Category: Litigation

‘States Must Use Juul Payouts for Prevention’

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Medical groups are urging the U.S. states that recently won a case against Juul Labs to use the money for tobacco prevention and cessation programs, according to Pew. The court case ended in a $438.5 million settlement.
The deal, which resolved an investigation by 33 states into Juul Labs’ marketing practices, requires Juul to pay states over six years to 10 years, prohibits Juul from further marketing to young people, limits where Juul products can be sold and advertised, bans flavors that haven’t been approved by the U.S. Food and Drug Administration and prohibits free samples and brand name merchandise marketing.
Groups, including the Campaign for Tobacco-Free Kids (CTFK), the American Cancer Society Cancer Action Network, the American Heart Association, the American Lung Association, Americans for Nonsmokers’ Rights and the Truth Initiative, called on the states involved in the settlement “to both build on the successes of the historic 1998 Master Settlement Agreement with the tobacco industry and avoid some of the mistakes that were made.”
The groups cited a CTFK report showing that of the $27 billion that states collected from tobacco settlements and taxes in fiscal 2022, only 2.7 percent was spent on programs to prevent kids from smoking and help smokers quit.
Several attorneys general have expressed intent to use the Juul settlement money for smoking prevention and cessation programs. The health groups urged the officials to “translate that admirable intention into a firm commitment expressed in the text of the final agreement.”
October 3, 2022
Maine Backs Out of Juul Settlement

Photo: Carsten Reisinger
Maine is backing out of a multi-state settlement with Juul Labs over the e-cigarette manufacturer’s marketing practices after objecting to certain conditions from the company.
Maine was set to receive an estimated $11.6 million over the next six years to 10 years as part of a nearly $440 million settlement between the manufacturer and 33 states and territories. The investigation found that Juul had marketed its products to youth.
However, as part of the agreement, Juul wanted states to waive the rights of school districts to pursue their own lawsuits, according to the Maine attorney general’s office. Maine is unwilling to agree to that.
“We are disappointed in the outcome of these negotiations, but ultimately, we were unwilling to waive the rights of other entities who are also trying to hold Juul accountable for its deception,” Attorney General Aaron Frey said in a statement to The Maine Monitor.
September 26, 2022
Juul Sues FDA for Docs Justifying Product Ban

Juul Labs is suing the U.S. Food and Drug Administration to force the agency to disclose documents supporting its order banning the company’s products, reports Reuters.
On June 23, the FDA ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.”
A federal appeals court then granted Juul Labs an emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal. The e-cigarette company separately asked the FDA to stay its own order pending the appeal.
In a complaint filed on Sept. 21 with a federal court in Washington, D.C., Juul accused the FDA of invoking the deliberative process privilege to improperly withhold scientific materials that are key to understanding the basis for the June 23 sales ban.
Juul said the materials would show whether the FDA conducted a legally required balancing of the public health benefits and risks of its products, including claims they help smokers quit cigarettes, and whether the agency’s reasoning was scientifically sound.
“The public deserves a complete picture of the scientific facts behind one of the agency’s most controversial and closely scrutinized decisions in recent years,” Juul said.
Juul accused the FDA of violating the federal Freedom of Information Act by withholding a majority of the “scientific disciplinary reviews” underlying the sales ban.
September 21, 2022
A Second Chance

