Juul directors, Altria must face bellwether lawsuits -judge

Juul brand vape cartridges are pictured for sale at a shop in Atlanta
Juul brand vape cartridges are pictured for sale at a shop in Atlanta, Georgia, U.S., September 26, 2019. REUTERS/Elijah Nouvelage
  • Judge finds plaintiffs allege sufficient participation by defendants in marketing e-cigarettes to youth
  • Strict liability claims dismissed as a matter of law

(Reuters) - Current and former directors of e-cigarette maker Juul Labs Inc, as well as its largest investor, Altria Group, have lost bids to dismiss 18 bellwether cases in a multidistrict litigation over claims that they fueled a youth addiction epidemic.

U.S. District Judge William Orrick in San Francisco on Thursday ruled that most claims could go forward against Juul founders James Monsees and Adam Bowen, directors Nicholas Pritzker and Riaz Valani, former director Hoyoung Huh and Marlboro cigarette maker Altria, which took a 35% stake in Juul in 2018.

James Kramer of Orrick, Herrington & Sutcliffe, a lawyer for Monsees, and Eugene Illovsky of Boersch & Illovsky, a lawyer for Bowen did not immediately respond to requests for comment. Bowen also sits on Juul's board of directors, while Monsees left the board last year.

Michael Guzman of Kellogg, Hansen, Todd, Figel & Frederick, a lawyer for the other director defendants, also did not immediately respond to a request for comment. Nor did Altria or John Massaro of Arnold & Porter, one of its attorneys.

More than 2,000 cases have been consolidated in the MDL before Orrick against Juul, Altria and the individual defendants.

Plaintiffs, including local government entities and people who say they became addicted after using Juul e-cigarettes in their teens, allege that the defendants falsely represented Juul's e-cigarettes as smoking cessation aids when in fact they were marketed to minors, including through the use of fruit flavors.

Eighteen pending personal injury cases by individuals have been designated as bellwethers. Altria and the founders and directors moved to dismiss those cases on multiple grounds, including that they were not sufficiently involved in Juul's alleged conduct to be liable.

Orrick rejected that argument. He found that the plaintiffs have sufficiently alleged the founders' "personal participation (including their intent, aims, and control over) the testing, design, marketing, and sales of the product."

Similarly, he said they had plausibly alleged the other directors' "positions on and control over the board and management that allegedly allowed these defendants to control and continue unabated (Juul's) efforts to grow the youth market."

The judge rejected Altria's argument that the California court lacked personal jurisdiction over it, finding that the plaintiffs alleged the company took actions in the state to "gain influence over the director defendants and control of (Juul) in order to maximize Altria's profits in the long-run."

However, the judge did dismiss strict liability claims against the individual defendants, finding that courts in the relevant states had not recognized such claims against directors.

The judge also dismissed some state law claims as insufficiently pled under the laws of those states.

The case is In re Juul Labs Inc, Marketing, Sales Practices, and Products Liability Litigation, U.S. District Court for the Northern District of California, No. 19-md-02913.

For Altria: John Massaro of Arnold & Porter

For Bowen: Eugene Illovsky of Boersch & Illovsky

For Monsees: James Kramer of Orrick, Herrington & Sutcliffe

For the other directors: Michael Guzman of Kellogg, Hansen, Todd, Figel & Frederick

Read more:

Altria and Juul founders, directors lose bid to dodge RICO claims

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.