Posts Tagged ‘Juul’
Monday, July 1st, 2019
By Edward L. Sweda, Jr., PHAI Senior Attorney
Five months before Howard A. Willard III presided for the first time over the Altria Group annual shareholders meeting in Richmond, Virginia, the company carried out a business plan that dominated the discussion at the meeting. On December 20, 2018, Altria Group announced it had spent $12.8 billion to purchase a 35% share of San Francisco-based Juul Labs, Inc. While that expenditure was not enough to buy an outright controlling interest in the company, it was more than enough to provide major controversy throughout the one-hour shareholders meeting on the morning of May 16, 2019.
Willard, Altria’s chairman and Chief Executive Officer, called 2018 a “strong year for the core tobacco business” and touted the JUUL investment, couching it as having been done to provide JUUL to adult smokers.
2018 was also a year that saw a dramatic surge in youth use of e-cigarettes, including JUUL. According to the 2018 National Youth Tobacco Survey, current e-cigarette use among middle and high school students rose dramatically between 2017 and 2018, with over 3.6 million young people currently using e-cigarettes in 2018. This marked a stark reversal of downward trends of such use in previous years.
In the shareholder meeting’s question and answer session, this author noted that, since the December purchase, “a federal class action lawsuit has been filed in Sarasota County, Florida, on behalf of a girl and her parents accusing JUUL of intentionally targeting teenagers for addiction and falsely denying doing so. The lawyers are using Florida’s anti-racketeering statute, alleging the company committed fraud, product liability and deceptive trade practices. In late April, the Public Health Advocacy Institute (for which I work) sent a demand letter to JUUL on behalf of three youths in Massachusetts. The three of them have become addicted to nicotine by using JUUL, and allege a violation of the state Consumer Protection Act. Specifically, the allegations involve breach of the implied warranty of merchantability regarding the design of the product to addicting non-smoking minors and also unfair marketing to teenagers.
“And the plaintiffs here are seeking the establishment of a program for the prevention and treatment of nicotine addiction in young people who use JUUL. And then, of course, just yesterday, the North Carolina Attorney General, Josh Stein, sued JUUL, saying that it had misrepresented the potency and danger of nicotine in its products. He is seeking injunctive relief, the disgorgement of profits and limiting some of the flavors used by JUUL.
“So my question is, what specific steps will Altria Group take to protect its $12.8 billion investment in JUUL by making JUUL less vulnerable to lawsuits of this type?”
Willard responded by acknowledging that, in December, Altria was aware of litigation against JUUL. Then he gave the standard assurance that “we are very committed to helping address the increase in e-vapor use and to encourage JUUL to make sure that their marketing is only to adult cigarette smokers.”
Another shareholder approached the issue of the $12.8 billion investment in JUUL from a different angle. Dr. Andrew Kramer cited three major criticisms of the deal “One that we paid too much. Two, more often, to me, is that here’s no path to control. And lastly, we’re restricted from distributing any other nicotine vaping systems that limits our – that prohibits our ability to build a diversified portfolio in that space.” Willard rejected Kramer’s analysis, calling the deal a “very attractive investment” for Altria.
Jonathan Chafee of Cattaraugus County, New York, asked why Altria had changed its position on raising the purchase age for tobacco products to 21 from two years earlier, when then-CEO Martin Barrington had said that local laws to raise the age to 21 would not help prevent youth use of tobacco because they would just travel to a community without such a law. Willard justified that switch in position by noting the rapid increase in youth use of e-vapor products in 2018.
Olivia Lang of New York asked what Altria sees as its ethical obligation to help their customers make better informed decisions about using products that harm their health. Willard cited the company’s “significant opportunity with products like IQOS and the new e-vapor products like JUUL to convert adult cigarette smokers down the risk continuum.”
Two shareholder resolutions were presented. The first one, supported by Sister Nora Nash, a sister of St. Francis of Philadelphia, called on Altria Group to disclose publicly the nicotine levels of the company’s cigarette brands. Sr. Nash said that “Altria needs to hear the calls of the thousands of people who will die this year from the horrible effects of smoking cigarettes and other products.”
