Juul Labs Settlements with Public Entities Exceed $3 Billion
Author: Alliant
In June of 2021, North Carolina became the first state to reach a settlement with Juul Labs, the leading e-cigarette manufacturer, after suing for alleged false advertising (Juul did not disclose that its products contained nicotine) and aggressively targeting underage middle and high school students in marketing its products. The settlement was in the amount of $40 million.
According to North Carolina Attorney General Josh Stein, Juul’s targeted marketing to young people “lit the spark and fanned the flames of a vaping epidemic among our children--one that you can see in any high school in North Carolina.” The consent order commemorating the settlement also includes Juul’s agreement to restrict its marketing in the future. Under the terms of the agreement, Juul will no longer be able to engage in social media advertising of its products, have outdoor advertising near schools, or sponsor sporting events or concerts. The settlement also prohibits Juul from selling its sweet and fruity flavored cigarettes unless the Food and Drug Administration (FDA) authorizes it to do so. The North Carolina settlement funds will be used to pay for programs to help young people quit using e-cigarettes and to underwrite research on e-cigarettes.i
North Carolina’s settlement with Juul Labs was just the beginning of a nationwide resolution of actions brought against it by states, school districts, local governments and individuals. In April of 2023, Juul Labs agreed to settle suits brought against it by New York, California, Colorado, the District of Columbia, Illinois, Massachusetts and New Mexico. This settlement in the total amount of $462 millionii is in addition to its December 2022 settlements totaling $1.7 billion with more than 5,000 individuals, school districts and local governments.iii In addition, West Virginia recently settled with Juul for $7.9 million. In Minnesota, after a three-week trial, Juul and that state reached an agreement in May of this year with Juul paying the state $60.5 million.iv All in all, Juul has paid approximately $3 billion in settlements so far.v With these latest settlements, Juul has brought many of its legal woes to conclusion.
In New York, which was paid $113 million by Juul in settlement of its claims, Attorney General Letitia James stated, “Juul’s lies led to a nationwide public health crisis and put addictive products in the hands of minors who thought they were doing something harmless.”vi
The terms of the New York settlement with Juul Labs are common to most of the Juul consent decrees and include the following requirements:
- Juul may not conduct any marketing that targets youth directly or indirectly, including use of anyone under 35 years old in promotional materials or funding;
- Juul may not operate any youth education/prevention campaigns or sponsor school related activities;
- Places limits on the amount of retail and online purchases an individual can make of Juul products;
- Juul must perform regular retail compliance checks at 5% of New York retail stores that sell Juul products for at least four years;
- Juul must treat synthetic nicotine as nicotine;
- Juul must refrain from providing free or nominally priced Juul pods as samples to consumers;
- Juul is excluded from product placement in virtual reality systems; and
- Juul must increase funding to a document depository by up to $5 million and add millions of relevant documents to the depository to inform the public on how Juul created a public health crisis.vii
Rising Use of E-Cigarettes Among Youth
In a report dated October 7, 2022, the Centers for Disease Control and Prevention (CDC) stated that since 2014, e-cigarettes have been the most used tobacco product among U.S. middle and high school students. The CDC noted that these products contain nicotine which is highly addictive and can harm developing brains and increase risks for future addiction to other drugs. The report asserts that use of e-cigarettes increased significantly among middle and high school students between 2019 and 2020 and was the most used device in 2021. Further, according to the CDC report, in 2020 and 2021, approximately eight in 10 middle and high school students using e-cigarettes reported using flavored e-cigarettes.viii
The CDC report cited the FDA’s 2022 National Youth Tobacco Survey (NYTS)ix that found that 14.1% of high school students and 3.3% of middle school students (some 2.55 million) reported current e-cigarette usage. Among such users, 42.3% reported using these devices frequently, including 46% of high school student users and 20.8% of middle school student users. Daily use was reported among 27.6% of current e-cigarette users, including 30.1% of high school students and 11.7% of middle school students. The most frequently used e-cigarettes were reported to be disposable devices followed by pre-filled or refillable pods or cartridges, with Juul brand e-cigarettes coming in third as most used with 22% choosing their products. Among current middle and high school student users, 84.9% reported using flavored e-cigarettes with favorite flavors including fruit, candy desserts or other sweets, mint and menthol.x
Juul is awaiting FDA authorization of the sale of its products on the permanent market. Legally, the FDA is authorized to require e-cigarette companies to apply for clearance to make such sales. Following recent FDA reviews of vaping devices and materials, millions of such products were rejected with only about two dozen vaping products approved. Juul products are only sold today because the FDA has not enforced its requirement for premarket clearance. In June of 2022, the FDA denied Juul’s request to continue to sell its products, stating that Juul had submitted “insufficient and conflicting data” to the FDA in support of its request. Juul won a temporary stay of the FDA decision from an appeals court and the FDA subsequently stayed its June decision pending review of scientific issues in the Juul application.xi
Next Steps for Public Entities
States and local governments are deciding how best to spend the Juul settlement monies. In at least one state, Wisconsin, the State Department of Health Services sought input from the public on the use of its $15 million in settlement funds. There, the Department’s announcement stated that its funds must be used for cessation services, prevention and education programs, research, school-based activities and/or community-based activities. The state held three listening sessions in July and August of this year and sought online written recommendations through August 16, 2023, to help the state decide how it will spend the monies.xii It will be important for other states and local governments to reach out to stakeholders to seek their input to be properly informed as to the best and most effective uses of their Juul settlement monies. These are one-time funds and the public health problems caused by youth addiction to these nicotine products will be ongoing.
[iii] https://www.nytimes.com/2022/12/10/health/juul-settlement-teen-vaping.html.
[ix] https://www.cdc.gov/mmwr/volumes/71/wr/mm7140a3.htm.
[x] The NYTS, a web-based survey conducted in some 341 middle and high schools from January 18 through May 31, 2022, had an overall response rate of 45.2%.
[xi] https://www.cdc.gov/mmwr/volumes/71/wr/mm7140a3.htm.
[xii] https://www.fda.gov/news-events/press-announcements/fda-denies-authorization-market-juul-products.
[xiii] https://www.dhs.wisconsin.gov/news/releases/070623.htm.