The $438.5 million settlement announced this week between e-cigarette maker Juul Labs Inc. and more than 30 states will require changes to the company’s marketing practices that allegedly target youths. But it does not resolve separate litigation brought by hundreds of school districts that contend they have been harmed by the rapid rise of student vaping.
The school district lawsuits have been consolidated in federal district court in San Francisco, and what is known as the “bellwether” case of that category—the one brought by the San Francisco Unified School District—is scheduled to go to trial in November.
A separate category of so-called multidistrict litigation claims involves personal injury suits brought by Juul users, and the trial for a Tennessee teenager who first began using the company’s e-cigarettes at age 12 is scheduled to go to trial this month.
“Settlements occur party by party, so settling with the states is not going to affect litigations brought by other entities such as school boards and cities, because the other entities are asserting different harms,” said Heidi Li Feldman, a professor at Georgetown University Law Center in Washington who is an expert on torts and product-liability litigation.
The separate lawsuits by school districts are an indication of lessons learned from the big multistate settlement with tobacco companies in the 1990s, which funneled money to state governments but left out cities, counties, and school districts.
“I think the legacy of the tobacco litigation prompted municipalities and school boards to be more on their toes to make sure that harms particular to them were addressed by resolution of any lawsuits against a business,” Feldman said.
Juul agrees to end marketing to youths, but faces a number of legal challenges
The settlement between Juul and 33 states and Puerto Rico was announced Tuesday by Connecticut Attorney General William Tong. He said the states’ investigation revealed that the San Francisco-based company “relentlessly marketed vaping products to underage youth, manipulated their chemical composition to be palatable to inexperienced users, employed an inadequate age verification process, and misled consumers about the nicotine content and addictiveness of its products.”
As part of the settlement, Juul has agreed to refrain from youth marketing including the use of cartoons, depicting people younger than 35 in ads, hiring young social media influencers, and offering free samples.
Juul has separately reached settlements with four other states and faces additional cases brought by nine state attorneys general. The company is also appealing a June order from the federal Food and Drug Administration that Juul pull its products from the market.
But that settlement “is entirely separate from the ongoing federal Multi-District Litigation (MDL) where hundreds of lawsuits brought by school districts remain ongoing,” Jonathan P. Kieffer, a partner with the Kansas City, Mo., law firm of Wagstaff & Cartwell, which organized many of the school district suits and represents the San Francisco district in the bellwether case, said in an email.
The firm filed a 315-page amended complaint in that case in March, adding new allegations based on evidence from a lengthy discovery process.
Juul and certain other defendants “targeted kids as their customer base,” the suit says. “JUUL products were designed to appear slick and high-tech like a cool gadget, including video-game-like features like ‘party mode.’ [Juul] offered kid-friendly flavors like mango and cool mint, … all because defendants knew that flavors get young people hooked. Under the guise of youth smoking prevention, [Juul] sent representatives directly to schools to study teenager e-cigarette preferences.”
The complaint cites evidence that a Juul representative told 9th graders in a 2018 presentation that the company’s product was “much safer than cigarettes” and was “totally safe.”
The lawsuit details problems the rapid increase of vaping caused for schools.
“E-cigarette use has completely changed school bathrooms—now known as ‘the Juul room,’” the suit says. “As one high school student explained, ‘it’s just a cloud.’”
The suit said the San Francisco school district has had to create programs to address student e-cigarette use and divert staff resources to monitor school restrooms, among other harms.
Juul argues that the San Francisco school district suit is unsupported by the evidence. In a motion for summary judgment filed in the schools case in August, Juul said the amended complaint filed by the San Francisco district shows that the suit’s initial allegations were not supported by discovery.
“SFUSD has no fact witnesses, no documents, and no experts that can quantify any harm that SFUSD experienced due to JUUL products,” the Juul filing says. The motion says the San Francisco district is seeking a multi-hundred-million dollar award (the specific amount is blacked out in the public version of the document) to establish its own public health system.
“SFUSD … proposes that it be awarded hundreds of millions of dollars to dictate public-health strategy for one of the most populous regions of Northern California and that JLI—only one industry player, and now not even the largest one—pay for all of it,” Juul’s motion says.
The San Francisco district will file an answer to Juul’s summary judgment motion next week, Kieffer said.
Feldman, the Georgetown law professor, said Juul’s settlement with the states does not necessarily strengthen the hand of the school district plaintiffs in their separate suits against the e-cigarette maker.
“When defendants settle, part of what they are doing is trying to limit the amount of money they pay out from the same underlying actions,” she said.
But the settlement with states may also be an indication that Juul would be willing to reach some kind of settlement with plaintiffs in the consolidated cases in the multidistrict litigation, she added.
“That’s a business decision” for the company, she said.