School class actions are latest plaintiffs’ tool against JUUL

As nearly 200 cases from around the nation against vaporizer manufacturer JUUL Labs are being consolidated, some recent plaintiffs are attempting to sue the company under RICO statutes, a tactic attorneys say has been key to combating cigarette companies in the past.

The specifics of how and under what terms the cases will be linked are to be decided by U.S. District Judge William H. Orrick III in San Francisco. The next hearing will take place at the end of January.

In addition to the growing number of suits in the Northern District of California, state Attorney General Xavier Becerra has joined the Los Angeles County district attorney on a suit in Alameda County and the L.A. Unified School District has filed an additional class action in San Bernardino County which purports to represent every school district in the state. Each suit alleges the violations of law occurred in the counties of Alameda and San Bernardino respectively and throughout the state.

Anne Marie Murphy of Cotchett, Pitre & McCarthy LLP, who is representing several San Mateo County school districts, said getting RICO charges included in the consolidation could result in a backbreaking modern equivalent to the 1998 Master Settlement Agreement between most state attorneys general and the four largest American cigarette manufacturers in America at the time.

One of those companies, Altria, bought a 35% majority stake in JUUL last December in a $12.8 million bid.

"The remedies are also enhanced, so that would be another consideration," Murphy said, meaning any wrongdoing proved under the statute would carry stiffer penalties. "All the claims are getting at the same issue though, that these school districts have been damaged."

A large majority of the suits against JUUL have been brought by individuals.

One complaint suggests schools were damaged by paying for increased security and monitoring devices to catch students vaping. More suspensions and other disciplinary proceedings and "educational programs necessary to correct the JUUL Youth Marketing Enterprise's deceptive and illegal marketing" were required, according to the complaint. JUUL Labs Inc., Marketing, Sales Practices, and Products Liability Litigation, MDL No. 2913 (N.D. Cal, Filed Jul. 29, 2019).

One of the claims alleges JUUL worked with smaller marketing agencies and affiliates to sponsor school visits that were purportedly to educate students on the dangers of vaping and tobacco products but in fact served as marketing opportunities where paid consultants would downplay the risks of e-cigarettes

An example from the complaint names LifeSkills, a contracted group that held events with "a thousand youths in Baltimore, Maryland," that specifically pitched JUUL products as an alternative to normal smoking.

In one brief to the court, JUUL's attorney Austin Schwing of Gibson, Dunn & Crutcher LLP wrote, "The U.S. Food and Drug Administration and other public health organizations recognize that electronic nicotine delivery systems may offer an 'alternative to cigarettes for adults who still seek access to satisfying levels of nicotine, without all the deadly effects of combustion.'"

Schwing wrote that each plaintiff has "mounted sweeping, policy-based attacks on JLI and its products simply because they contain nicotine, disregarding the enormous public health benefit JUUL products can offer when used as intended by adult smokers as an alternative to combustible cigarettes."

None of the suits, Schwing argued, have a coherent theory of liability or damages and the individualized nature of each claim will further serve to muddle the issue.

Louise Renne of Renne Public Law, who is also handling a number of the school district cases in California, said adding RICO charges "felt warranted, especially with the way in which they have targeted youth, the way in which they have flouted federal laws, FDA regulations for example." She added that coordination and movement of money by wire and across state lines between third-party sales companies and representatives of JUUL was a further indicator the charges were appropriate.

As for the likelihood of more school districts joining the class, Renne seemed certain.

"I anticipate that there will be more filings. While it is not common for school districts to sue, the problem is so pervasive that I would be surprised if other school districts do not follow suit," Renne said.

The longtime attorney, who worked on the 1998 tobacco settlement, describes JUUL as a modern day Altria or Philip Morris; a powerful company who rode a wave of scientific uncertainty to secure a huge market share for a product they knew to be dangerous for their users.

Citing her experience suing Camel for their Joe Camel ads, Renne said, "When we brought those lawsuits, frankly I think a lot of people thought we were out of our minds. 'Where was the proof?' The fact is the cigarette companies had tried very hard to hide what they were doing. ... What I see here is history repeating itself."

Murphy painted parallels between the e-cigarette litigation and massive ongoing class actions such as opioid suits.

She said each represented a large-scale public health crisis that dealt with highly addictive substances and claimed the public had been defrauded by opioid manufacturers and vaping companies through a targeted campaign of false marketing.

Citing a California Student Tobacco Survey from last year, Murphy said 20.8 percent of teens in San Mateo County had self-reported as using e-cigarettes and that figure was up from 11.8 percent just a year before in 2017.

"We have to prove a concerted effort between JUUL and other co-conspirators where they have worked together to defraud the public and have in the process violated state or federal laws," Murphy said of standing up her RICO allegations in court. These tactics, she insisted, were "used to develop a whole new generation of smokers. I think that's irrefutable at this point."

Renne charted what she believed to be a near exact refrain of her work suing big tobacco in the past.

"Altria, which is big tobacco, now owns about 33% of JUUL's stock. This is just a repeat performance with a different style. ... Even in their public testimony, the founders of JUUL say they went through the documents that were made a part of the big tobacco settlement to see how they had done it."

In literature posted on its website under a heading dedicated to efforts to reduce underage use of its products JUUL's website reads, "Youth use of vapor products is detrimental to our mission, and to our business. Our target market is the one billion adult smokers globally, more than 70 percent of whom want to quit using combustible cigarettes (per CDC). Offering these adult smokers a real alternative to cigarettes is a public health and commercial opportunity of historic proportions, with over 7 million preventable deaths per year caused by cigarettes. Youth use puts this all at risk."

In pursuit of its stated goal, the company claims on its website to use a secret shopper program to root out purveyors that sell to underage buyers and stopped selling flavored pods at traditional retail stores, among other measures.

Neither of the plaintiffs' attorneys were swayed by what they saw as stopgap measures JUUL has employed in a public relations campaign to defray some of the public animus aimed its way since reports of deaths and increased risk of respiratory disease were linked to its products, even tangentially. Limiting or discontinuing fruit flavors favored by younger smokers, was either false, or done as a tactic, Renne contended, adding, "I don't think so. They're going to have to prove that."

Murphy concluded, "Frankly, I think that the evidence scientifically is showing that vaping is causing very serious lung problems, not only for youth, but for adults as well. ... There's starting to be ties between deaths and vaping products, but going back to what we're citing, it's the addiction."