Category: Litigation

Juul to Pay Washington State $22.5 Million for Youth Vaping

Photo: steheap
Juul Labs has agreed to pay Washington State $22.5 million to settle claims that it unlawfully targeted underage consumers with deceptive advertisements.
“Juul put profits before people,” Washington Attorney General Bob Ferguson said on April 13 in a statement. “The company fueled a staggering rise in vaping among teens.”
Among other complaints, Washington State argued that Juul failed to disclose clearly that its products contain nicotine. For more than 20 months, from August 2016 until April 2018, it “unlawfully sold hundreds of thousands of vaping products to Washington consumers,” the state’s attorneys wrote in their complaint.
As part of the settlement, Juul committed to reforms, including stopping all advertising that appeal to youth and ending most social media promotion in the settlement, according to Bloomberg.
“This settlement is another step in our ongoing effort to reset our company and resolve issues from the past,” the company said in a statement. “We support the Washington state attorney general’s plan to deploy resources to address underage use, such as future monitoring and enforcement.”
The deal is the latest in a series of settlements of youth vaping-related court cases brought by U.S. states.
In November 2021, Juul agreed to pay $14.5 million and change its business practices as part of an agreement with Arizona. In June 2021, it settled a similar case brought by North Carolina for $40 million.
Juul Labs continues to face similar suits from several states, including New York and California.
April 17, 2022
Top Court Reviews Tobacco Ban

The government wants to overturn a lower court’s verdict that the ban was unconstitutional.
South Africa’s Supreme Court of Appeal heard an appeal on Thursday arguing that the tobacco ban during the country’s Covid-19 lockdown was justifiable under the constitution, according to the Times Live.
In December 2020, the Western Cape High Court found that the tobacco ban had breached a number of human rights under the constitution and that the ban was unlawful because it was not “necessary” to prevent escalation or alleviate effects of the disaster (the coronavirus pandemic) as required by the Disaster Management Act.
The ban has not been in effect for a while, and President Cyril Ramaphosa said that the national state of disaster would soon be lifted as well, according to his state of the nation address. It is not guaranteed that another state of disaster would not be declared due to new and potentially more harmful Covid-19 variants, however. The court decision on the tobacco ban is important, then, because it would set precedent for future states of disaster.
“In a situation of evolving scientific knowledge, and with infection numbers rising and likely to continue to do so, the government had to take a cautious approach,” said Andrew Breitenbach, counsel for the government, arguing that the court judgment should not stand.
The goal of the ban was to relieve the strain on the healthcare system, and Breitenbach argued that the science at the time showed that smokers had higher rates of hospitalization and severe illness from Covid-19.
Alfred Cockrell, counsel for BAT South Africa, said it that the government needed to show that stopping smoking during lockdown would reverse or lessen the progression of Covid-19, not just that stopping smoking had an immediate “general good” effect.
“The point is that the dangers from cigarette smoking result from long-term chronic use,” Cockrell said.
More than 18 months after South Africa lifted its tobacco ban, the country is still coping with elevated levels of illicit cigarette sales.
March 4, 2022
BAT Prevails in Tanzania Distributor Dispute

Photo: somemeans
British American Tobacco Kenya has prevailed in an eight-year legal battle against a distributor in Tanzania, sparing it from paying a TZS3.2 billion ($1.4 million) court award, reports The East African.
The Tanzania Court of Appeal annulled a 2016 decision by a lower court awarding the money to Mohans Oysterbay Drinks as damages after it sued BAT Kenya over the termination of a cigarette supply contract.
Mohans claimed it had the exclusive rights to sell BAT products in Tanzania, which the cigarette maker disputed.
“In our view, there was no evidence to prove the existence of a distributorship agreement between the parties nor its breach,” said the appellant court.
Mohans started importing and supplying BAT cigarettes in Tanzania in 2000. However, in 2014, BAT awarded an exclusive distribution contract to another firm after a review of the cigarette maker’s business model.
Mohans challenged the decision in Tanzania’s high court, saying that BAT had unlawfully terminated a contract. BAT said there was no such contract.
In September 2016, the high court held that an implied contract between the parties existed in their 14 years of engagement and awarded Mohans damages for loss of goodwill and money invested in the business.
In overturning that ruling, the Court of Appeal ruled that the parties’ business relationship was “neither express nor implied agreement.”
Further, the judges said the high court had erred in its decision given that Mohans had rebuffed an attempt by BAT to formalize the distributorship agreement.
February 25, 2022
Ruling Could Impact EU Smoke Measurement

