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Juul to pay $14.5 mln to settle AZ lawsuit over youth marketing

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Juul brand vape cartridges are pictured for sale at a shop in Atlanta, Georgia, U.S., September 26, 2019. REUTERS/Elijah Nouvelage

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  • Arizona is second state to settle with e-cigarette giant
  • More than 2,000 lawsuits pending over company's marketing practices

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(Reuters) - E-cigarette giant Juul Labs Inc has agreed to pay $14.5 million to settle a lawsuit by the state of Arizona accusing it of fueling a vaping epidemic by marketing its products to minors.

The settlement, announced Tuesday by the office of Arizona Attorney General Mark Brnovich, provides for $12.5 million to be set aside for anti-addiction programs. The remaining $2 million will go to a general consumer protection fund and litigation expenses.

"Today's settlement holds Juul accountable for its irresponsible marketing efforts that pushed Arizona minors toward nicotine and the addiction that follows," Brnovich said in a statement.

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Under pressure from regulators, Juul in 2018 pulled popular flavors such as mango and cucumber from retail store shelves and shut down its social media channels on Instagram and Facebook. The company on Tuesday said it supported the anti-addiction provisions of the deal.

"This settlement is another step in our ongoing effort to reset our company and we applaud the Attorney General's plan to deploy resources to address underage use," Juul said in a statement. "We will continue working with federal and state stakeholders to advance a fully regulated, science-based marketplace for vapor products."

Arizona is the second state to reach an agreement with Juul over its marketing practices. The company previously agreed to pay $40 million to resolve a similar lawsuit by North Carolina.

Juul's e-cigarettes resemble USB flash drives and work by vaporizing a nicotine-laced liquid.

In its 2020 lawsuit, Arizona accused the company of using fruit-flavored liquid pods, social media campaigns and free giveaways to appeal to young customers, leading to a spike in addiction among teens.

The company still faces more than 2,000 lawsuits, including from state and local governments, making similar claims. Marlboro cigarette maker Altria Group Inc, which in 2018 acquired a 35% stake in Juul, is also named as a defendant in many of the lawsuits.

Along with other e-cigarette makers, Juul was required to apply for U.S. Food and Drug Administration approval for its products under a 2016 federal rule, though it was allowed to continuing marketing them in the meantime. The agency has not yet acted on the application, saying in September that it needed more time.

The case is Arizona v. Juul Labs Inc, Superior Court of the State of Arizona, Maricopa County, No. CV2020-000371.

For Arizona: Joseph Sciarrotta of the Attorney General's office

For Juul: David Rosenbaum of Osborn Maledon

Read more:

Juul to pay North Carolina $40 mln over claims it targeted youth

U.S. FDA says it needs more time to decide on Juul, other e-cigarettes

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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.

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