Juul Reaches $439 Million Settlement Over Marketing to Kids

Juul Labs Inc. has reached a groundbreaking settlement agreement, agreeing to pay $438.5 million to 33 states, including Puerto Rico. This settlement marks the culmination of a two-year bipartisan probe into Juul’s marketing and sales practices, with particular focus on the company’s alleged targeting of children with disposable vape products.

Strict Injunctive Terms to Limit Marketing and Sales Practices

Connecticut Attorney General William Tong, along with Texas and Oregon, led the negotiations and announced the terms of the settlement. Juul will be required to comply with a set of strict injunctive terms that severely limit its marketing and sales practices.

According to the statement, Juul has committed to refraining from all youth marketing, paid product placement, advertising on public transportation, funding education programs, and using depictions of individuals under 35 years old or cartoons in advertisements. Furthermore, the company has agreed not to advertise on billboards or employ paid influencers for product promotion.

Attorney General Tong emphasized the detrimental effects of Juul’s advertising campaigns, stating, «Juul’s cynically calculated advertising campaigns created a new generation of nicotine addicts. They 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.»

Juul’s Commitment to Resolving Past Issues

In response to the settlement, Juul released a statement acknowledging the significance of the agreement as part of their ongoing commitment to resolving past issues. The company emphasized that the terms of the deal are already aligned with its current business practices.

While resolving the issues from the past, Juul remains focused on its mission to transition adult smokers away from traditional cigarettes, which are the leading cause of preventable death. The company is determined to combat underage use of its products.

FDA’s Actions and Previous Settlements

This latest settlement comes after Juul reached earlier agreements with individual states. In April, Juul settled with Washington state for $22.5 million over claims of unlawfully targeting underage consumers. Additionally, in 2021, the company struck a $40 million accord with North Carolina regarding its marketing practices towards underage users. Separate lawsuits by New York and California are still pending.

The FDA also took action in June, banning Juul products from U.S. shelves due to a lack of evidence demonstrating their overall safety. The regulatory body cited Juul’s disproportionate role in the rise of youth vaping. However, Juul obtained a court order temporarily blocking the ban, and the FDA stayed its decision, allowing the vaping company to continue selling products for now. A ban would significantly impact Juul’s revenue, potentially leading to new financing or even a bankruptcy filing.

Personal Injury Lawsuits and Potential Damages

The multistate investigation into Juul’s practices uncovered evidence that the company became the dominant player in the vaping market through an advertising campaign that specifically appealed to youth. Launch parties, advertisements featuring young and trendy-looking models, social media posts, and free samples were used to target underage users, despite the risks associated with e-cigarettes.

Despite this settlement, Juul still faces more than 2,500 personal injury lawsuits and numerous cases brought by local governments and school districts, all seeking to hold the company accountable for underage vaping. Experts estimate that Juul could potentially face hundreds of millions of dollars in damages from these claims.

The first trial among these cases is scheduled for November and involves claims by the San Francisco Unified School District.

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FAQs

1. What is the settlement amount Juul has agreed to pay? Juul has reached a settlement agreement to pay $438.5 million to 33 states, including Puerto Rico.

2. What are the strict injunctive terms imposed on Juul? Under the settlement, Juul is required to comply with strict injunctive terms that severely limit its marketing and sales practices. These terms include refraining from youth marketing, paid product placement, advertising on public transportation, funding education programs, and using depictions of individuals under 35 years old or cartoons in advertisements.

3. What did Juul’s advertising campaigns involve? Juul’s advertising campaigns targeted underage users through launch parties, advertisements featuring young and trendy-looking models, social media posts, and free samples. These marketing strategies contributed to the rise in youth vaping.

4. What other settlements has Juul reached in the past? Prior to this agreement, Juul settled with Washington state for $22.5 million and North Carolina for $40 million over claims related to targeting underage consumers. Lawsuits by New York and California are still pending.

5. What legal challenges does Juul face apart from the settlement? Juul is currently facing over 2,500 personal injury lawsuits and numerous cases brought by local governments and school districts seeking to hold the company responsible for underage vaping. The potential damages from these claims could amount to hundreds of millions of dollars.