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How companies can make the most of a recent court ruling requiring the FDA to reassess thousands of PMTA rejection notices.
By Neil McKeganey
It would be hard to overstate the threat that youth vaping in the United States poses to the use of e-cigarettes as a means of tobacco harm reduction. Respected national surveys have shown a rising trend in youth vaping, with the threat to the vaping industry as predictable as night following day.
Former Food and Drug Administration Commissioner Scott Gottlieb could not have been clearer in signaling that threat when he said that the offramp to adult smoking could not be justifiably achieved at the cost of the on-ramp of teen vaping. If anybody was in any doubt about the risks that youth vaping poses to the entire e-cigarette industry, those doubts would have surely been extinguished in the recent ruling against Juul Labs, which required the company to pay in excess of $438 million to compensate states for the harms caused by past marketing practices increasing the likelihood of youth using their eponymously named vaping device.
For vaping companies, the threat of youth vaping may have lifted slightly in a recent U.S. court ruling requiring the FDA to pay attention to what vapor companies are doing in trying to restrict youth access to their products. Odd as it may sound, after having encouraged vapor companies to pay attention to their marketing and sales practices in light of the rising trend in youth vaping, the FDA’s position appears to have been that those efforts were almost certainly doomed to fail, with youth accessing what are often easy-to-conceal vaping products with relatively little difficulty through their social networks.
With vapor companies having invested heavily in age verification software, point-of-sale restrictions and in the removal of flavored e-liquids, it would have been a bitter pill to swallow to be told that the regulators had largely ignored those efforts to reduce youth access to their products.
The logic behind the FDA’s decision seems to have been that it would be easier to expedite the large number of premarket tobacco product applications (PMTAs) by adopting a “Fatal Flaw” approach—rejecting those applications that did not present data from either longitudinal customer studies or randomized trial evaluations and simply ignoring what the companies were doing to lessen the likelihood that their products would be found in the hands of youth.
By ruling against the FDA in legal action initiated by six vapor companies that had received marketing denial orders without the FDA even paying attention to their youth sales restriction efforts, the judges have effectively provided vapor companies with a second chance to have their PMTA applications reassessed.
So, what should vapor companies do given the legal victory that has been dropped in their lap? Clearly, it is going to be important for companies to do all they can to restrict youth access to their vapor products. But actions taken by these companies is not the same thing as being able to present evidence to the FDA that their products are not being used by youth.
To this end, research undertaken by the Centre for Substance Use Research (CSUR) in Scotland may help many of the companies concerned. For the last two years, the CSUR has been measuring the prevalence with which over 200 e-cigarette devices are being used by youth and adults within the United States. This ongoing research provides vapor companies with product-specific data showing the extent to which their products are being used, or more crucially, are not being used by youth.
Valuable as the data from this study undoubtedly are, vapor companies also have to be able to show the benefit of their products to adult smokers. The fastest route to obtaining this data is through an actual use study in which adult smokers using a company’s vapor products are monitored over a number of weeks to determine how many smokers are able to quit or reduce their cigarette smoking through using the company’s vapor products.
To obtain a marketing authorization, vapor companies have to be able to show two things—that their products are not being used by youth and that they can help adult smokers in quitting or reducing cigarette consumption. Succeed in these two things and vapor companies can have a bright future. Fail in either one and the future looks a lot bleaker.
Neil McKeganey is the director of the Center for Substance Use Research in Glasgow, Scotland.

September 12, 2022
Reynolds Hit with $95 Million Verdict in Vapor Patent Dispute

Photo: New Africa
A jury in the U.S. District Court for the Middle District of North Carolina awarded Altria Client Services more than $95 million after finding that Reynolds Vapor Co.’s Vuse Alto e-vapor product infringed three Altria patents.
The jury awarded $95.23 million in past damages through June 30, 2022. Post-trial proceedings will address ongoing damages through the expiration of Altria’s patents in 2035. At trial, Altria urged the jury to find a royalty rate of 5.25 percent, which the jury accepted in returning its award of past damages.
“Patents are at the core of innovation, and we take very seriously protecting our intellectual property,” said Murray Garnick, executive vice president and general counsel of Altria, in a statement. “We are pleased that the jury recognized the importance of Altria’s innovation and the value of its patent rights.”
At issue in this case were three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings dating back to April 2015. The jury found that Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.
The case is Altria Client Services vs. Reynolds Vapor Company et al.
September 7, 2022
Juul Settles Teen Vaping Investigation

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Juul Labs will pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products, which critics have blamed for sparking a surge in underage vaping, reports AP.
The probe found that Juul marketed its e-cigarettes to underage teens with launch parties, product giveaways and ads and social media posts using youthful models.
“Through this settlement, we have secured hundreds of millions of dollars to help reduce nicotine use and forced Juul to accept a series of strict injunctive terms to end youth marketing and crack down on underage sales,” Connecticut Attorney General William Tong said on Sept. 6 in a statement.
In reality, most of the limits imposed by the settlement won’t affect Juul’s practices, which halted use of parties, giveaways and other promotions after coming under scrutiny several years ago.
While Juul’s early marketing focused on young, urban consumers, the company has since shifted to pitching its product as an alternative nicotine source for older smokers.
“We remain focused on our future as we fulfill our mission to transition adult smokers away from cigarettes—the number one cause of preventable death—while combating underage use,” the company said in a statement.
While resolving one of the biggest legal threats, Juul Labs still faces nine separate lawsuits from other states. Additionally, Juul faces hundreds of personal suits brought on behalf of teenagers and others who say they became addicted to the company’s vaping products.
The company is also in the process of appealing a marketing denial order (MDO) by the U.S. Food and Drug Administration, which, if upheld, would force its products off the market.
In June, the FDA rejected Juul Labs’ premarket tobacco product applications, saying that the company has submitted insufficient evidence that its products were appropriate for the protection of public health.
While the agency subsequently suspended its MDO, citing scientific issues in the application that warrant additional review, the agency stressed that the stay does not rescind the order.
September 6, 2022
Court Rejects Gripum’s MDO Appeal

