In April 2015, a vaping technology company named PAX Labs, Inc., announced a line of new e-cigarette products under the brand JUUL®. Industry press at the time touted JUUL’s “proprietary technology” and “liquid nicotine cartridges available in four flavors.” JUUL was the only e-cigarette to use nicotine salts derived from tobacco, and PAX claimed JUUL would provide “two times the nicotine strength and three times the vapor quality of leading competitive products.”
|Litigation||Juul Labs, Inc. Marketing, Sales Practices & Products Liability Litigation|
|District||Northern District of California|
|Assigned Judge||Judge William H. Orrick|
Within three years, JUUL became the best-selling e-cigarette brand in the United States. By combining sleek product design, popular flavorings, powerful nicotine delivery, and creative marketing across conventional media and many social media platforms, JUUL rose to dominate what had been a fractured industry. The most popular JUUL vape pen resembled a USB drive, and the liquid in JUULpods™ came in many attractive scents and flavors.
In early 2016, JUUL was just one of many relatively small brands, but after eighteen months, PAX Labs spun off JUUL Labs, Inc., (JUUL) as an independent company in July 2017. PAX’s CEO and co-founders left to become senior executives at JUUL. Under their leadership, JUUL was “one of the first major retail e-cigarette brands that relied heavily on social media to market and promote its products.” JUUL’s presence on social media (especially Twitter, Instagram and YouTube) skyrocketed in the second half of 2017. JUUL spent less on marketing than some competitors but achieved much better results; by the end of that year JUUL was the biggest brand around.
Estimates of JUUL’s market share at the end of 2017 ranged up to 40 percent of U.S. e-cigarette sales1. The company reported more than $150 million in retail sales in the last three months of 2017. Industry observers reported that JUUL’s explosive growth transformed the market; JUUL was the primary driver of growth in U.S. e-cigarette sales. At the end of 2017 JUUL raised $150 million in investment capital and kept right on growing.
A year later, in December 2018, the Altria Group—a tobacco and alcohol conglomerate whose companies include Phillip Morris USA (the makers of Marlboro cigarettes)—paid $12.8 billion to buy a 35 percent stake in JUUL Labs, Inc., in a deal valuing the company at $38 billion. In January 2019, Altria reported that JUUL had brought in over one billion dollars in sales revenue in 2018, up from about $200 million the year before.
But by 2018, the medical complications linked to vaping were attracting more public attention after years of being largely under the radar, and the mounting public health problems caused by the surge in e-cigarette use (especially among American teens) drew regulatory attention.
As public health experts had stated—in the subdued language common to scientific journals: “JUUL’s high nicotine concentration, discreet shape, and flavors could be particularly appealing to, and problematic for, youths.” The evidence suggests those concerns were well-founded.
The National Institute of Health’s annual Monitoring the Future survey of 8th, 10th, and 12th graders saw a “stunning increase” in teen vaping in 2018: vaping nicotine had nearly doubled among 10th and 12th graders— “the largest annual jump in the use of any substance” in the survey’s 44 year history.
In 2019, the survey authors were so concerned that they published their results three months early to sound the alarm: teen vaping had jumped again and was now double the level in 2017. “With 25% of 12th graders, 20% of 10th graders and 9% of eighth-graders now vaping nicotine within the past month, the use of these devices has become a public health crisis,” said National Institute on Drug Abuse Director Dr. Nora D. Volkow.
At roughly the same time as the surge in teen vaping, the Centers for Disease Control and Prevention (CDC) had identified “a national outbreak of e-cigarette, or vaping, product use-associated lung injury (EVALI).” By February 18, 2020, the CDC had confirmed more than 2,800 reported EVALI cases requiring hospitalization and 64 confirmed deaths. The CDC reports evidence strongly linking Vitamin E acetate—a chemical in some vape liquids—to EVALI cases.
