Category: Litigation

Juul Labs’ founders used a $12.8 billion investment from Altria Group to enrich themselves, according to a minority shareholder.

In a lawsuit filed in California state court last week, Daniel Grove says Juul founders Adam Bowen and James Monsees each sold $500 million in stock after the deal with Altria while denying similar opportunities to minority stakeholders.

The suit seeks to block Juul Labs’ board from approving further transactions involving its members and to make the company hold annual meetings. It also seeks to represent others as a class of plaintiffs.

Describing the suit as “without merit and filled with factual inaccuracies,” Juul Labs countersued  stop Grove from gaining access to its books and record.

Grove’s lawyer, Francis Bottini, said his client is seeking information about payments to Juul Labs’ board members related to the Altria deal and that under California law he didn’t sign away those rights as Juul contends.

Bottini said Juul Labs’ lawsuit against Grove is “without merit.”

The U.S. Court of Appeals for the District of Columbia in Washington has upheld the Food and Drug Administration’s (FDA) regulatory power over vapor products, report Bloomberg and Reuters.

The agency’s authority had been challenged by e-cigarette maker Nicopure Labs and the Right to be Smoke Free Coalition, who argued that the FDA violated the federal Tobacco Control Act by failing to provide an easier path to market for their products and their First Amendment rights by banning the distribution of free samples.

A three-judge panel unanimously said on Tuesday that the FDA’s application to e-cigarettes of rules governing tobacco marketing makes sense because the new products “are indisputably highly addictive and pose health risks, especially to youth, that are not well understood.”

“The First Amendment does not bar the FDA from preventing the sale of e-cigarettes as safer than existing tobacco products until their manufacturers have shown that they actually are safer as claimed,” U.S. Circuit Judge Cornelia Pillard wrote for the court.

While the FDA prevailed in the case, the agency still faces stiff resistance from trade groups and conservative activists in anticipation of its e-cigarette flavor restrictions.

Opponents say flavor restrictions will stifle a budding e-cigarette industry while killing thousands of jobs and small businesses.

Tuesday’s appellate ruling affirmed a 2017 decision by U.S. District Judge Amy Berman Jackson in Washington.

Vitabon Co. is suing British American Tobacco (BAT) for trademark infringement in South Korea.

Vitabon claims that the name of BAT’s Glo Sens hybrid e-cigarette too closely resembles that of its nicotine-free aromatherapy device, Sense.

Vitabon is demanding KRW110 million ($93,000) in compensation and an end to the manufacture and sales of Glo Sens in South Korea.

“Despite the fact that Vitabon Sense is a product designed to help customers quit smoking and Glo Sens is an e-cigarette product, the methods of use are very similar and their customer bases very close,” a Vitabon official said, adding that Vitabon Sense was released prior to Glo Sens.

BAT plans to file a countersuit against Vitabon, denying the claim that the names confuse consumers.

The Supreme Court of Kenya on Tuesday dismissed a challenge by British American Tobacco (BAT) to regulations that charge the tobacco industry a fee to help compensate people affected by smoking, reports AP.

BAT had argued that the 2 percent fee was vague because it was unclear whether it would be imposed on the raw material or the final product.

The justices ruled the regulations conform to the constitution and its goal of protecting the lives of Kenyans.

“The limitation has to be weighed against the larger society,” said Justice Njoki Ndungu. “There is no way regulations can be made without considering the health of the people.”

Tobacco advocacy groups celebrated the judgment. “The Supreme Court’s decision is a resounding victory for public health and allows the government to implement a law that will help protect Kenyans from the devastating consequences of tobacco use,” said Bintou Camara Bityeki, director of Africa programs, Campaign for Tobacco-Free Kids.

California is suing Juul Labs for marketing its products directly to underage teenagers and failing to include health warnings.

Announced on Monday by state Attorney General Xavier Becerra, the lawsuit alleges that the San Francisco company contributed to a public health epidemic by selling tobacco products directly to minors. The suit also accuses Juul Labs of violating the privacy of minors by sending marketing emails to those who failed the age verification on Juul Labs’ website.

The suit also alleges that Juul Labs neglected to inform consumers about health risks associated with the product, such as chemicals linked to cancer and the potential for reproductive harm.

“Juul adopted the tobacco industry’s infamous playbook, employing advertisements that had no regard for public health and searching out vulnerable targets,” Becerra said in a press release.

Since Juul’s launch in 2015, youth vaping in the United States has almost doubled, according to a press statement published by the California Department of Justice. From 2017 to 2019, e-cigarette use among high school students rose by 135 percent. The majority of underage e-cigarette users report that Juul is their usual brand.

A spokesperson for Juul Labs said the company is “focused on resetting the vapor category in the U.S. and earning the trust of society by working cooperatively with attorneys general, regulators, public health officials and other stakeholders to combat underage use and convert adult smokers from combustible cigarettes.”

Jurors ordered R.J. Reynolds Tobacco Co. and Philip Morris USA to pay $148 million in punitive damages, bringing the total award in the death of a Florida smoker to $157 million.

Friday’s decision, which imposes $74.1 million each against R.J. Reynolds and Philip Morris, is added to a $9.2 million compensatory award handed down last week for the respiratory disease-related death of Edward Caprio.

The lawsuit is among thousands of claims that stem from Engle v. Liggett Group Inc., a 1994 Florida state court class action case against U.S. tobacco companies. The state’s supreme court ultimately decertified the class but ruled that “Engle progeny” cases may be tried individually.

Caprio had originally filed suit against the companies while suffering from respiratory disease but died three years after a partial verdict in a 2015 trial against the tobacco companies left his claims unresolved.

The award is the largest in years in Florida’s Engle progeny class of tobacco cases. In July 2014, jurors in Pensacola handed down a $23.6 billion verdict against R.J. Reynolds for Michael Johnson’s 1996 cancer death. That award was ultimately thrown out on appeal.

A former Juul Labs executive is alleging in a lawsuit that the company shipped 1 million contaminated pods without informing consumers or issuing a recall, reports Buzzfeed.

Plaintiff Siddharth Breja, a former senior vice president of global finance who worked at Juul Labs from May 2018 to March 2019, claims he was retaliated against for raising concerns about the contaminated shipment.

Breja alleges that on March 12, 2019, he learned that some batches of mint e-liquid had been found to be contaminated. Approximately 250,000 mint refill kits, the equivalent of 1 million pods, were manufactured with the contaminated e-liquid, shipped to retailers and sold to customers.

Not only did management refuse to recall the batches, it also asked Breja to charge the supplier of the e-liquid $7 billion for the contaminated batches, the lawsuit alleges.

According to the lawsuit, Breja was terminated on March 21, just over a week after he raised concerns about the contaminated pods. He was told it was because he had misrepresented himself as the chief financial officer at Uber.

A Florida state court jury has cleared R.J. Reynolds Tobacco Co. of responsibility for a long-time smoker’s cancer death.

The jurors concluded that nicotine addiction did not legally cause the lung cancer that killed Eugene Delancy in 1996. Delancy’s family has requested $3
million in compensatory damages plus a finding that punitive damages were warranted.

The case stems from Engle v. Liggett Group Inc., a 1994 Florida state court class-action lawsuit against Reynolds and other tobacco companies. The
state’s supreme court ultimately decertified the class but ruled the cases may be tried individually.

While plaintiffs in the so-called Engle progeny cases are entitled to the benefit of the jury’s findings in the original verdict, they must prove the smokers at the
heart of their cases suffered from nicotine addiction that caused a smoking-related illness.