Category: Litigation

North Carolina Launches Juul Depository

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The attorney general for the U.S. state of North Carolina announced the launch of an online, searchable public depository that will contain nearly 4 million documents from the state’s lawsuit against e-cigarette manufacturer Juul Labs.
The depository was created and is being housed by the University of North Carolina at Chapel Hill’s (UNC) University Libraries and the University of California, San Francisco (UCSF). The first 50,000 documents are now available online in the UCSF Industry Documents Library, and additional documents will be added monthly, according to Attorney General Josh Stein.
“We insisted on a publicly accessible database of Juul’s documents to ensure transparency,” said Stein in a statement. “We want people to understand what Juul did so this never happens again. I’m grateful for the partnership with UNC and UCSF and appreciate their teams’ hard work to bring this document library to life.”
Stein sued Juul Labs in 2019 for unlawfully designing, marketing and selling its e-cigarettes to teenagers. In 2021, he reached a first-in-the-nation settlement with the pod vaping system manufacturer, winning $47.8 million and requiring the company to make significant business changes and publicize many of the documents it had produced during the lawsuit.
The documents include information about Juul Labs’ business practices, research, advertisement, marketing, and sales data, and, according to Stein, “they shine a light” on how the company marketed its products to youth.
The Juul Labs documents will be cross-searchable with more than 18 million other documents in the UCSF library’s tobacco, opioid, chemical, drug, food and fossil fuel industry archives.
Stein is also investigating Puff Bar and other e-cigarette manufacturers, distributors and retailers due to ongoing concerns about flavors, age verification and marketing.
February 5, 2024
PMI and BAT Settle Patent Disputes

Photo: ASDF
Philip Morris International and British American Tobacco have settled their ongoing intellectual property disputes relating to heated tobacco and vapor products.
The cigarette makers had been fighting a multi-front patent battle. BAT, which makes Vuse vapes and Glo heated tobacco devices, was ordered to pay PMI millions of dollars after losing one case, while PMI has been blocked from importing its flagship heated tobacco device IQOS into the United States as part of another.
The settlement includes non-monetary provisions between PMI and BAT that resolve all ongoing global patent infringement litigation, encompassing all related injunctions and exclusion orders, and prevents future claims against current heated tobacco and vapor products. The settlement also allows each party to innovate and introduce product iterations.
“We are pleased that this matter has been resolved to the mutual satisfaction of both parties,” said PMI CEO Jacek Olczak in a statement. “There is a clear and growing global desire from adults who smoke to choose from a range of smoke-free products, and we believe continued reduced-risk category innovation can accelerate declines in the harms associated with smoking to the benefit of consumers and public health at large as we continue PMI’s journey to end the sale of cigarettes.”
“This agreement is an important step forward for BAT and all our stakeholders,” said BAT CEO Tadeu Marroco in a statement. “Having already built two £1 billion [$1.28 billion] brands in Vuse and Glo, the potential for their continued impact on tobacco harm reduction is clear. I am delighted that this settlement will allow BAT to focus on developing innovative solutions that provide adult consumers with a greater choice of reduced risk products in support of our ‘A Better Tomorrow’ purpose. By doing so, we will help build a smokeless world for the benefit of consumers, investors and society as a whole.”
February 2, 2024
Pax Labs Sues ALD Over Patents

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Pax Labs has filed a lawsuit against the vape brand Stiiizy and its manufacturer ALD Group for allegedly infringing four vape pen patents, reports Bloomberg Law.
Stiiizy and Hong Kong-based ALD make vaporizing devices, including a cartridge and battery, that utilize methods similar to Pax Labs’ patents, according to separate complaints filed in the U.S. District Court for the Central District of California.
Pax Labs said the companies infringed U.S. Patents 11,369,756, 11,369,757, 11,766,527 and 11,759,580, which deal with methods for leak-resistant vaporizer cartridges and apparatuses.
February 1, 2024
Pax Labs Files Patent Suit Against Stiizy
Credit: Stiizy
Pax Labs Inc. has filed a lawsuit against the vape brand Stiiizy Inc. and its manufacturer ALD Group Ltd. for allegedly infringing four patents with vape pens they make and sell.
Stiiizy and Hong Kong-based ALD make vaporizing devices, including a cartridge and battery, that utilize methods similar to Pax Labs’ patents, according to separate complaints filed Monday in the US District Court for the Central District of California, according to media reports.
Pax Labs said the companies infringed U.S. Patent Nos. 11,369,756, 11,369,757, 11,766,527, and 11,759,580, which deal with methods for leak-resistant vaporizer cartridges and apparatuses.
The patents are all labeled as a “Leak-resistant vaporizer device.”
January 31, 2024
BAT Faces Lawsuits Over Impairment