In June 2009, the Family Smoking Prevention and Tobacco Control Act (“the Act”) amended existing law to give the U.S. Food and Drug Administration (FDA) the power to regulate tobacco products. But e-cigarette products remained largely unregulated by the federal government. After years of controversy and litigation, on August 8, 2016, the FDA published final rules under the Act extending its regulatory authority to include e-cigarettes, which the FDA deemed to be “covered tobacco products.” This result was a hard-fought victory for safety advocates, but hardly a complete victory, because e-cigarettes would not be evaluated using the stricter standards and approval procedures applied to drug delivery devices.
Under the new rules, the age restrictions on tobacco sales immediately applied to e-cigarettes, and all e-cigarette products require FDA approval before they can be legally marketed or sold. The premarket approval requirement applies to all “new tobacco products”—defined by law as products not sold in the U.S. on or before February 15, 2007—including all e-cigarette products. Until they receive FDA approval, the products are marketed and sold illegally and may be subject to FDA enforcement action.
But the FDA declined to pursue rapid enforcement action. Instead, after extending the original compliance deadline by three months, the FDA extended the deadline by five more years. The FDA’s August 2017 Guidance gave manufacturers up to August 8, 2022, to seek FDA approval for e-cigarette products already on the market in August 2016 and allowed the products to be sold indefinitely while under FDA review.
In March 2018, a coalition led by the American Association of Pediatrics and the Campaign for Tobacco-Free Kids sued the FDA to challenge the decision to grant e-cigarette makers a total of six years to apply for FDA approval while continuing to sell their products. Plaintiffs claimed that the FDA had failed to follow proper procedures and that its decision was “arbitrary and capricious,” exceeded the FDA’s legal authority, and was “an express and deliberate abdication of FDA’s responsibilities under the Tobacco Control Act.” In May 2019, the Court ruled that the FDA had enacted the August 2017 Guidance without following the required procedures to give public notice and allow for public comment and voided the Guidance.
Because the compliance deadlines set by the original FDA rule (May 2017) and the earlier Guidance had already passed, the Court asked the parties to submit arguments about what the new deadline should be. In July 2019, the Court set May 12, 20202 as the new application deadline and further ruled that e-cigarettes could remain on the market for up to one year while the FDA reviewed their application. The court criticized “the Industry’s lack of effort to obtain approval without an imminent deadline,” but noted that it had to balance “the need to address the existing public health crisis among today’s youth, which both parties acknowledge,” with the need to avoid causing another public health crisis by abruptly pulling e-cigarettes from the market and driving their users to tobacco.
Although years have passed and sales skyrocketed since the FDA began regulating e-cigarettes, no e-cigarette has yet been approved by the FDA.
By late 2017, the FDA was receiving a growing number of complaints about e-cigarette use by minors; the agency reported its investigation unearthed new information indicating “an alarming increase in the use of ENDS products by middle and high school students.” The growth in youth vaping was also appearing in the NIH’s Monitoring the Future studies discussed above.
So, by the end of 2017 the FDA began to increase its investigations and enforcement actions. Industry-wide enforcement actions—especially enforcing age restrictions on sales with so much business conducted online —can feel like a never-ending game of Whac-a-Mole™.
For example, between August 2016 and September 2019, the FDA issued more than 8,000 warning letters to retailers—online and brick-and-mortar stores—for selling e-cigarettes or related products to minors. It also issued warning letters to six e-cigarette companies ordering them to stop selling 71 unauthorized products introduced after August 2016 without FDA approval.
But the challenge in tracking the many small players makes the deterrent effect (and public relations value) of enforcement action against the largest and most visible companies even more important to regulators.
In April 2018, the FDA conducted a nationwide undercover enforcement effort that resulted in 56 warning letters to online retailers and 6 civil money penalty complaints (administrative fines) against retail stores for selling e-cigarette products to minors.
