Juul agrees to settle more than 5,000 lawsuits amid ongoing concerns about teen vaping
Juul Labs has reached settlements covering more than 5,000 cases brought by about 10,000 plaintiffs related to its vaping products, the company announced this week.
Although Juul declined to disclose the settlement amount because of legal restrictions, it noted in a statement that the company had secured an equity investment in order to finance it. Cases involved in the settlement include personal injury and consumer class action lawsuits, with plaintiffs ranging from government entities to native tribes, according to Juul. The relevant suits were filed against Juul and its officers and directors, the company said.
Buffeted by lawsuits, Juul announced hundreds of layoffs last month and bankruptcy appeared increasingly likely as it secured financing to continue operations.
The e-cigarette maker faced thousands of suits brought by individuals and families of Juul users, school districts and Native American tribes. This week's settlement resolves those cases, which had been consolidated in a California federal court pending several bellwether trials.
"These settlements represent a major step toward strengthening Juul Labs' operations and securing the company's path forward," the company said in a statement, calling the resolution one of "a series of steps" the company has taken, along with last month's layoffs, "to stabilize its business operations and address past legal issues.
Juul rocketed to the top of the U.S. vaping market five years ago on the popularity of flavors like mango, mint and crème brulee. But the startup's rise was fueled by use among teenagers, some of whom became hooked on Juul's high-nicotine pods.
Parents, school administrators and politicians largely blamed the company for a surge in underage vaping, which now includes dozens of flavored e-cigarette brands that are the preferred choice among teens.
Amid the backlash of lawsuits and government sanctions, Juul dropped all U.S. advertising and discontinued most of its flavors in 2019.
In June, the Food and Drug Administration rejected Juul's application to keep its product on the market as a smoking alternative for adults, throwing its future into uncertainty. The FDA said Juul did not adequately address key questions about the potential for chemicals to leech from its device. The FDA has placed a temporary hold on its initial decision while Juul files an appeal.
Then, in September, the San Francisco company agreed to pay nearly $440 million to settle a two-year investigation by 33 states into the marketing of its high-nicotine vaping products.
That same month, the company's largest investor, tobacco giant Altria, announced plans to resume competing on its own in the e-cigarette space.
Altria pulled its own e-cigarettes off the market in 2018 after taking a nearly $13 billion stake in Juul. But that investment has lost more than 95% of its value as Juul's prospects have dimmed, giving Altria the option to exit its non-compete agreement.
That means Juul could soon be forced to battle for space on retail shelves with Marlboro-maker Altria, along with long-standing competitors like Reynolds American's Vuse, which recently edged past Juul to become the leading U.S. vaping brand.
Juul has also settled with 37 states and territories over the last year and said it's in ongoing talks with other key stakeholders to resolve remaining litigation.