Image: Vitalii Vodolazskyi
BAT is facing potential shareholder lawsuits targeting the $31.5 billion write-down in the fair market value of R.J. Reynolds Tobacco Co.’s traditional cigarette brands, according to the Winston-Salem Journal.
The write-down was disclosed in early December 2023. BAT changed the value status of Newport, Camel, Pall Mall and Natural American Spirit to “finite” from “indefinite.” The value lifespan of these brands has shifted to about 30 years from “perpetual,” according to Tadeu Marroco, BAT CEO, in the company’s fiscal 2023 financial update.
Multiple law firms, including Rosen Law Firm and Kuznicki Law, are soliciting plaintiffs for a class-action lawsuit. Some firms have cited a deadline of March 25, but a new round of solicitations has been made this week.
The law firms are requesting a class-action period of Feb. 9 to Dec. 6 for purchasers of BAT’s publicly traded securities.
BAT and certain unnamed current and former executives are potential defendants.
The potential lawsuits claim that BAT “made false and/or misleading statements and/or failed to disclose that BAT materially understated the risks and potential likelihood of an impairment to its premium American cigarette brands as a result of various longstanding headwinds.”
Following the write-down, investors sent share prices down 9 percent.
According to PricewaterhouseCoopers, an indefinite value “has no expiration date barring any significant legal, regulatory, contractual, competitive, economic or other factors that limit its useful life to the reporting entity.” A finite value typically covers brands whose worth is likely to decline over time.
Reynolds has been under increasing pressure from BAT to improve overall traditional cigarette performance. According to Marroco, BAT’s “performance in U.S. combustibles (traditional cigarettes) has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S.”
January 29, 2024
Appeals Court Affirms Dismissal of PMI Suit

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The United States Court of Appeals for the 2nd Circuit on Dec. 26, 2023, affirmed a district court’s dismissal of a putative class action asserting claims against Philip Morris International that the company made false or misleading statements regarding both the scientific studies it conducted in support of an application to the Food and Drug Administration and the outlook for the company’s sales growth in Japanese markets, according to Lexology.
The district court held that the plaintiffs failed to adequately prove falsity or scienter. The 2nd Circuit affirmed the dismissal, holding that the plaintiffs failed to adequately plead falsity.
The court decided two questions of first impression in the 2nd Circuit, holding a securities fraud defendant’s statement that its scientific studies comply with a methodological standard that is published and internationally recognized, but stated in general and inherently subjective terms, is properly analyzed as a statement of opinion rather than a statement of fact, and holding that, whereas a securities fraud defendant’s statement expresses an interpretation of scientific data that is ultimately endorsed by the FDA, such a statement is per se “reasonable” (i.e., supported by “meaningful inquiry”) as a matter of law.
The plaintiffs alleged that PMI made misrepresentations in securities filings and public statements about clinical studies it conducted in support of an application to the FDA to sell IQOS in the U.S. and market IQOS as reduced risk. The plaintiffs also alleged that PMI made misleading statements about its growth projections in Japan regarding IQOS. The district court found that none of the challenged statements were false or misleading because all the challenged statements were true, inactionable puffery or inactionable statements of opinion. Furthermore, the district court found that the plaintiffs failed to establish the required strong inference of scienter, either by alleging facts showing motive and opportunity to commit fraud or strong circumstantial evidence of conscious misbehavior or recklessness. Accordingly, the district court granted the defendants’ motion to dismiss the plaintiffs’ first amended complaint and denied the plaintiffs’ motion for reconsideration. After the district court dismissed the plaintiffs’ second amended complaint, this time with prejudice, the plaintiffs appealed.
January 12, 2024
Top Court Won’t Hear Flavor Ban Challenge