On April 24, 2018, the FDA requested documents from JUUL Labs related to its marketing practices and marketing research. The agency explained that its detailed requests were “based on growing concern about the popularity of JUUL products among youth . . . [including] in middle and high schools. . .”
In May 2018, the FDA issued 17 warning letters to manufacturers, distributors, and retailers for selling e-liquids with labeling or advertising resembling kid-friendly products like juice boxes, candy, or cookies.
Over the summer of 2018, the FDA continued its nationwide undercover investigations of brick-and-mortar and online retailers, issuing more than 1,300 warning letters and civil complaints for illegal sales to minors. The agency also issued 12 more warning letters to online retailers selling e-liquids resembling kid-friendly food products such as candy and cookies.
On August 10, 2018, after more than two and a half years on the market and right at the legal deadline, JUUL Labs added the required warning label to its products: “WARNING: This product contains nicotine. Nicotine is an addictive chemical.”
In September 2018, in the largest coordinated enforcement effort in FDA history, the agency issued more than 1,100 warning letters and initiated 131 civil money penalty complaints against retailers who sold e-cigarettes to minors.
On September 12, 2018, the FDA issued warning letters to five e-cigarette manufacturers, including JUUL, that included asking each company to submit a plan to FDA within 60 days to describe how it would address the problem of youth access to and use of its products. The agency informed the companies that failure to comply might cause it to reconsider whether it should continue to allow them to sell products which hadn’t gone through the approval process.
From September 24–28, 2018, the FDA conducted a surprise inspection of JUUL headquarters in San Francisco, seizing documents related to the company’s sales and marketing. The FDA claimed to be focused on evidence that the company had knowingly marketed JUUL to minors.
On October 2018, JUUL Labs redesigned the JUUL package to include a much larger boxed warning label along with a new slogan: “The alternative for adult smokers.”
On July 24–25, 2019, a Congressional committee3 held a two-day hearing featuring sworn testimony by experts and other witnesses, including executives from JUUL, on the subject “Examining JUUL’s Role in the Youth Nicotine Epidemic.”
On September 9, 2019, the FDA issued another warning letter to JUUL Labs about its marketing, which the agency claimed had illegally stated or implied to consumers (including high school youth) that using JUUL was safer than smoking tobacco. The FDA also requested additional documents related to JUUL marketing and outreach, including the “Make the Switch” campaign the FDA asserts conveyed that vaping was safer than smoking cigarettes.
On October 7, 2019, JUUL Labs announced it was suspending sales of non-tobacco and non-menthol based flavored products in the United States.
On November 7, 2019, JUUL Labs announced it had stopped selling mint-flavored JUULpods in the United States.
In December 2019, a new federal law raised the legal age to buy e-cigarettes and other tobacco products from 18 to 21.
On January 2, 2020, the FDA banned the sale of cartridge-based fruit- or mint-flavored vape liquids, flavors shown to particularly appeal to teens.
Each JUUL lawsuit based on personal injuries will be filed as an individual case, not as part of a class action. But as often happens with mass torts, where many plaintiffs sue the same defendant(s) making similar factual and legal claims, the courts have created a multi-district litigation (MDL) to efficiently handle the pretrial proceedings in the federal JUUL lawsuits.
About ten lawsuits were pending against JUUL in five federal district courts in mid-2019 when the company asked the Judicial Panel on Multidistrict Litigation (JPML) to establish an MDL. Those ten cases included potential class actions brought on behalf of consumers and third-party payers, as well as individual personal injury cases. The plaintiffs claimed JUUL had intentionally marketed its JUUL products to attract minors, that JUUL’s marketing misrepresented or omitted information that JUUL products are more potent and addictive than tobacco cigarettes, that JUUL products are defective and unreasonably dangerous because they are so attractive to minors, and that JUUL had promoted nicotine addiction. Some plaintiffs argued for two MDLs—one for economic loss class actions and another for personal injury cases.