Photo: Mikhail Reshetnikov
A U.S. appeals court denied a petition to review the Food and Drug Administration’s marketing denial order (MDO) to Illinois-based e-liquid manufacturer Gripum, reports Vaping360.
Gripum submitted premarket tobacco product applications (PMTAs) in September 2020 for about 200 bottled e-liquid products in nontobacco flavors. The company received an MDO on Sept. 8, 2021. Gripum filed a petition for review on Oct. 8 and was granted a stay of FDA enforcement in November 2021. The company participated in oral arguments before the court on April 20.
Gripum argued that the MDO was unfairly issued because Congress and the FDA did not establish any “ascertainable standards” to determine if the company’s products are “appropriate for the protection of public health.” The company also said that the agency changed the evidentiary standard for a successful PMTA after the application deadline had passed and that the agency failed to conduct individualized PMTA reviews as required by the Tobacco Control Act.
The 7th Circuit Court of Appeals rejected all of Gripum’s arguments, finding that the FDA’s approach to resolving the application was both reasoned and consistent with the Tobacco Control Act.
Gripum’s defeat follows a successful MDO challenge by six vapor companies. On Aug. 23, the U.S. Court of Appeals for the 11th Circuit granted petitions for review filed by Bidi Vapor, Diamond Vapor and four other companies challenging the FDA’s rejection of their e-cigarette applications.
August 30, 2022
Judge Denies Altria Investor Settlement

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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.
August 29, 2022
Kaival Expects Boost From Court Ruling

Photo: Kaival Brands Innovations Group
Kaival Brands, the U.S. distributor of products manufactured by Bidi Vapor, expects sales of its Bidi Stick vapor product to benefit from a recent court decision instructing the U.S. Food and Drug Administration to take another look at the company’s premarket tobacco product applications (PMTAs).
On Aug. 23, the U.S. Court of Appeals for the 11th Circuit granted petitions for review filed by Bidi Vapor, Diamond Vapor and four other companies challenging the FDA’s rejection of their e-cigarette applications. According to Chief Judge William Pryor, the agency didn’t properly assess the companies’ marketing and sales-access-restriction plans designed to minimize youth exposure and access.
This ruling effectively reverses the marketing denial orders and allows Bidi Vapor to continue to market all flavor varieties of the Bidi Stick in the United States. The company submitted PMTAs for all 11 flavor of its Bidi Stick prior to the Sept. 9, 2020, PMTA deadline.
“As the exclusive U.S. distributor of Bidi Vapor’s products, this [ruling] is a significant event for us and our downstream partners, as many awaited the decision before expanding distribution, and paves the way for potential revenue growth for our company,” said Eric Mosser, president and chief operating officer of Kaival Brands, in a statement.
“But more than that, we are glad the appellate court recognized the potential importance and direct effects that an adult-focused marketing plan and strict sales and access restrictions may have on addressing the youth access problem.”
At press time, the FDA had not announced how it would respond to the court ruling. The agency could appeal the ruling or put Bidi Vapor’s PMTAs for its nontobacco-flavored devices into scientific review.
August 29, 2022
Court Upholds Public Housing Smoking Ban

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The U.S. Department of Housing and Urban Development (HUD) is entitled to ban smoking in federally subsidized public housing, an appeals court ruled on Aug. 25, reports Reuters.
The D.C. Circuit Court of Appeals decided that the HUD properly enacted a 2016 rule requiring state and local public housing agencies to ban cigarettes, cigars and pipes inside housing units and indoor common spaces, and outside within 25 feet of those areas.
Six tenants and a smokers’ rights group challenged the ban, saying it improperly invaded their privacy and violated due process by preventing them from engaging in lawful activity—using tobacco—inside the home.
But Chief Judge Sri Srinivasan said HUD provided “considerable” evidence that the rule helped protect residents against the health risks of secondhand smoke, prevent fires and reduce property maintenance costs. The HUD, he said, did not act arbitrarily and capriciously in promulgating the rule.
Srinivasan also rejected a claim that the ban improperly restricted how the government spends money, violating a provision of the U.S. Constitution governing federal spending.
The plaintiffs plan an appeal, arguing that the case involves significant issues involving federalism and whether Congress actually empowered HUD to ban smoking.
Srinivasan’s decision in NYC CLASH Inc et al v Fudge, D.C. Circuit Court of Appeals, No. 20-5126 upheld a March 2020 lower court ruling.
August 28, 2022