can be up to 26 times the official norm and that nicotine and carbon monoxide levels are also too high in most brands.
In its tests, the RIVM covered the ventilation holes in the filter paper, a method that experts say more accurately mimics the way consumers smoke their cigarettes than the prevailing methods, which leave the ventilation holes uncovered.
Until the European Commission comes up with a measurement method that accurately reflects the emissions that smokers are inhaling, there is no guarantee that the filter cigarettes sold in the Netherlands comply with the directives, the Rotterdam court said.
Wanda de Kanter of the anti-youth smoking body Stichting Rookpreventie Jeugd said the ruling effectively ended the use of fraudulent measurements for emissions of tar, nicotine and carbon monoxide. “This has enabled the tobacco industry to make and keep people addicted for years, but the ruling makes it clear this practice cannot last,” she said.
“The NVWA must immediately remove all cigarettes from the shelves.”
November 5, 2022
Court Stays Logic MDO

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A U.S. appeals court has stayed the Food and Drug Administration’s marketing denial order (MDO) for Logic Technology Development’s Logic Power Menthol E-Liquid Package and Logic Pro Menthol E-Liquid Package, according to a NATO newsletter.
The ruling allows retailers and wholesalers to continue selling the products for the duration of the stay.
The U.S. Circuit Court of Appeals for the 3rd Circuit will now consider a further motion from Logic regarding the MDO that the company has seven days to file, according to media reports.
“The foregoing motion for a partial administrative stay is GRANTED as follows. The FDA’s marketing denial order is TEMPORARILY STAYED as to the Logic Pro Menthol E-Liquid Package and the Logic Power Menthol E-Liquid Package products. Within seven days of this order, the petitioner must file its motion for a stay pending the petition,” the order states. “The FDA’s response must be filed within 10 days thereafter.”
The temporary administrative stay will remain in effect until a panel of the court decides on Logic’s new stay motion. If no timely stay motion is filed, the clerk is authorized and directed to vacate the temporary administrative stay.
Tobacco harm reduction advocates have questioned the FDA’s reasoning behind the Logic MDO, suggesting that the agency misinterpreted youth consumption statistics.
November 1, 2022
Juul Lab Publishes Details of MDO Appeal

Photo: Juul Labs
Juul Labs has published its administrative appeal of the marketing denial order (MDO) issued by the U.S. Food and Drug Administration, which explains the company’s position, based on science and evidence, that the MDO was substantively and procedurally flawed. This appeal, referred to as a 10.75 appeal, is currently under review by the FDA.
In its press release for the MDO, the FDA stated that Juul Labs’ premarket tobacco product applications (PMTAs) “lacked sufficient evidence regarding the toxicological profile of the products” and that some of the “study findings raised concerns due to insufficient and conflicting data.”
Juul Labs believes that each of the deficiencies in the MDO is based on an incorrect and incomplete assessment of the data, and when the data are appropriately evaluated within the PMTAs, the FDA can properly assess the toxicological profile of Juul products and relative to other tobacco products, including combustible cigarettes. The appeal also shows that all perceived limitations could have been resolved by clarifications through the usual, iterative process that the FDA has followed for prior applications.
Through its 10.75 appeal, Juul Labs requests that the MDO be rescinded and its PMTAs be placed back into substantive review so that the FDA can complete a full and fair review to determine whether the Juul system is appropriate for the protection of public health. “We believe that once the FDA does a complete review of all of the science and evidence presented in the applications, without political interference, as required by law, we should receive marketing authorization for our products,” Juul Labs wrote in a press note.
For context: In July 2020, Juul Labs submitted PMTAs to the FDA for its currently marketed products and a new device with age-verification technology. The PMTAs included over 125,000 pages of data, information and analysis from over 110 scientific studies across nonclinical (75-plus studies), clinical (14 studies) and behavioral (21 studies) research programs to support the marketing of Juul products. The company also assessed its products relative to combustible cigarettes, an FDA-authorized heated-tobacco product (IQOS) and other marketed vapor products.
Despite this science and evidence, on June 23, 2022, the FDA issued an MDO for Juul Labs’ PMTAs. On July 5, the FDA stayed the MDO, announcing, on its own, that it would review the decision after determining “there are scientific issues unique to this application that warrant additional review.”
A summary of the Juul Labs responses to what the company believes are the deficiencies of the MDO is available here.
October 24, 2022
British Columbia Juul Litigation to Proceed

