With regards to lawsuits filed by over 10,000 people, local governments, educational institutions, and American Indian tribes, Juul Labs has negotiated a financial settlement. Allegations of racketeering against the business and a few Juul Labs directors were mentioned in the cases.
More than 5,000 lawsuits against Juul, including those involving personal injury, consumer class actions, government agencies, and American Indian tribes, are covered by the settlement, the company said yesterday. According to the company, Juul is not allowed to reveal the settlement amount at this time due to the agreement.
Under Judge William Orrick III's supervision, the majority of the cases had been combined into a sizable multi-district litigation (MDL) in the U.S. District Court for Northern California. January 2023 was set aside for the trial of the MDL's first bellwether case.
The settlement cost is covered by new investments.
Juul Labs, plagued by legal issues and animosity from the FDA, reportedly considered filing for bankruptcy; nonetheless, the company now claims to have "taken a series of steps to stabilize its business operations." The Wall Street Journal reports that Juul has secured fresh equity investments to pay for the settlement and let the business to proceed. (An ownership share in the business is granted to an equity investor.) According to reports, Juul reduced its workforce by a third as part of its cost-cutting initiatives.
This agreement comes exactly three months after Juul consented to settle charges that it misled customers about the addictive nature of its JUUL pod vape and promoted it to minors by agreeing to pay more than $438 million to 33 states and Puerto Rico. The business had already reached separate settlements with four other states. It continues to be sued by a few additional state attorneys general.
The New York Times was informed by the plaintiffs' attorneys that the deal does not address allegations made against Altria, which owns 35% of Juul Labs. Recently, Altria terminated its non-compete agreement with Juul, citing a decline in Juul's value to less than 10% of Altria's initial $12.8 billion investment. Altria may acquire an already-existing vape brand like NJOY or introduce a new product to rival Juul.
Juul continues to encounter opposition from the FDA and a shifting market.
Now that its legal issues have largely been resolved, Juul may attract the attention of a bigger business, such as Altria or Philip Morris International (PMI). Following its acquisition of Swedish Match, a manufacturer of ZYN nicotine pouches, PMI is making its debut in the American market. It will also soon begin selling its heated tobacco product, IQOS, there.
As of right now, neither Altria nor PMI have FDA-approved vaping products on the market, and it can take years for new product submissions to the FDA to be approved for premarket assessment. It's pure speculation, but it seems like purchasing an existing brand might be an attractive option for those companies—especially a popular brand with little outstanding legal liability.
Of course, the FDA hasn't yet granted Juul's goods authorization. Juul was ordered off the market immediately by the agency in June through the issuance of a marketing denial order (MDO). The next day, the company filed a motion in federal court to temporarily suspend the order, and less than two weeks later, the FDA withdrew its initial position and put the MDO on hold while Juul's premarket tobacco application (PMTA) was reexamined.
Juul keeps selling its goods without permission while it waits for the FDA to make a decision on whether to accept science and approve Juul's product or to carry out its petty and politically driven retaliation against the company. Juul may be forced off retail shelves and may have to wage a lengthy legal battle if the FDA upholds its marketing denial.
Juul has also had difficulty in the market lately. R.J. Reynolds’ Vuse Alto gadget dethroned it as the top vape device in convenience stores, and Juul is losing the war against hundreds of disposable vape devices on the gray market that circumvent FDA taste limitations.
