What’s next in NC’s lawsuit against e-cigarette maker Juul?
The next steps in North Carolina’s case against e-cigarette maker Juul are unclear after the company’s attorneys asked what’s left to decide following a judge’s finding Juul violated state law and limited the evidence it can present to a jury.
“It’s a little perplexing about what’s left, if anything, to tell you the truth,” Juul attorney James Hurst told Superior Court Judge Orlando Hudson on Thursday.
In the lawsuit, N.C. Attorney General Josh Stein accuses Juul, which at one time had 75% of the e-cigarette market, of unlawfully marketing and selling its products to youth.
Juul attorneys have argued the company targeted adults ages 24 to 35 and that the lawsuit is counterproductive to public health goals since its products are an alternative to cigarettes. The trial is set to start June 7.
On Monday, Hudson found Juul should be subject to sanctions after state attorneys argued Juul had destroyed documents, provided thousands of pages of irrelevant information in document dumps, and ignored related court orders.
The state’s request for sanctions appears to prevent Juul from offering evidence related to the subject matter of the state’s requests for pre-trial documents and other information. Those topics include social media postings, marketing and age verification practices, all key aspects of the case and Juul’s defense.
While Hudson, Durham’s senior resident judge, granted the sanctions order orally in court, the state is still drafting the written order outlining all the details, which Hudson would have to review and sign.
Based on statements in court, the sanctions would grant the state’s yet-to-be argued motion for partial summary judgment, concluding that Juul knowingly violated North Carolina’s Unfair or Deceptive Trade Practices Act by:
▪ Failing to verify people were over 18 when they ordered online from June 2015 to February 2016 and from August 2017 to the present.
▪ Failing to engage an independent third-party age verification system to ensure customers were over 18,
▪ Allowing minors to obtain Juul products through its warranty replacement program, along with bulk and serial purchasing.
The order also calls for counting the documents the company provided in some of the alleged document dumps to determine how many times it violated the act. That number is 16,000 and counting, according to statements in court. Violations carry a fine of up to $5,000 each, meaning the company could face tens of million of dollars in fines.
‘Civil equivalent of the death penalty’
At the start of Thursday’s hearing, Andy Penry, a private attorney working on the state’s case, said after Hudson’s ruling they had hoped to reach a resolution in the case.
“I can’t give the court any particular good news one way or the other,” he said. “So we are back to deal with the motions that are left.”
Special Deputy Attorney General Brian Rabinovitz then argued for proceeding with arguments for motions for summary judgment put forward by both sides.
Hurst told Hudson he wants the written order on sanctions first.
“I understand from your honor that your intent was to grant all of the state’s requested sanctions .... the civil equivalent of the death penalty,” Hurst said. “I just want to get some confirmation and clarification because it will help us all to see the future and what the consequences of the order are.”
Juul had 41 witnesses on its trial list, Hurst said, and the sanctions order appears to prevent them all from testifying.
Hurst also said he didn’t understand why the state needed to argue its motion for partial summary judgment given the judge’s sanctions order.
The attorneys ultimately agreed to return to court on Thursday, May 27.
16,000 violations
Monday’s decision was the latest blow to Juul’s case.
Before the hearing, Hudson turned down two requests from Juul attorneys’ to delay it. Earlier this month, Hudson barred two of Juul’s experts from testifying.
Under Hudson’s oral order Monday, each document Juul provided responding to certain state requests would count as a violation of the Unfair or Deceptive Trade Practices Act. When the state requested advertisements accessible to North Carolina consumers, for example, Juul provided 16,000 documents.
After Hudson’s ruling, Juul attorneys grappled with what had happened.
“You have now ordered as a matter of law there have been thousands and thousands of (Unfair or Deceptive Trade Practices Act) violations,” Hurst said. “My client is going to ask me this. They are going to say, ‘Is that really what happened?’ That is just what happened right? You ordered there is at least 16,000 and counting UDTPA violations.”
Hudson agreed, but clarified that it is up to the state to help determine the final number of violations.
North Carolina v. Juul
North Carolina was the first state to sue Juul on May 19, 2019.
Other states followed, including Illinois, New York, California, Massachusetts, Washington, Arizona, Pennsylvania, Hawaii and Colorado.
Juul played a central role in fostering an e-cigarette epidemic, the lawsuit states, as its market share went from 24% to 75% in 2019, reversing a historic decline for teen tobacco use. At the end of 2020, Juul’s market share was about 40%, according to Altria, which owns about 35% of the company.
From 2018 to 2019, use of e-cigarettes rose 78% among high schoolers and 48% among middle schoolers according to the N.C. Youth Tobacco Survey.
“It is no accident that Juul has achieved such striking success in attracting underage users,” the lawsuit states. “Juul’s popularity among teens is the predictable result of Juul’s youth-focused business strategy.”
According to Juul, in September 2019, a new chief executive officer announced changes that included suspending all broadcast, print and digital advertising. The next month the company suspended sales of non-tobacco, non-menthol-based flavors in the United States, including mango, creme, fruit and cucumber.
This story was originally published May 20, 2021 at 4:52 PM with the headline "What’s next in NC’s lawsuit against e-cigarette maker Juul?."
