JUUL Settles With North Carolina for $40 Million Over Underage Vaping

This past week, Juul announced a $40 million settlement with North Carolina. The settlement occurred after the state’s attorney general sued the company for its deceptive marketing practices toward minors. The lawsuit, which was scheduled to begin trial next month, is one of over 2,000 others filed by cities, counties, school districts, and other plaintiffs that have been consolidated in a federal multidistrict litigation.

Electronic Cigarettes’ Increased Popularity

Few vices have catapulted into popularity as quickly as electronic cigarettes. These battery-powered devices, also known as vapes, were initially touted as safer alternatives to traditional cigarettes because the nicotine is ingested via heated vapor.

Over the years, manufacturers have faced growing criticism over the devices’ supposed safety. The lawsuits filed alleged various dangers associated with vaping products targeted to young consumers. In 2019, an estimated 5.3 million teens used electronic cigarettes. Juul Labs Inc has been one of the top manufacturers of e-cigarette products, controlling 75% of the market.

The Lawsuit’s Allegations

North Carolina Attorney General Josh Stein filed this lawsuit, alleging Juul deliberately designed and marketed its vaping products to underage users. The company sold refillable inserts in a variety of sweet, “kid-friendly” flavors. Many minor-aged users cited the flavor as a reason for purchase. However, these inserts contain nicotine and other toxic chemicals such as formaldehyde, arsenic, and acetone. The complaint alleged that Juul markets its products through youth-oriented sponsors and social media influencers. Simultaneously, the company fails to adequately verify the ages of consumers who order products online, the complaint claims. According to the complaint, Juul’s allegedly purposeful marketing resulted in an exponential increase in teen vape use. Usage increased among high-schoolers by 78% (and 48% among middle-schoolers) by 2018.

The complaint alleged vaping still presents serious health risks despite its marketing as a safer alternative to cigarettes. Nicotine exposure can affect the brain and lungs and cause a slew of respiratory disorders. In children and teens, in particular, vape use can cause long-term behavioral changes. For these age groups, an increased likelihood of other drug use is also a possibility.

As part of the relief sought, Attorney General Stein requested preliminary and permanent injunctive relief. The injunctive relief requires Juul not sell, market, or advertise e-cigarettes to minors in North Carolina. Additionally, the company can only sell tobacco and mint flavors.

The Settlement’s Terms

As part of the settlement agreement, Juul agreed not to advertise to anyone under the age of 21 in North Carolina. This includes advertising through social media. The company will also limit online sales to North Carolina residents. Juul will only sell its products in stores that utilize ID scanners to confirm that customers are of age. “Secret shoppers” will police the stores using the scanners. The settlement also requires that Juul deposit a trove of internal company documents at a North Carolina university. The public will be able to view the documents, which will be made public by next July. However, this past May, the court had found that Juul had destroyed documents and ignored court orders for the same. The actions of the company could have led to monetary sanctions.

The $40 million settlement amount will go to the support of scientific research on youth vaping cessation and prevention. The amount will go to the state over the course of six years. However, as part of the settlement, Juul did not admit any wrongdoing. A company spokesperson stated “this settlement is consistent with our ongoing effort to reset our company and its relationship with our stakeholders, as we continue to combat underage usage and advance the opportunity for harm reduction for adult smokers.”

Future Juul Lawsuits

The North Carolina settlement is likely just the beginning for Juul. Currently, a massive multidistrict litigation in the Northern District Court of California is pending against the company. The litigation originally consolidated approximately 15 actions, with additional actions transferred, including 265 this past week alone. The MDL, which started in 2019, is currently considering candidates for representative bellwether trial cases. There are also over 400 lawsuits pending in California’s state courts, with similar claims of safety and deceptive marketing practices.

Whether Juul will enter into similar settlement agreements with other plaintiffs remains to be seen. The scheduled trial date for the North Carolina lawsuit was mere weeks before settlement. Be that as it may, there are no Juul trials scheduled for the remainder of the year. Likewise, the company is likely waiting on its U.S. Food & Drug Administration’s review, due in September, to make further determinations in connection to any settlements.

There is a long way to go for the bulk of the Juul litigation. Although teen vaping has dropped this past year, this may be the beginning of the end for Juul and other e-cigarette companies and their teen customer base.