The second resolution was presented by Cathy Rowan the director of socially responsible investments for Trinity Health and a member of the Interfaith Center for Corporate Responsibility. It called for a report on Altria’s policy and procedures governing direct and indirect lobbying, the company’s payments for such lobbying, Altria’s membership in and payments to any tax-exempt organization that endorses model legislation and a description of Altria’s oversight of this activity.
The first resolution garnered 3.9% YES votes, while the second resolution got 27.9% YES votes.
Young people from New York and Nebraska attended the meeting while many more were outside the Richmond Convention Center, chanting slogans such as “People Over Profits” and holding signs with messages including “We will not be FUULed! 1 Pod = 1 Pack”, “Who do you think these flavors are targeting? Fruit Medley” and ”13 is the average age of a new smoker.” Approximately 85 teen leaders came to Richmond to confront Altria Group management over the company’s outrageous conduct.
The youth who came to Richmond for this meeting were able to see through the multi-billion dollar corporate smokescreen and returned to their communities with the powerful messages they delivered to the management of Altria Group, Inc.
Monday, April 29th, 2019
Today, the Public Health Advocacy Institute (PHAI) took the first step in launching a public health class action lawsuit in Massachusetts against Juul Labs, the makers of the most popular e-cigarette in the United States, for designing and marketing its product to appeal to and addict adolescents. This is the first such case brought against Juul in Massachusetts, and the first such lawsuit asking only one thing: for a court to require the company to fund a statewide clinical program for the treatment of nicotine addiction in young people who used Juul e-cigarettes.
While Juul Labs maintains that its product is intended to be used by adult smokers, the product’s design, in fact, caters to adolescents, whose brains are especially vulnerable to nicotine addiction. . Importantly for teens, Juul is designed to be used discreetly. To the untrained eye, a Juul e-cigarette may look simply like a USB drive. The design enables young people to use Juul surreptitiously without parents, teachers, or other adults even knowing. This product feature has helped Juul capture a massive teen market. “Kids use Juul everywhere,” said Matthew Murphy, now 19 years-old and one of the class representatives. “I knew kids who used Juul during class. I used it in my bedroom and my parents couldn’t smell it. They had no idea until long after I was hooked.”
Despite Juul’s claims that its e-cigarettes are intended solely for adult smokers hoping to switch from conventional cigarettes, the company engineered its sophisticated e-cigarettes to yield a physiological response and degree of nicotine ‘satisfaction’ which may actually exceed those of traditional cigarettes. Dr. Jonathan Winickoff is a professor of pediatrics at Harvard Medical School who treats Juul-addicted patients in his pediatric practice. “First of all, Juul is not a recommended or approved product for smoking cessation,” said Winickoff. “On the other hand, a teen can easily inhale a cigarette pack’s worth of nicotine in a Juul pod and, because the product’s design almost eliminates the body’s natural response to bronchial irritation caused by high doses of inhaled nicotine, addiction can occur very quickly”
Juul Labs went from a startup to being valued at over $30 billion in just over three years. Its business model depends on the sale of proprietary “pods” of liquid nicotine, including flavors like Mint, Mango, Fruit, and Crème that help make their e-cigarettes highly palatable and attractive to teenagers.
Marianne Savage is the mother of an addicted teen user of Juul and a class representative. “It is so hard seeing your child struggle with addiction,” said Savage. “It affected his grades, his social life, and his health. We have to fight hard to quit. The ordeal of Juul addiction caused my son a lot of pain and anxiety.”
Because best practices for treatment have yet to emerge, young people suffering from nicotine addiction caused by Juul have very few places to turn for help. “The goal of this lawsuit is to make sure that these kids and their parents in Massachusetts have a place to go to deal with this addiction,” said Mark Gottlieb, Executive Director of the Public Health Advocacy Institute. “Our non-profit law firm is taking on Juul Labs so that the company with the greatest responsibility for teenage addiction to e-cigarettes pays the cost for effective treatment for these young people.”