Category: Litigation

Altria Execs Scorn Company’s Vapor Products During Trial

Photo: Paul Brady | Dreamstime.com
Altria Group Executives have been describing in detail their failure to come up with a marketable vapor product during an antitrust trial, reports The Wall Street Journal. Products leaked, generated high formaldehyde levels and lacked the nicotine smokers were looking for, according to their testimonies.
In April 2020, the Federal Trade Commission (FTC) sued to unwind Altria’s 35 percent interest in Juul Labs, which the cigarette maker acquired in December 2018 for $12.8 billion.
A key question at trial is why Altria ended production of its own e-cigarettes in late 2018, shortly before announcing its investment in Juul.
Altria in October 2018 announced it was halting the sale of its pod-based and fruity-flavored e-cigarettes in response to a call by the Food and Drug Administration for e-cigarette makers to help stem a surge in vaping among children and teens. Then in December of that year, two weeks before the Juul agreement was signed, Altria pulled its remaining e-cigarettes off the market.
The FTC alleges Altria did so because of an illegal side deal in which it agreed to close its own e-cigarette business so it could take a stake in Juul. Altria and Juul both deny they had any such agreement.
Altria says it halted its e-cigarette sales amid pressure from regulators to curb youth use and an internal reckoning about the company’s inability to develop a successful vaping product. Juul says it didn’t see Altria’s e-cigarettes as a threat, didn’t ask Altria to shelve them and was surprised when Altria did so.
Juul and Altria argue that since the deal was struck, competition in the e-cigarette market has increased not decreased. Juul’s market share has fallen as have e-cigarette prices.
The FTC is seeking to force Altria to divest its stake and terminate the companies’ noncompete agreement. The case is being heard by an administrative law judge, who will make an initial decision; the agency’s commissioners will then vote on the matter.
June 24, 2021
Plaintiffs Sought in RLX Technology Class-Action Suit
Wolf Haldenstein Adler Freeman & Herz LLP are now seeking additional plaintiffs for a federal securities class action lawsuit that has been filed in the United States District Court for the Southern District of New York on behalf of investors that purchased RLX Technology Inc. The lawsuit was filed by Glancy Prongay & Murray LLP on behalf of investors.
The filed complaint alleges that the Registration Statement misrepresented and omitted, among other things, RLX’s exposure to China’s then-existing campaign to establish a national standard for e-cigarettes that would bring them into line with regular cigarette regulations, according to a press release.
“The truth was revealed when draft regulations were posted by the Ministry of Industry and Information Technology, before the market opened on March 22, 2021, eight weeks after RLX’s IPO, which confirmed e-cigarettes and new tobacco products would be regulated similar to traditional tobacco offerings,” the release states.
Following the news out of China, the price of RLX’s shares suffered an enormous decline. On March 22, 2021, RLX’s ADR closed at $10.15 per share, down nearly 48 percent from its previous close of $19.46 on March 19, 2021, the previous trading day.
June 21, 2021
Class-Action Lawsuit Filed by RLX Investor
RLX Technology is facing a class-action lawsuit started by an investor who claims the Chinese e-cigarette manufacturer overstated its financials and misrepresented potential regulatory risks when it filed the paperwork for its initial public offering (IPO) in the U.S.
Credit: Zerbor
The lawsuit, submitted Wednesday by shareholder Alex Garnett in the U.S. District Court for the Southern District of New York, alleges RLX’s registration statement from last October omitted the impact of ongoing efforts by Chinese regulators to tighten sales of electronic cigarettes, according to an article in The Wall Street Journal.
The case is captioned Garnett v. RLX Technology Inc., No. 21-cv-05125, and is assigned to Judge Paul A. Engelmayer. The RLX Technology class-action lawsuit charges that the company, certain members of its officers and directors, and the underwriters of its IPO with violations of the Securities Act of 1933.
Companies under rules established by the U.S. Securities and Exchange Commission have to disclose any known events or uncertainties that at the time of an IPO caused or were likely to not represent future earnings. RLX stock fell sharply in March after Chinese authorities announced their intent to more heavily regulate the Chinese vapor market. Garnett filed the lawsuit on behalf of other RLX investors.
The lawsuit alleges investors purchased RLX shares at artificially inflated prices, in part because the company omitted and misrepresented information in the registration statement. As the stock price dropped, RLX investors lost hundreds of millions of dollars, the lawsuit states.
At least two other law firms in recent weeks said they are investigating on behalf of investors to determine whether RLX failed to disclose relevant information to investors. Rosen Law Firm and Bronstein, Gewirtz & Grossman, among others, are reportedly seeking RLX investors who want to join the class-action suit.
RLX on June 2 reported revenue of CNY2.4 billion ($366.1 million), for the quarter ended March 31, up from CNY368.6 million the prior-year period. The company booked a net loss of CNY267 million, compared with a profit of CNY12.1 million during the prior-year quarter.
