Juul Settles NC Lawsuit for $40M, but Faces Bigger Legal Hurdles

Vape manufacturer Juul Labs has settled a lawsuit brought by the state of North Carolina, agreeing to pay $40 million, and to change some business practices. The money will be spent funding “programs to help people quit e-cigarettes, prevent e-cigarette addiction, and research e-cigarettes,” according to a press release.

North Carolina Attorney General Josh Stein filed the lawsuit against Juul in May 2019, charging that the company marketed to minors and downplayed the dangers of nicotine use. The lawsuit—the first brought against Juul by a U.S. state—claimed that Juul Labs' marketing practices violated North Carolina law.

“For years, Juul targeted young people, including teens, with its highly addictive e-cigarette,” Stein said today. “It lit the spark and fanned the flames of a vaping epidemic among our children—one that you can see in any high school in North Carolina.”

Stein’s press release claims the settlement will force Juul Labs to “make drastic changes to the way it conducts business.” But most of the changes Juul agreed to as part of the settlement had already been in place for months or years.

Juul no longer uses social media influencers for advertising or sells online without third-party age verification, and the company withdrew its flavored products from the market before removal of flavors was mandated by the FDA. Comparing “the health effects of using JUUL with the health effects of using combustible cigarettes in its marketing materials” is already prohibited by the FDA, as is marketing intended to appeal to those under age 21.

The settlement will also create a public collection of documents from the lawsuit at a North Carolina public university (they didn’t specify which). The documents will become public next year. The attorney general’s office says they will “prevent this kind of epidemic from happening again.”

The North Carolina lawsuit was filed in state court, and is not part of the huge multi-district litigation (MDL) against Juul Labs and Altria, which is a part-owner of Juul. That action—consolidated lawsuits being heard in a U.S. District Court in San Francisco—is still going forward, with thousands of plaintiffs lined up against Juul, including states, cities, school districts, and individuals.

The MDL case includes RICO (Racketeer Influenced and Corrupt Organizations) charges against some of Juul's individual directors. A ruling against Juul that included racketeering convictions could possibly triple the damages owed to the plaintiffs, and might even force the company into bankruptcy.

Tobacco control groups are hopeful that the addition of RICO charges will force Juul and Altria to agree to a large multi-state settlement similar to the 1998 Master Settlement Agreement (MSA) between 46 state attorneys general and the major tobacco companies. As part of the MSA, tobacco manufacturers agreed to pay states billions of dollars yearly to avoid further litigation.