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The U.S. Supreme Court has declined to hear a legal challenge to California’s ban on flavored tobacco, reports Reuters.
On Jan. 8, the justices rejected an appeal by R.J. Reynolds and other plaintiffs of a lower court’s ruling holding that California’s law did not conflict with a federal statute regulating tobacco products.
The ruling ends a long battle over tobacco restrictions in the U.S.’ most populous state.
In 2020, California Governor Gavin Newsom signed into law a ban on all flavored tobacco products, including menthol cigarettes, following concerns about increased underage vaping and tobacco use.
The tobacco industry and allied groups then gathered enough signatures for a ballot measure that would block the state from implementing its flavor ban. The move forced California to postpone the Jan. 1, 2021, implementation until after the ballot.
When the ballot took place in November 2022, nearly two-thirds of participants approved the flavor ban.
A day after the California vote, Reynolds, along with a tobacco retailers group and a vape shop, filed a lawsuit arguing that the federal Tobacco Control Act preempts state and local laws that bar flavored tobacco product sales.
In March 2023, a federal judge rejected the plaintiffs claim, citing an earlier decision by the San Francisco-based 9th U.S. Circuit Court of Appeals upholding a similar ban in Los Angeles County.
California’s flavor ban took effect in December 2022, after the U.S. Supreme Court refused to block the measure in response to an earlier request by the tobacco industry.
California was the second state to ban all flavored tobacco product sales after Massachusetts, which passed similar legislation in 2019. Several other states have restricted flavored vaping products and several municipalities have adopted their own bans. The Biden administration plans to make a decision on whether to ban menthol cigarettes nationwide in March.
Anti-tobacco activists welcomed the Supreme Court ruling. “States and localities should feel secure that they are not federally preempted from passing laws ending the sale of flavored tobacco products,” Yolonda C. Richardson, president and CEO of the Campaign for Tobacco-Free Kids, wrote in a statement. “They should move forward expeditiously in passing these laws to protect kids, advance health equity and save lives.”
Critics of flavor bans say they have boosted out-of-state sales near Massachusetts and spawned an illicit market in California. There has also been controversy over the products that replaced menthol cigarettes in California, with health groups and state officials warning that the new products also violate the flavor ban.

January 8, 2024
Liquid Makers Get Another Shot at PTMA

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Two e-liquid companies will be able to resubmit their marketing applications to the U.S. Food and Drug Administration following a court ruling, reports Bloomberg Law.
On Jan. 3, the U.S. Court of Appeals for the Fifth Circuit ruled that the FDA acted “arbitrarily and capriciously” in rejecting the premarket tobacco product applications (PMTA) of Wages and White Lion Investments, doing business as Triton Distribution, and Vapetasia for approval to sell their products in the United States.
The agency “sent manufacturers of flavored e-cigarette products on a wild goose chase,” telling them what would be needed to approve their products, and then denying all applications, the court said in an opinion by Judge Andrew S. Oldham. The FDA “never gave petitioners fair notice that they needed to conduct long-term studies on their specific flavored products,” Oldham said.
In a dissenting opinion, Judge Catharina Haynes said the agency “properly fulfilled its statutory mandate by considering the relevant portions of Petitioners’ PMTAs and coming to a reasonable conclusion that marketing Petitioners’ products is not appropriate for public health.”
January 3, 2024
Court Approves Warehouse Monitoring

Image: Alexey Novikov
The South African Revenue Service (SARS) will move forward with installing closed-circuit television cameras at tobacco warehouses, after defeating a legal challenge in the Guateng High Court, reports Daily Maverick.
The surveillance plan was drafted to help plug fiscal gaps due to illicit tobacco trade. The South African government misses out on an estimated ZAR8 billion ($431.06 million) in revenue annually due to tobacco tax evasion.
The Fair Trade Independent Tobacco Association (FITA), representing 80 percent of licensed cigarette manufacturers in Southern Africa took SARS to court in an attempt to stop the installation of the cameras. In two separate applications, 11 tobacco companies sought to prevent SARS from implementing the rule promulgated under the Customs and Excise Act.
The tobacco companies argued that the new rule is unconstitutional and that it was an unjustified violation of the right to privacy, dignity and property.
Acting judge Jacques Minnaar on Dec. 29 rejected their case, arguing, among other things, that companies applied for warehouse licenses in the knowledge that these are conditional on SARS officials having unrestricted access to install cameras.
The companies were all aware of the installation of CCTV cameras at British American Tobacco and Gold Leaf in February 2023, the court added.
January 2, 2024
PMI Prevails in Investors’ Suit

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A U.S. appeals court on Dec. 26 dismissed a securities fraud class action brought by shareholders against Philip Morris International, reports Bloomberg Law.
Investors accused the tobacco manufacturer of misleading them about the methods and results of IQOS clinical studies presented to the U.S. Food and Drug Administration. PMI sought the approval so that its former parent company, Altria Group, could sell the device within the U.S.
Investors also targeted company statements about projected IQOS sales in Japan, the only country at that time where PMI sold the line of products nationwide.
The U.S. Court of Appeals for the Second Circuit ruled that statements by PMI and its executives that the IQOS studies were “rigorous,” “the best science,” and “very advanced” were inactionable puffery. The court rejected the investors’ argument that such statements could be proven true or false.
Optimistic remarks about sales performance in Japan, meanwhile, were allowable forward-looking statements, the court ruled.
December 27, 2023