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The Supreme Court of British Columbia has dismissed an application from Altria Group to stay or dismiss proceedings against the company in a class action lawsuit against Juul Labs, reports The Lawyer’s Daily. Altria owns 35 percent of Juul.
The claim alleges that Altria conspired with Juul in the sale of nicotine vaping devices to youth in particular with the goal “to convert them into smokers” in part through nicotine addiction.
The class action suit was initially filed in September 2019, shortly after Health Canada issued an advisory for vapers to “monitor themselves for symptoms of pulmonary illness … and to seek medical attention promptly if they have concerns about their health.”
“This is an important decision that ensures that Canadians are able to sue all the parties that they allege have harmed them,” said Daniel Bach, a partner in Siskinds, about the Supreme Court decision. “We look forward to litigating these issues against Altria on the merits.”
Juul has been pummeled by lawsuits and mounting restrictions on the production and sale of vaping products in recent years. The e-cigarette maker has suffered financially as a result.
Since 2019, Juul has halted all U.S. advertising, discontinued most of its flavors and attempted to rebrand itself as a product for older smokers who seek alternatives to cigarettes.
According to press reports, Juul has been preparing to file for Chapter 11 bankruptcy.
This was the second appeal by Altria in this class action that British Columbia courts have dismissed. In October 2021, the B.C. Court of Appeal dismissed an appeal to an order allowing cross-examination on its affidavits in the company’s jurisdictional challenge.
October 19, 2022
Complaints Against Vapor Companies

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The United States filed complaints against six companies and related individuals to stop the illegal manufacture and sale of unauthorized vaping products, the Department of Justice (DOJ) announced Oct. 17.
In civil complaints and accompanying court papers filed in a U.S. District Court, the government alleges that the defendants illegally manufacture and sell electronic nicotine-delivery system (ENDS) products, including “finished” e-liquids, or liquids that contain nicotine and colorings, flavorings and/or other ingredients.
The complaints allege that the defendants caused tobacco products to become adulterated and misbranded while held for sale after shipment of one or more of their components in interstate commerce and that they continued to manufacture, sell and distribute the adulterated and misbranded tobacco products despite receiving warning letters from the Food and Drug Administration that they were violating the law.
According to the DOJ, the companies’ actions violate the premarket review requirements of the federal Food, Drug and Cosmetic Act.
“These cases are an important step in stopping the illegal sale of unauthorized electronic nicotine-delivery system products,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a statement. “The Department of Justice will continue to work closely with FDA to stop the distribution of illegal, unauthorized tobacco products.”
“Today’s enforcement actions represent a significant step for the FDA in preventing tobacco product manufacturers from violating the law,” said Brian King, director of the FDA’s Center for Tobacco Products. “The FDA is committed to acting swiftly when we are made aware of these violations. We will not stand by as manufacturers repeatedly break the law, especially after being afforded multiple opportunities to comply.”
The companies named in the Oct. 17 filing are Seditious Vapours of Phoenix, Arizona; Vapor Craft of Columbus, Georgia; Lucky’s Convenience and Tobacco of Wichita, Kansas; Morin Enterprises of Minnesota; Super Vape’z of Lakewood, Washington; and Soul Vapor of Princeton, West Virginia.
According to the DOJ, each of the defendants manufactured and sold ENDS products after receiving notice of the need to first obtain marketing authorizations from the FDA.
Vapor industry representatives warned against unintended consequences. “Mr. King seems delighted to kick in the doors of small businesses but turns a blind eye to the millions of Americans who rely on nicotine vaping to quit cigarettes,” Amanda Wheeler, president of the American Vapor Manufacturers Association, was quoted as saying by CNN. “The ongoing result is countless people being driven back to smoking.”
October 19, 2022
Health Ministry Sued Over Misinformation

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The Korea Electronic Cigarette Association (KECA) has sued the Ministry of Health and Welfare (MOHW) and the Korea Disease Control and Prevention Agency (KDCA), demanding the government correct misinformation about e-cigarettes, reports the Korea Biomedical Review.
The KECA’s lawsuit alleges that the government caused financial damage to e-cigarette-related small business owners by releasing incorrect information via an Oct. 23, 2019, press release recommending Koreans stop using liquid e-cigarettes.
The MOHW’s recommendation was issued following an outbreak of lung injuries in the United States that was initially attributed to nicotine vapes but was later determined to be associated with illicit THC products.
“According to the U.S. [Food and Drug Administration’s] notice banning the sale of liquid-type e-cigarettes, which was the basis of the MOHW’s decision that advised smokers to stop using e-cigarettes, tetrahydrocannabinol, a hemp-derived substance, was the main problem,” the KECA said.
In 2019, the U.S. Centers for Disease Control and Prevention stated that there were 530 confirmed severe lung diseases and eight deaths in the U.S. related to the use of liquid-type e-cigarettes.
“However, at the time of the announcement of the MOHW’s recommendation, there was only one suspected case of lung damage in Korea, and even the suspected case came from a person who smoked tobacco,” the KECA said.
According to a paper published in the Journal of Korean Medical Science in December 2021, there were no cases of severe pneumonia or lung damage among liquid e-cigarette users, according to the KECA. The group stated that the MOHW’s failure to withdraw its recommendation to stop use of liquid e-cigarettes shows a neglect of its duties.
A MOHW spokesperson said it will investigate the complaint and respond to the lawsuit in conjunction with other agencies, such as the KDCA and the Ministry of Food and Drug Safety.
October 17, 2022
Investor Suit Against RLX Dismissed