June 11, 2021
SCOTUS Denies Big Time Vapes a Review of Ruling
It’s over. After winding it’s way through the court system for nearly two years, the Supreme Court of the United States (SCOTUS) has denied Big Time Vapes a request for a writ of certiorari.
Credit: Sean Pavone Photo
On August 19, 2019, Big Time Vapes and United States Vaping Association, an e-cigarette manufacturer and an e-cigarette trade association, filed suit in the U.S. District Court for the Southern District of Mississippi challenging the constitutionality of the U.S. Food and Drug Administration’s (FDA) authority over vaping products.
The original complaint was dismissed by the U.S. District Court in December 2019, and failed on appeal in the Fifth Circuit Court of Appeals last year. On June 25th, 2020, the Court of Appeals issued its opinion, finding that Congress’ delegation of authority to the Secretary of Health and Human Services to deem additional products subject to the Tobacco Control Act is not unconstitutional, upholding the district court’s decision.
The nation’s highest court referred the case back to a lower court. Since the court did not accept the petition, the lower court’s decision will stand. SCOTUS accepts 100-150 of the more than 7,000 cases that it is asked to review each year, according to its website. It’s is the first petition for a case involving e-cigarettes to be considered by SCOTUS.
The suit challenges the Tobacco Control Act, claiming that Congress unconstitutionally ceded its legislative authority to the FDA when it gave the agency the power to “deem” products as tobacco products that were not specified in the 2009 legislation.
The FDA argued the Tobacco Control Act is constitutional, however, as “Congress laid out intelligible principles with appropriate boundaries for FDA to apply.” The FDA has also cited the public health issues posed by e-cigarettes, particularly to children, in defending the its authority to regulate the industry.
June 7, 2021
Altria, Juul Labs Antitrust Suit Continues This Week
The Altria Group antitrust trial continues this week over allegations made by the Federal Trade Commission (FTC) that company participated in anticompetitive practices ahead of its 2018 investment in e-cigarette startup Juul Labs.
Credit: Steheap
In opening remarks on Wednesday, the FTC argued that Altria pulled its vaping products off the U.S. market illegally at the insistence of Juul as the two companies were discussing a deal. Altria argued that its e-cigarettes were failures, and it jettisoned them amid regulatory pressure and an internal reckoning about the company’s inability to develop a vaping product that consumers liked, according to the Wall Street Journal.
If the FTC prevails, it could unwind Altria’s 35 percent interest in Juul Labs, which Altria bought in December 2018 for $12.8 billion. The agency is seeking to force Altria to divest its stake and terminate the companies’ noncompete agreement. The case is being heard by an administrative law judge, who will make an initial decision; the agency’s commissioners will then vote on the matter.
The FTC in April of last year sued to unwind the deal. The trial is taking place via teleconference at the agency’s office of administrative law judges. A key question at trial is why Altria, when it was in talks with Juul, stopped selling its own e-cigarettes. Altria’s explanations for exiting the e-cigarette market were pretexts, FTC attorney Stephen Rodger said in his opening remarks Wednesday. “But for the transaction, Altria would still be competing with [Juul] today.”
June 7, 2021
Altria, Juul Likely to Face Suit Over $13 Billion Deal

Photo: jessica45 | Pixabay
Altria Group and Juul Labs will likely face a proposed antitrust action seeking to unwind a $12.8 billion deal that gave the tobacco giant a 35 percent stake in the vapor company, reports Bloomberg Law, citing a “tentative” ruling by a federal judge in San Francisco.
Judge William H. Orrick indicated Wednesday that he’s inclined to let most of the lawsuit move forward in the U.S. District Court for the Northern District of California, where it was consolidated after dozens of antitrust plaintiffs sued over deal clauses calling for Altria’s exit from the vaping market.
The Federal Trade Commission has also sued over the Altria-Juul transaction.
April 23, 2021
Kandypens Ordered to Pay $1.2 Million for Marketing to Youth
California-based vaping company Kandypens was ordered to stop targeting youth in its marketing and pay $1.2 million for past violations, Los Angeles County City Attorney Mike Feuer said. Feuer’s office had sued Kandypens in 2018 for marketing its vaping devices and e-liquids at young people through social media and by placing their products in music videos featuring artists like DJ Khaled and Justin Bieber, according to CBS News.
“Tobacco products including flavored e-liquids, hook kids and pose a threat to their health,” Feuer said in a statement. “The message from this victory to the vaping industry is clear: don’t sell or market to kids – we’ll hold you accountable.”
The lawsuit had alleged Kandypens targeted young consumers on YouTube and Instagram, and did not restrict access to its social media advertisements to people 21 and over, and had paid to get their products into the music videos of artists who have a large following of young people, in violation of the state’s Unfair Competition Law, the Stop Tobacco Access To Kids Enforcement, or STAKE, Act; and Proposition 65.
An investigator with the City Attorney’s Office was able to purchase a tobacco products from the Kandypens website while posing as a teenage customer using a fake email account and a prepaid gift card. Feuer alleges the company did not ask for a date of birth or verify the age of the customer, in violation of the STAKE Act.
