The first landmark case relating to electronic cigarettes sold by Juul Labs began Monday in federal court in San Francisco.
Tom Cartmell, an attorney for the San Francisco Unified School District, explained in his opening statement to 11 jurors that Altria, Philip Morris’ parent company, which owns a 35% stake in Juul, provided the sales and distribution staff who to increase their e-cigarette sales, especially to children.
“This case is about Altria, our country’s largest cigarette company, which has helped hook a whole new generation of young people to nicotine, leading to a vape crisis, a youth epidemic and a vape crisis in schools,” claimed Cartmell of Wagstaff & Cartmell in Kansas City, Missouri.
“How did Altria do that?” Cartmell said. “Altria accomplished this by partnering with a startup vape company that had a highly addictive e-cigarette — an e-cigarette that Altria knew would appeal to and be attracted to young people, including children. Why did Altria do this? Money, plain and simple.”
Altria’s actions were reckless and negligent and caused a public nuisance in San Francisco schools.
Altria attorney Beth Wilkinson of Wilkinson Stekloff in Washington, DC, denied the existence of a partnership in her opening statement. She told jurors that sales declined six months after Altria acquired shares in Juul for $12.8 billion in December 2018.
Altria is interested in Juul because scientific studies show that electronic cigarettes are less harmful than tobacco cigarettes, she said.
“We think that in the end, if you look at all of this, you’re going to realize that Altria wasn’t trying to grow the youth nicotine market when they invested in Juul,” Wilkinson added. “They were trying to support a product that they thought would benefit smokers and be successful for them.”
The lawsuit is the second involving Juul’s e-cigarettes. A standalone trial between Juul and the Minnesota Attorney General’s office began March 28, but was settled confidentially just before jury deliberations this month.
The San Francisco Unified School District’s case is the first in interdistrict litigation before US District Judge William Orrick, who sits in the Northern District of California. Juul closed the case, leaving Altria as the sole defendant.
US District Judge William Orrick III, Northern District of California. Free photo.
In his opening statement, Cartmell told jurors that Altria bought its shares in Juul because cigarette smoking among adults and teenagers had declined. Altria was banned from advertising tobacco cigarettes to teenagers, but Juul’s product, which looked like a cool USB device that was easy to hide from parents and teachers, had particular appeal to kids, he said.
“Juul has everything it takes to attract and addict young people, including children,” he said. “It has sweet mint and fruit flavors. It’s a high-tech and cool design. It was marketed to appeal to the young popular cool crowd. And it’s full of nicotine.”
And despite some claims that e-cigarettes are safer than tobacco cigarettes, he said there’s no evidence Juul is safe for children.
In 2018, under pressure from the U.S. Food and Drug Administration to reduce appeal to children, Juul pulled most of its flavored products off the shelves. Only tobacco and mint flavors remained.
“Both Altria and Juul knew kids liked mint,” he said, “and keeping mint in the market wouldn’t help the teenage vape epidemic.”
“They wanted to control it”
But Wilkinson insisted that Juul, which needed FDA approval, had decided to withdraw its flavored products months before Altria’s involvement.
“That was one of the really big signals that Juul gave to regulators, the marketplace, and Altria: that they were trying to reverse and address the youth epidemic,” she said.
Beth Wilkinson, with Wilkinson Stekloff. Free photo.
Altria, meanwhile, was a competitor to Juul, which had failed to launch a successful electronic cigarette product of its own. Altria wanted to offer a product that would not expose its customers to tobacco smoke.
But its electronic cigarette product didn’t contain the more potent nicotine salts, and Juul’s did. Altria offered to buy a 51% stake in Juul, but the company declined the offer. In their final deal, Altria received no voting rights.
“They wanted to control it, they wanted to own it, and they couldn’t do that,” Wilkinson said.
Regarding the mint flavor remaining on the market, Wilkinson noted that the City of San Francisco had banned all flavored electronic cigarettes six months before Altria acquired the stake.
Juul this month reached a $462 million settlement with attorneys general from six states, including California, New York and Washington, DC Last year, Juul paid an estimated $1.7 billion to settle thousands of lawsuits filed by government agencies, individuals and criminals school districts like San Francisco Unified. As part of that agreement, Juul reached a $255 million class action settlement, which Orrick granted preliminary approval earlier this year for customers seeking economic damages.