Juul, Altria face first trial over claims of marketing e-cigarettes to teens

© Reuters. FILE PHOTO: Juul brand vape cartridges are pictured for sale at a shop in Atlanta, Georgia, U.S., September 26, 2019. Picture taken September 26, 2019. REUTERS/Elijah Nouvelage/File Photo

By Brendan Pierson

(Reuters) – E-cigarette company Juul Labs Inc and its former largest investor, Marlboro maker Altria Group (NYSE:) Inc, will face their first U.S. trial this week over claims that they created a public nuisance by marketing addictive e-cigarettes to minors.

Minnesota seeks to force the companies to pay for measures to remedy the harms of addiction. It says Juul sold its e-cigarettes in sweet flavors and promoted them on social media to appeal to underage consumers.

The state says teen vaping skyrocketed in the three years leading up to the lawsuit in 2019, with vaping by 11th graders increasing by more than 50% and by 8th graders nearly doubling.

Jury selection begins on Monday in Hennepin County state court with opening statements expected on Tuesday. Juul and Altria have faced thousands of similar lawsuits around the country.

Public nuisance, a legal theory more traditionally invoked in cases seeking to remedy damage to public amenities or waterways, has been used more in recent years, including in litigation over the opioid epidemic that has yielded more than $50 billion in settlements. This week’s trial will be its first test against Juul.

“We will prove how Juul and Altria deceived and hooked a generation of Minnesota youth on their products, causing both great harm to the public and great expense to the State to remediate that harm,” Minnesota Attorney General Keith Ellison said in a statement this month about the trial.

“At trial we will present a vigorous defense and show that the state’s claims do not stand up as matters of facts and law,” Juul said in a statement Friday.

Altria did not immediately respond to a request for comment. The company has said in court papers that the surge in youth vaping in Minnesota took place largely before Altria took its 35% stake in Juul in 2018, and that as a minority, non-voting investor it should not be held responsible.

Both companies also argue that Minnesota itself is responsible because it has failed to use its $6.1 billion share of a landmark 1998 settlement between states and tobacco companies for its intended purpose of funding anti-smoking efforts. The litigation leading up to that settlement was also based on a public nuisance theory.

The state also says Altria helped Juul market its products, including by providing it access to its sales force and including Juul advertisements in Marlboro products.

Juul last year agreed to pay $439 million to settle similar lawsuits with 34 states, not including Minnesota, and $1.7 billion to resolve thousands of lawsuits by individuals and local government entities. Altria was not part of the settlements.

Juul, which has not admitted wrongdoing, in 2019 pulled most of its flavors from the market and halted much of its advertising under pressure from regulators. The U.S. Food and Drug Administration last June briefly banned the products, though it put the ban on hold and agreed to reconsider after the company appealed.

Altria this month announced that it had given up its investment in Juul in exchange for some of Juul’s intellectual property. As of December, its share of Juul was valued at $250 million, down from $12.8 billion in 2018.