On October 2, 2019, the JPML rejected the idea of multiple JUUL MDLs and centralized all federal cases for coordinated discovery and pretrial purposes. It also noted that at least forty other “tag-along” cases were pending.
MDL No. 2913, Case 3:19-md-2913-WHO (N.D. Cal.)
The MDL grew to include more than six hundred and fifty cases by mid-June 2020—including cases filed on behalf of school districts and other governmental entities—and continued to grow. By October 12, 2021, more than 2,800 cases were ending in the JUUL MDL, naming more than one hundred defendants. More than 500 other cases filed in the MDL have been dismissed for various reasons.
On the same day the JPML established the MDL, Judge Orrick issued an Order with some procedures for organizing it and setting an initial status conference for November 8, 2019. At the initial status conference, the Court discussed the procedures for and purpose of an initial case census: “to provide information concerning the scope, types, and number of cases in the MDL in order to . . . . formulate effective Case Management Orders to move the MDL along briskly and efficiently.” Judge Orrick encouraged JUUL to produce basic sales data within its control in exchange for access to the initial census data. The Court wanted the parties to complete the initial census by the end of 2019.
On December 13, 2019, the Court established procedures allowing every U.S. plaintiff with a JUUL-related claim to file their case directly in the MDL.
At the January 13, 2020, Case Management Conference, the Court adopted the parties’ proposed schedule requiring the initial discovery conference by January 30, 2020, requiring complaints to be filed by March 6, 2020, and requiring defendants to give notice of any motions to dismiss within 30 days after complaints were filed.
The Court also scheduled Case Management Conferences on the third Friday of every month and ordered the parties to file Case Management Statements two days before each conference describing the progress of the litigation, identifying issues for the Court to consider, and proposing an agenda for that conference.
On January 14, 2020, the Magistrate Judge assigned to help with the MDL issued an order establishing procedures for handling discovery disputes: the parties must each submit a brief letter to the magistrate within a week after the dispute arises.
Due to the COVID-19 pandemic, Judge Orrick suspended his usual rule that lawyers must appear in person at status conferences and hearings. The monthly Case Management Conferences were held by telephone in March and April 2020 and by Zoom video conference since then, but the MDL has so far continued with little delay.
On March 11, 2020, plaintiffs filed their Consolidated Class Action Complaint and their Consolidated Master Complaint (Personal Injury). The “master complaints” are massive documents (sometimes requiring Tables of Contents) that become part of all proposed class action complaints and all personal injury complaints (respectively) filed in the MDL. This Master Complaint procedure allows the complaints in each separate case to be filed in “short form” rather than every document repeating hundreds of pages of identical common facts, claims, and allegations. Defendants can respond to or oppose key allegations all at once rather than in each separate case.
The claims in the personal injury Master Complaint center on allegations that JUUL products were defectively designed and manufactured, that JUUL failed to properly warn consumers of the risks, that JUUL and others committed fraud, misrepresented facts, knowingly worked to boost JUUL sales among minors, and conspired to do so.
At the March 20, 2020, Case Management Conference, the Court stated he was “mindful of the current situation with respect to Covid-19 and its impact on the public health and welfare as well as plaintiffs, defendants, counsel, and the court system. However, to the fullest extent practicable, the Court will follow the guiding principle of moving this important case forward . . . as expeditiously and efficiently as possible.”
On April 6, 2020, the parties filed an Amended Consolidated Class Action Complaint and an Amended Consolidated Master Complaint (Personal Injury), adding additional material based on their continuing review of defendants’ initial document production.
On May 18, 2020, the Court appointed a senior outside attorney to serve as a Special Master to oversee any eventual settlement negotiations.
On May 20, 2020, the Court entered Case Management Order No. 10 establishing deposition procedures and protocols for fact witnesses on issues common to all MDL cases.