April 20, 2021
Judge: ‘No Party Shall Vape’ During Juul Labs Depositions
A California magistrate judge said vaping would be off-limits during upcoming depositions in multidistrict litigation against Juul labs. The suits allege that the e-cigarette manufacturer intentionally marketed product to teens, according to law360.com. Judge Jacqueline Scott Corley wrote that the court “confirms that no party shall vape during deposition questioning.” She added that individuals who vape can take however many breaks as they need. “These breaks shall not count against the presumptive seven-hour deposition limit.”
Credit: Insurance Journal
The actions include putative class actions, actions on behalf of school districts and other governmental entities, and individual personal injury cases. The lawsuits allege that Juul Labs “marketed its JUUL nicotine delivery products in a manner designed to attract minors, that [Juul Labs] marketing misrepresents or omits that JUUL products are more potent and addictive than cigarettes, that JUUL products are defective and unreasonably dangerous due to their attractiveness to minors, and that [Juul Labs] promotes nicotine addiction.”
North Carolina was the first state to sue Juul over accusations that it targets underage youths with its products. Most specifically, the NC Attorney General’s office accuses Juul of violating the state’s Unfair and Deceptive Trade Practices Act.
March 26, 2021
2 Cases Ask SCOTUS to Take Away FDA’s Vapor Rules
The litigants in two lawsuits challenging the constitutionality of the the U.S. Food and Drug Administration’s (FDA) Deeming Rule for vapor products have asked the Supreme Court of the United States (SCOTUS) to take up the cases.
The cases are Big Time Vapes, Inc., et al. v. FDA, and Moose Jooce, et al. v. FDA.
Attorneys for the plaintiffs in the Moose Jooce case filed a petition for writ of certiorari, a request to have the U.S. Supreme Court consider the case. On February 26, 2021, the Moose Jooce challengers filed their petition asking the Supreme Court to take up questions related to their challenge to the Deeming Rule under the “Appointments Clause” in Article II, § 2 of the Constitution.
The plaintiffs claim that FDA acted improperly because the person that issued the deeming regulations was not qualified to do so per the Appointments Clause. In this case, the rule was issued by Leslie Kux, the associate commissioner for policy, and not the commissioner himself, according to an attorney for Troutman Pepper.
FDA has argued that the commissioner—in both 2016 and 2019—ratified the regulations. Both the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the District of Columbia have ruled against plaintiffs in the Moose Jooce case. The district court and court of appeals held that these circumstances did not render the Deeming Rule invalid. The plaintiffs are represented by the Pacific Legal Foundation.
In the Big Time Vapes case, the challengers petitioned the Supreme Court for a writ of certiorari on December 18, 2020. The case involves the claim that the statute purportedly authorizing the Deeming Rule is an unconstitutional delegation of Congress’ legislative power.
The challengers in the Big Time suit initiated their case in the U.S. District Court for the Southern District of Mississippi. The court granted the FDA’s motion to dismiss and denied the challengers’ motion for preliminary injunction and the Fifth Circuit affirmed the decision.
There is no guarantee that the Supreme Court will take up these cases. According to the Administrative Office of the U.S. Courts, the court accepts 100-150 of the more than 7,000 requests it receives each year.
The FDA will have the opportunity to respond to the challengers’ petitions before the Supreme Court acts on them. Review “is not a matter of right, but of judicial discretion,” and the petitions “will be granted only for compelling reasons.”
Currently, vapor businesses are still subject to the Deeming Rule.
March 9, 2021
VPR Files 3 More Suits for Auto-Draw IP Infringement
VPR Brands has filed lawsuits against three more vapor companies for violating its “auto draw” patent. The company filed a lawsuit against three previous companies in February. The company owns intellectual property rights for one of the original patents filed for electronic cigarette technology.
Credit: VPR
The patent dates back to 2009 and includes independent claims covering vaping products containing an electric airflow sensor, including a sensor comprised of a diaphragm microphone. The sensor turns the battery on and off, and covers auto-draw, button less e-cigarettes, cigalikes, pod devices and vaporizers using an airflow sensor.
“Just this week we have filed three additional lawsuits which brings the total to six with many more expected and likely as almost every company in the vape space has at least one product which uses the Patented “auto draw” technology.” said Kevin Frija, CEO of VPR Brands. “We will be aggressively pursuing every company infringing on our patent no matter how small or how large they maybe.”
VPR Brands along with SRIPLAW has started to identify and notify over 50 of the leading companies. These companies were prioritized, based on sales volume and popularity. Most recently VPR Brands LP and its legal team, headed by Joel B Rothman of SRIPLAW, have filed litigation against Mong LLC, B&G Trading LLC, and Lightfire Holding LLC. The three previous suits were filed against Jupiter Research, Cool Clouds Distribution and XL Vape.
“We want to make sure VPR Brands Patent which is valid until 2030 is enforced and our Intellectual property rights are protected,” said Frija. “We intend to send a clear message to the industry that we mean business and of course, as they say, “business is business” it’s nothing personal, in the end its just business.”
March 7, 2021