SYNOPSIS

On December 4, 2019, Minnesota Attorney General Keith Ellison filed a lawsuit on behalf of the State of Minnesota suing e-cigarette manufacturer Juul Labs, Inc. The lawsuit, filed in Hennepin County District Court, alleges that Juul violated multiple state consumer-protection laws, breached its duty of reasonable care, and created a public nuisance. The complaint describes how Juul developed products with more addictive doses of nicotine than conventional cigarettes and other e-cigarettes, but represented that its products are a safe alternative. The complaint describes how Juul developed trendy products and popular flavors designed to appeal to youth. The complaint also asserts that Juul was negligent in its duty to verify its customers’ ages, as required by Minnesota law and to ensure that its controls were working and that underage Minnesotans were not purchasing its products.

WHY IT MATTERS FOR PUBLIC HEALTH

In the wake of this alleged deceptive, fraudulent, and unlawful behavior by Juul — which controlled 75 percent of the U.S. e-cigarette market in 2018 — tobacco use rose dramatically among Minnesota youth. In October 2019, the Minnesota Department of Health reported in "Tobacco Use in Minnesota" that over the last three years, the percentage of 11th graders in Minnesota who vaped in the last 30 days grew more than 50 percent, the percentage of 9th graders grew 75 percent, and the percentage of 8th graders grew nearly 100 percent.  Moreover, 75 percent of Minnesota youth who used e-cigarettes had never smoked a cigarette before.

The growth took place despite the known harms of vaping. E-cigarettes are highly addictive and can cause cancer, seizures, breathing problems, and DNA damage. Young people are at a higher risk of nicotine addiction than adults because their brains are not fully formed until age 25. Studies also show that adolescent tobacco use is associated with the risk of developing major mental health disorders. Nevertheless, 75 percent of Minnesota 11th-graders say they think vaping is not dangerous. Minnesota's Attorney General attributes this lack of understanding largely to Juul’s aggressive misinformation campaign.

BACKGROUND

Since its entry in the marketplace in 2015, Juul quickly rose to dominate the e-cigarette market, especially among youth. In just one year, from 2017 to 2018, its revenues grew 800 percent. Big Tobacco wanted a piece of the pie. In December 2018, Altria — the largest tobacco company in the United States — bought a 35 percent stake in Juul for nearly $13 billion. By July 2022, however, Altria lost about 95 percent of its investment, largely due to mounting lawsuits against Juul.

By December 6, 2022, Juul agreed to settle for an undisclosed amount roughly 5,000 lawsuits that accused the company of marketing its products to teens and children. Additionally, 33 states and territories settled for approximately $438.5 million and agreements from the company (1) to not market to people under the age of 35, (2) to not use cartoons in advertising, and (3) to place limits on in-store displays of its Juul products, among other things. On April 12th, 2023, Juul announced a $462 million multi-state settlement with attorneys general of six states: New York, California, Colorado, the District of Columbia, Illinois, Massachusetts and New Mexico.

Proceedings

The complaint filed on behalf of the State of Minnesota alleges that Juul has committed: consumer fraud; deceptive trade practices; unlawful trade practices; false statements in advertisement; public nuisance; and negligence and negligence per se.

For its part, Juul blamed the State for not protecting youth from its harmful products. Juul claimed the State already reaped billions of dollars because of the 1998 Master Settlement Agreement and should not be able to collect more. In a November 2022 motion, Juul argued:

The State collected over $840 million in tobacco-related settlements and taxes in 2017, and another $750 million in 2018.... Yet both years, the State spent less than 1% of that money on prevention and cessation efforts. In other words, the State consistently collected a hundred times as much in tobacco taxes and settlement fees than it spent on tobacco-control measures.

Litigation Status (CLOSED)

On April 17, 2023, after three weeks of testimony and evidence, the parties settled on the eve of closing arguments. The details of that agreement were disclosed on May 17, 2023.

Under terms of the Consent Judgment filed with the Hennepin County District Court, Juul and Altria will together pay a total of $60.5 million to the State of Minnesota over an eight-year period. The payment schedule is frontloaded: it requires Juul and Altria to pay $22.75 million within 30 days and another $12.75 million by March 2024, meaning that the State will receive nearly 60 percent of the total value of the settlement in less than one year.

The monetary value of Minnesota’s settlement with Juul and Altria is the largest per capita of all 48 states and territories that have settled with Juul. It is also greater than the total value of Juul’s gross revenue from sales of its products in Minnesota from 2015 to 2021.

Currently pending bi-partisan legislation is pending that, if passed, would ensure that Minnesota’s recovery from the case is placed into a special fund administered by the Minnesota Department of Health that is dedicated to the prevention of smoking and treatment for commercial tobacco addiction.

The settlement also requires Juul and Altria to publish over 10,000 pages of internal documents related to the litigation in a public document depository. The settlement ensures that Minnesota-specific Juul documents will be made public in addition to the document disclosure already secured by other states’ settlements with Juul.

Furthermore, the settlement agreement requires Altria to make public the documents from Minnesota’s litigation, as well as from similar litigation by other states against Altria and from the federal multidistrict litigation matter involving Juul and Altria.

The settlement requires Juul to abide by substantial conduct restrictions, including:

• Prohibiting Juul from marketing and selling to children and young adults, including use of models under the age of 35, advertising on apparel, entertainment, and social media platforms, and the sale of flavored products;
• Restricting Juul’s ability to sponsor events and use outdoor advertising in Minnesota;
• Preventing Juul from distributing product samples;
• Requiring that Juul accurately disclose the nicotine content of Juul products; • Directing how Juul products may be sold in-store and limiting online sales; and
• Creating a retailer compliance program for Minnesota stores to ensure that Juul products are being sold with proper age verification.

The agreement requires Altria to abide by restrictions on the sale of its own e-cigarette products that it sells in the future. That is, regardless of Altria's association with Juul, it has agreed to carry these protocols forward with other companies in which it is involved, such as NJOY.

For more on lessons learned regarding the crafting of a solid Juul settlement agreement, see Roadmap to a National Settlement Agreement: How the Tobacco MSA Helps Frame a Juul Settlement (March 2021).