Photo: Amir
A ruling by the European Court of Justice (ECJ) could impact the way in which the tar, nicotine and other chemicals emitted by cigarettes are measured, according to a report by DutchNews.
In 2018, Dutch antismoking groups asked judges in Rotterdam to ban the existing EU ISO test because it provides inaccurate information about what smokers are actually inhaling.
Tests by a Dutch public health institute showed that when the tiny ventilation holes in cigarette filters are covered—as smokers tend to do with their fingers when holding cigarettes—tar, nicotine and carbon monoxide levels exceed the official EU limits.
The official EU ISO test, however, leaves the ventilation holes uncovered, leading to lower readings.
The Rotterdam court referred the case to the ECJ to establish whether the test was valid and binding. While confirming that test was valid, the court on Feb. 22 noted it was not binding on the public because the method had not been published in the Official Journal of the European Union, where the trade bloc publishes its legal acts.
Dutch attorney Phon van den Biesen said the ECJ had effectively thrown out the ISO method and instructed the Dutch court to review the antismoking group’s request on the basis of a measuring system the better reflects the deliveries.
February 24, 2022
USTC Plans Bankruptcy Exit

Photo: USTC
U.S. Tobacco Cooperative (USTC) has begun planning an exit from Chapter 11 bankruptcy later this summer. The cooperative originally filed for protection in July 2021 to meet contractual obligations to its member growers while the company faced uncertainty presented by an ongoing class-action lawsuit.
Oscar House
“On February 2, after 17 years of litigation, we were able to reach economic terms of a settlement with the Lewis Class,” said USTC CEO Oscar J. House. “As we await final approval from the court this summer, we are beginning to prepare our exit from bankruptcy and continue providing the exceptional service and quality products our organization is known for across the globe.”
USTC originally filed for protection in federal bankruptcy court to satisfy obligations to its 550-plus member-growers, 200-plus employees, suppliers and customers. The settlement and plan of reorganization will allow the cooperative to honor its commitments worldwide and emerge from bankruptcy well positioned to serve its member-growers. Details of the agreement will be provided in the ordinary course of obtaining formal court approval of the settlement and USTC’s plan of reorganization.
“USTC is healthy and set for a sustainable, successful future,” continued House. “Throughout the bankruptcy process we have fulfilled all obligations to all stakeholders: our customers, grower-members, vendors and employees. Going forward we will continue to do so, stronger than ever.”
February 17, 2022
FTC Complaint Against Altria’s Investment in Juul Dismissed

Photo: Aerial Mike
A U.S. Administrative Law Judge has dismissed the Federal Trade Commission’s (FTC) claims against Altria and Juul Labs arising out of Altria’s 2018 minority investment in Juul. Following a three-week trial, the judge found that the evidence failed to sustain the alleged violations.
The judge’s decision is subject to review by the FTC. Any decision by the FTC may be appealed to any U.S. Court of Appeals.
“We are pleased with this decision and have said all along that our minority investment in JUUL does not harm competition and does not violate the antitrust laws,” said Murray Garnick, executive vice president and general counsel of Altria, in a statement
In April 2020, the FTC issued an administrative complaint against Altria and Juul alleging that Altria’s 35 percent investment in Juul and the associated agreements constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act of 1890 and Section 5 of the Federal Trade Commission Act of 1914, and substantially lessened competition in violation of Section 7 of the Clayton Antitrust Act.
A public version of the decision is expected to be made available late this month.
February 15, 2022
Court Stays Bidi Vapor Marketing Denial Order
The U.S. Court of Appeals for the Eleventh Circuit has stayed the marketing denial order (MDO) issued by the U.S. Food and Drug Administration to Bidi Vapor in September 2021.
The Feb. 1, 2022, ruling allows Bidi Vapor and Kaival Brands to market and sell all of its Bidi Stick electronic nicotine-delivery systems (ENDS), including its tobacco, menthol and flavored products, while Bidi Vapor continues with its merits lawsuit compelling the FDA to place Bidi Vapor’s premarket tobacco product application (PMTA) for the flavored ENDS back under scientific review.
With the judicial stay decision going in favor of Bidi Vapor, the company expects many distribution partners to reestablish their previous sales volumes, with potentially new distribution chains added as well.
“We expect this judicial stay will result in a rebounding of Bidi Stick sales,” said Niraj Patel, president and CEO of both Kaival Brands and Bidi Vapor, in a statement. “Many wholesale and retail partners had discontinued or slowed purchases of the Bidi Stick until we heard back from the courts on the likelihood of our merits case succeeding. This is what our wholesale and retail partners have been waiting for.”
“We believe that Bidi Vapor has developed substantial, robust and reliable scientific evidence through, among other things, surveys, behavioral studies and clinical trials establishing support that the product is appropriate for the protection of the public health,” Patel said. “Following on FDA’s initial administrative stay of the MDO, we believe that this recent judicial stay is a good indication that the court finds some merit in Bidi Vapor’s arguments and puts Bidi Vapor’s PMTA one step closer to being properly and fully evaluated by FDA. We are extremely pleased with the court’s decision on this judicial stay order and continue to expect to be successful on the merits case as well.”
“The company believes that this decision signals a new milestone in the path toward providing adult smokers 21 and older with a viable alternative to combustible cigarettes. Distributors, wholesalers, retailers and adult consumers are all anxious to see positive outcomes not just for Bidi Vapor, but for the vaping industry as a whole. We believe in science-based regulation of ENDS and hope the courts will require FDA to adhere to the law as it reviews Bidi Vapor’s PMTAs,” Patel said.
February 3, 2022
Reynolds Prevails in Shareholder Dispute

