Juul to pay $462 million to six US states, D.C. over youth addiction claims

By Brendan Pierson

NEW YORK (Reuters) -E-cigarette maker Juul Labs Inc agreed on Wednesday to pay $462 million over eight years to settle claims by six U.S. states including New York and California, along with the District of Columbia, that it unlawfully marketed its addictive products to minors.

The deal, which also included Colorado, Illinois, Massachusetts and New Mexico, means that San Francisco-based Juul has now settled with 45 states for more than $1 billion, putting most of the long-running litigation over its business practices to rest. The company did not admit wrongdoing in the settlement.

The various states had accused Juul of falsely marketing its e-cigarettes as less addictive than cigarettes and targeted minors with glamorous advertising campaigns.

“Juul’s lies led to a nationwide public health crisis and put addictive products in the hands of minors who thought they were doing something harmless,” New York Attorney General Letitia James said at a news conference.

“Today is another step forward in our fight to protect our kids from getting hooked on vaping and nicotine,” California Attorney General Rob Bonta added.

Juul said in a statement that use of its products by people under age 18 has fallen by 95% since the fall of 2019, when it changed its marketing practices as part of a “company-wide reset.”

“With this settlement, we are nearing total resolution of the company’s historical legal challenges and securing certainty for our future,” the company said.

While Juul continues to sell its e-cigarettes in tobacco and menthol flavors, with limited advertising, its market share has fallen from a once-commanding 75% in 2018 to less than 30%.

Wednesday’s settlement was negotiated by the states and District of Columbia as a group but stems from separate lawsuits they filed against the company.

Juul is still facing a lawsuit by Minnesota, where a trial is currently underway, as well as lawsuits or open investigations by Florida, Michigan, Maine and Alaska. It previously reached a $439 million settlement with 34 states and territories, as well as settlements with several individual states.

In addition to the state settlements, the company last year agreed to pay $1.7 billion to settle thousands of lawsuits by local government entities and individual consumers.

Under pressure from regulators, Juul in 2019 pulled most of its flavors from the market and halted much of its advertising. The U.S. Food and Drug Administration last June briefly banned the products, though the agency put the ban on hold and agreed to reconsider the action after the company appealed.

Juul’s former largest investor, Marlboro cigarette maker Altria Group Inc, is also facing claims over its alleged role in marketing Juul’s e-cigarettes, and has not settled.

Altria last month announced that it had given up its investment in Juul in exchange for some of Juul’s intellectual property. As of December, its share of Juul was valued at $250 million, down from $12.8 billion in 2018.

The head of the FDA’s center for tobacco products said last year that adolescent e-cigarette use in the United States remained at “concerning levels” and posed a serious public health risk. Federal health officials said last October that an estimated 2.55 million U.S. middle and high school students reported using e-cigarettes during a four-month span earlier in 2022.

Most e-cigarettes contain nicotine, the addictive substance present in regular cigarettes, cigars and other tobacco products, and nicotine in adolescence can harm the parts of the brain that control attention, learning, mood and impulse control, according to the U.S. Centers for Disease Control and Prevention. The CDC also has said using nicotine in adolescence may raise the risk for future addiction to other drugs.

(Reporting by Brendan Pierson in New York; Editing by Will Dunham)