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A U.S. federal judge dismissed a class-action lawsuit brought against RLX Technology by investors who claimed that the company overestimated its financial prospects before its initial public offering, reports Lexis Legal News.
Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York found that RLX Technology did not misrepresent or omit known information about the future regulation of e-cigarettes in China.
“[T]he Offering Materials adequately disclosed the possibility of stricter regulations—indeed, the possible outright prohibition—of e-cigarettes in China,” Engelmayer wrote. The judge also found that the plaintiffs lacked standing to bring a claim because they did not purchase their shares in the IPO.
Founded in 2018, Beijing-based RLX went public on the New York Stock Exchange in January 2021. The offering raised $1.39 billion, according to data provider Dealogic. Its stock price fell sharply after Chinese regulators in March proposed treating vapor products like regular cigarettes.
The value of RLX shares dropped nearly 48 percent from $19.46 per share on March 19 to $10.15 at closing on March 22. As of November, the shares were valued at just over $4.
Certain investors later alleged that RLX in its offering documents made misleading statements about China’s regulations of e-cigarette products that made the company’s value appear to be greater than it is.
It allegedly stated that its products were not subject to regulation and would not fall under China’s Tobacco Monopoly Law and failed to disclose that Chinese regulators were developing new standards for e-cigarettes under which they would be regulated in a manner similar to the way ordinary cigarettes are regulated.
It also allegedly stated that it expected to continue profiting from China’s growing vaping market but allegedly failed to disclose how its profits would be affected by the new Chinese regulations of the vaping industry.
October 5, 2022
ITG Liable for Florida Settlement Payments

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ITG Brands assumed liability for tobacco settlement payments to Florida when it acquired four Reynolds American brands in 2015, a Delaware judge ruled, according to AP. As a result, ITG must compensate Reynolds American Inc. for losses incurred.
ITG bought the Kool, Winston, Salem and Maverick brands in 2014. Before the sale closed, R.J. Reynolds Tobacco Co. was making payments under a preexisting settlement agreement to reimburse Florida for smoking-related healthcare costs. After the deal closed, Reynolds stopped making payments for the four brands.
The purchase agreement required that ITG use reasonable best efforts to join the Florida settlement and make payments to the state for the brands it acquired from Reynolds. However, ITG has not joined the settlement agreement or made any payments.
Florida sued Reynolds and ITG, which ended with a judgment requiring Reynolds to continue paying on the settlement agreement unless and until ITG joins the agreement.
“That judgment on Reynolds amounts to over $170 million to date and tens of millions of dollars more each year into perpetuity,” noted Vice Chancellor Lori Will. The “unambiguous terms” of the asset purchase agreement support Reynolds’ arguments that ITG agreed to assume the liability imposed by the Florida judgment and must indemnify Reynolds, she concluded.
October 4, 2022
PMI Argues Against IQOS Import Ban

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The U.S. International Trade Commission (ITC) should have consulted more with the Food and Drug Administration before banning IQOS imports, lawyers for Philip Morris International argued before an appeals court panel on Oct. 3, according to Reuters.
In September 2021, the ITC upheld an initial determination from May 2021 that PMI’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc. (RAI). The agency then instituted an import ban and a cease-and-desist order preventing IQOS consumables and devices from being sold in the U.S.
PMI has challenged the import ban in court, arguing among other things that the ban deprives American smokers of nicotine products that are less unhealthy than cigarettes.
The case is part of a global patent dispute between RAI’s parent company BAT and tobacco giant Altria Group, which separated from PMI in 2008 and is the exclusive distributor of IQOS in the United States.
A North Carolina jury awarded Altria $95 million last month on claims that RAI’s Vuse e-cigarettes infringed its patents. In a separate case over RAI’s Vuse line, PMI won more than $10 million from a Virginia jury.
RAI sued Philip Morris at the ITC in 2020. Its related patent case against PMI in Virginia is on hold.
In July 2020, the FDA granted IQOS modified-risk orders, allowing Altria and PMI to tell consumers that the product generates lower levels of harmful chemicals than traditional cigarettes, among other claims.
October 4, 2022