Photo: RAI
The Supreme Court of North Carolina has upheld an April 2020 ruling by the N.C. Business Court that Reynolds American Inc. (RAI) provided “fair value” to shareholders who objected to the return they received from Reynolds’ $54.5 billion sale to British American Tobacco, reports The Winston-Salem Journal.
In January 2017, BAT announced it would acquire the 57.8 percent of RAI that it did not already own. BAT acquired a 42.2 percent ownership stake as part of Reynolds’ $4.4 billion purchase of BAT subsidiary Brown & Williamson Tobacco Corp. in 2004.
BAT’s initial offer for the remaining shares was valued at $59.64 a share. When the deal closed, the share price value had reached $65.87.
Believing the agreed-upon deal price significantly undervalued Reynolds, a group of dissenting shareholders, led by Third Motion Equities Master Fund, refused to tender their shares at closing. RAI then opted to pay them $59.64 per share plus interest..
The N.C. Business Court ruled that Reynolds “properly determined the ‘fair value’ of shares, saying the amount equaled or exceeded the value of Reynolds shares as of the date of the merger.”
The NC Supreme Court agreed with the Business Court judgment that that no further payments to the dissenters are required.
December 20, 2021
Eonsmoke Settles Youth-Marketing Lawsuit

Photo: Vitalii Vodolazskyi
Eonsmoke and its co-owners will pay Massachusetts nearly $51 million to settle a lawsuit over selling vapor products to minors, the office of Attorney General Maura Healey announced on its website. The e-cigarette retailer has also agreed to stop selling its products in the state.
The AG’s settlement resolves allegations that the defendants directly targeted young people for sales of its vaping products through marketing and advertising intended to appeal to youth. The attorney general’s office also alleged that Eonsmoke failed to verify the age of online purchasers of its products and failed to ensure shipments of these products were received by a person 21 years or older, the state’s minimum legal sales age for smoking products.
“Eonsmoke coordinated a campaign that intentionally targeted young people and sold dangerous and addictive vaping products directly to minors through their website,” said Healey. “We were the first to take action against this company and its owners, and today we are holding them accountable and permanently stopping them from conducting these illegal practices in our state.”
Eonsmoke ceased all operations and dissolved in 2020. If co-owners Gregory Grishayev and Michael Tolmach want to sell tobacco products in Massachusetts in the future, they are required to get authorization from the Food and Drug Administration and give notice to the AG’s Office to ensure compliance with federal and state law.
December 10, 2021
Call for Class Action Status in Juul Overpayment Cases

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Lawyers representing U.S. consumers who say they overpaid for Juul Labs’ e-cigarettes on Dec. 6 urged a federal judge to certify their claims as a class action, reports Reuters. Juul argues that the plaintiffs should proceed individually because they bought Juul products under differing circumstances.
More than 2,800 cases have been consolidated in the multidistrict litigation against Juul, its largest shareholder Altria Group and several individual officers and directors. They include both personal injury claims and claims of economic loss by people who say they would have paid less, or not bought the e-cigarettes at all, if Juul had not downplayed their addictiveness and appealed to teenagers through social media campaigns and other means.
The plaintiffs are seeking partial refunds for adult purchasers and full refunds for underage purchasers.
Gregory Stone of Munger, Tolles & Olson, representing Juul, said the plaintiffs’ case rested on whether Juul’s marketing was misleading, whether it targeted teenagers, whether buyers were actually misled and whether the marketing affected their buying decisions.
In a tentative opinion, U.S. District Judge William Orrick said that he was inclined to grant class certification.
December 7, 2021