On May 20, 2020, the Court entered a negotiated Joint Coordination Order intended to reduce costs and avoid duplicative discovery in the MDL and the JUUL lawsuits pending in state courts (including many cases pending in a large, coordinated proceeding in the California courts). The Order sets the terms (including fair cost-sharing) under which documents produced, testimony taken, and work done in the JUUL MDL can be used in the eventual federal bellwether trials, in state court cases, and in cases filed by state Attorneys General.
Beginning on May 29, 2020, following the schedule set by the Court, defendants JUUL Labs, Inc., the Altria Group, and other defendants filed several motions to dismiss some or all claims against them.
The Altria Group’s motions to dismiss argue in essence that Altria cannot be liable because it just bought a minority share in JUUL Labs in December 2018, does not own or control the company, and did not direct, control, or participate in any of JUUL’s challenged conduct before or after the investment.
JUUL filed several motions to dismiss or stay the claims, one of which argues that the FDA has the “primary jurisdiction” over the products, so the Court should stay the lawsuit until the FDA decides whether to grant JUUL premarket authorization. (When JUUL requested permission to file that motion, the court allowed the motion but Judge Orrick said he wasn’t inclined to grant a stay.) In another motion, JUUL argues that the doctrine of preemption bar some claims related to its labeling and warnings.
On September 9, 2020, Judge Orrick issued an Order setting out procedures for choosing the bellwether cases, and an aggressive discovery and trial schedule for the cases chosen to be part of the “bellwether pool.” To sum it up, any case filed by October 15, 2020, was eligible to be chosen for the bellwether selection pool. By December 15, 2020, the plaintiffs would select six cases and the defendants would select six cases, and Judge Orrick would then randomly select twelve more cases. The bellwether cases chosen for trial in the MDL would come from that group of twenty four. The Court would choose the bellwether trial cases by April 30, 2021, and the order of trials after May 1, 2021.
The first five bellwether trials were scheduled for February 22, 2022; March 28, 2022; May 9, 2022; June 20; 2022; and August 1, 2022, before Judge Orrick in San Francisco.
The hearing on JUUL’s Motions to Dismiss was held on September 21, 2020. Judge Orrick issued his 152 page opinion on this “first wave” of motions on October 23, 2020. These motions had been scheduled first to address issues that applied to all (or many) of the plaintiffs’ cases. The Court dismissed some of the RICO claims because they needed to be more specific and detailed but gave plaintiffs time to amend and refile those claims. Otherwise, the Court allowed the plaintiffs’ cases to move forward.
On December 30, 2020 (the court had extended the deadline), the parties submitted their joint list of twelve cases for the bellwether pool. The court then chose the other twelve cases.
On March 1, 2021, Judge Orrick entered an Order extending some of the discovery deadlines by four to six weeks, while keeping the scheduled February 22, 2022 date for the first bellwether trial.
On March 26, 2021, there was a hearing on the Plaintiffs’ second round of Motions to Dismiss, which focused on the RICO claims, the class action complaints, and the court’s personal jurisdiction over individual members of JUUL’s Board of Directors. On April 13, 2021, the court denied all of the Motions to Dismiss, except it dismissed the class action complaints as to the three states (and the District of Columbia) without any named plaintiffs to represent the class.
On July 16, 2021, at the monthly Case Management Conference, the Court granted the parties’ request to extend certain deadlines. Judge Orrick rescheduled the first four bellwether trials for April 18, 2022; June 27, 2022; September 12, 2022; and November 7, 2022.
On July 22, 2021, Judge Orrick largely denied Defendants’ Motions to Dismiss the complaints of the eighteen remaining bellwether personal injury plaintiffs. This Order was consistent with the Court’s earlier rulings — dismissing the strict product liability claims against the individual defendants and some of the state law claims, but largely allowing the cases to proceed.
On September 20, 2021, the parties exchanged their “generic” (generally applicable to all cases) expert reports on the issues on which they bear the burden of proof. (On most issues in these cases, the plaintiffs have the burden of proof.) The “generic” rebuttal reports are due on November 3, 2021.