New York, California and several other states on Wednesday announced a $462 million settlement with Juul Labs, settling lawsuits alleging the company aggressively marketed its e-cigarettes to youth and fueled the country’s vaping crisis.
The agreement brings many of the company’s legal troubles to an end, with settlements reached with most states and 5,000 individuals and local governments. Juul is in the middle of a lawsuit in Minnesota, an unusual case in which no settlement was reached. But the company’s efforts to close deals on the lawsuits have cost it nearly $3 billion so far, a huge sum for a company still seeking official regulatory approval to continue selling its products.
The final settlement resolved the claims of New York, California, Colorado, the District of Columbia, Illinois, Massachusetts and New Mexico. It follows others who have called the company to account for failing to warn young users that the high levels of nicotine in their e-cigarettes would prove addictive.
California argued in its lawsuit that for months Juul failed to disclose in its advertising that its devices contain nicotine. It details the company’s early marketing efforts, which included handing out free samples of the e-cigarettes in 2015 at trendy events, including one called Nocturnal Wonderland in San Bernardino and a “Movies All Night Slumber Party” in Los Angeles. The New York lawsuit noted that the company was embracing the use of social media hashtags like #LightsCameraVapor.
Attorneys general in those states conducted investigations they said found Juul executives were aware that their initial marketing enticed teen users to buy the sleek vape pens, but did little to address the problem as the number vaping among adolescents exploded.
New York Attorney General Letitia James said in a statement: “Too many young New Yorkers are struggling to quit vaping and there is no doubt that Juul played a central role in the nationwide vaping epidemic.”
Juul has repeatedly denied marketing directly to minors. In other rounds of settlements, the company has admitted no wrongdoing. In those agreements, the payments to plaintiffs are intended to provide funding to combat underage use and develop cessation programs. Juul drafted the deals as part of its efforts to “fix the company’s past issues.”
Selling products with flavors like mango and crème brûlée, sales of Juul soared in 2019 when federal data showed that 27.5 percent of high school students reported using e-cigarettes, with more than half citing Juul as their favorite brand mentioned. As pressure mounted on Juul, the company began to market itself less as a trend maker and more as a company helping adults make the transition from traditional cigarettes.
While the teen vaping crisis appears to be abating since peaking in 2019, public health experts have expressed concern that approximately 2.5 million adolescents continue to report using e-cigarettes at a much higher rate than before. adults.
Overall, about 4.5 percent of adults use e-cigarettes, according to the Centers for Disease Control and Prevention. An annual survey typically conducted in middle and high schools found that by 2022, 2.5 million middle and high school students, or about 9 percent, reported using e-cigarettes in the past 30 days. In that survey, about 14 percent of high school students reported vaping — about half the percentage in the survey conducted at the height of the crisis in 2019.
While the recent drop is considered a victory, some who oppose e-cigarette use are troubled by data showing the frequency of use among nearly half of high school students who reported using vaping, who said they had been using it for a long time. 20 to 30 days did in a month.
Last year, Juul resolved thousands of lawsuits from individuals and other plaintiffs.
In December, the company agreed to pay $1.7 billion for lawsuits from more than 5,000 individuals, school districts and local governments. In September, the company settled lawsuits brought by more than 30 states for $438.5 million.
This month, Juul settled claims filed by West Virginia for $7.9 million.
In the Minnesota lawsuit that began a few weeks ago, Keith Ellison, the attorney general, opened the proceedings by accusing the company of getting teens addicted to e-cigarettes “so they could make money.”
“They lured, duped and enslaved a whole new generation of kids after Minnesotans reduced youth smoking rates to the lowest level in a generation,” Ellison said.
Like other settlements, the latter requires Juul to refrain from marketing to young people. The agreement also requires Juul to stop offering free or “nominal priced” products to consumers, as well as using the marketing technique of “product placement” in virtual reality systems.
Meanwhile, Juul’s company continues to struggle to gain a foothold. In 2018, the company dominated the vape space, with nearly $1 billion in sales that year. Today, Juul lags behind in market share to Vuse, its competitor, which is owned by British American Tobacco. Juul doesn’t disclose its revenue, but BAT said its vape category in the United States, which includes the popular Vuse Alto product, had about $1 billion in revenue last year, up more than 60 percent from the year before.
Tobacco giant Altria had pinned its smokeless future on Juul. In 2018, it paid nearly $13 billion for a 35 percent stake in the vaping company, only to see Juul become the target of teen nicotine addiction, and the defendant in countless investigations and thousands of lawsuits. Late last year, Altria valued that stake at $250 million and earlier this year traded its stake in exchange for Juul’s intellectual property around heated tobacco.
Last year, speculation circulated for months around Juul that it would be forced into bankruptcy proceedings. But in late November, The Wall Street Journal reported that two of its directors and initial investors had provided a cash injection and that it would lay off about a third of its employees, or 400 people.
Meanwhile, Juul is still waiting for the Food and Drug Administration to decide whether it should allow sales of the company’s products to gain a permanent market. The agency is reviewing many uses of e-cigarettes. (Juul’s products are now on store shelves because the FDA is not enforcing its requirement for premarket approval.)
The FDA initially rejected the company’s request to continue selling its products in June, saying Juul had provided “insufficient and contradictory” data. But the agency later decided to conduct additional reviews of the “scientific issues” in the application.
