A Durham County Superior Court judge ruled Monday that Juul Labs Inc. has violated court orders by destroying documents and deleting social media postings ahead of a pending trial with the N.C. Attorney General’s Office.
Juul Labs is the maker of the controversial and top-selling Juul electronic cigarette.
Josh Stein filed in May 2019 a lawsuit targeting Juul’s business and marketing practices, most notably accusing Juul of violating the state’s Unfair and Deceptive Trade Practices Act.
Hudson ruled Monday in favor of several pre-trial motions by the attorney general’s office regarding Juul’s actions. He said the company should face sanctions that could run into the millions of dollars.
According to The (Raleigh) News & Observer, Hudson determined Juul had violated the Unfair or Deceptive Trade Practices Act — which can carry an up to $5,000 fine for each violation — thousands of times.
Hudson also agreed to tell the jury at the upcoming trial that it may “draw adverse inference that all the social media posts Juul deleted or caused to be deleted were youth oriented.”
North Carolina was the first state to sue Juul over accusations that it targets underage youths with its products. The trial is projected to begin June 7.
In October, Hudson denied Juul’s attempt to dismiss the lawsuit.
Stein wants Juul to: cease selling e-cigs to N.C. minors; limit the flavors sold in the state; stop advertising and marketing practices that are intended to or likely to appeal to minors; and delete all data for customers whom Juul cannot confirm are at least 18.
Juul said Wednesday it has only sold tobacco and menthol flavors in North Carolina since 2019, that the social media posts in question were deleted before there was a trial, and that it also stopped all marketing of its products in 2019.
Stein has requested details on Juul’s efforts, in marketing as well as relationships with retailers and re-sellers, to verify age before purchase, and any youth education and awareness programs.
The N.C. lawsuit is similar in approach to the avalanche of county- and state-level lawsuits filed against opioid manufacturers to thwart product usage.
Juul said in October that “we will continue to reset the vapor category in the U.S. and seek to earn the trust of society by working cooperatively with attorneys general, legislators, regulators, public health officials and other stakeholders to combat underage use and transition adult smokers from combustible cigarettes.”
Juul entered the mainstream retail marketplace in 2015. It has shown that a startup manufacturer can compete with the Big Three manufacturers: Philip Morris USA, R.J. Reynolds Tobacco Co. and ITG Brands LLC.
The Juul e-cigarette is sold in the form of a pen or a USB flash drive that’s easy to use — and hide — because the vapor typically does not have a smell and quickly dissipates.
Juul held a 74.6% U.S. e-cig market share at the time of Stein’s lawsuit.
However, e-cigarettes sales have slumped since the Food and Drug Administration implemented in February 2020 its latest round of heightened regulations on the products.
Those restrictions foremost required manufacturers of cartridge-based e-cigarettes, such as Juul Labs, R.J. Reynolds Vapor Co., NJoy and Fontem Ventures, to stop making, distributing and selling “unauthorized flavorings” or risk enforcement actions.
As of the Nielson convenience store survey as of April 10, Juul had a 50% market share, followed by Reynolds Vapor’s Vuse at 31.6%.