(August 26, 2019) – Juul must face an e-cigarette lawsuit filing, a California federal judge ruled on August 23. The company can trim some claims in a proposed class action lawsuit that alleges Juul deceptively advertised the nicotine content in its e-cigarette products. The company cannot, however, escape all the litigation, the judge ruled. Juul also cannot keep the legal claims out of the public eye, behind closed doors in arbitration.
U.S. District Judge William H. Orrick ruled that a group of 13 e-cigarette users in seven states, including three minors, can move forward with the majority of their claims that Juul Labs Inc. deceptively advertised the amount of nicotine in its e-cigarette product.
Two Claims Dismissed
The judge did dismiss two claims without leave for complaint amendment. The plaintiffs’ negligence per se claim was tossed, based on a lack of Juul’s failure to obtain licenses to sell its products in certain states. He ruled the class failed to identify a standard of care contained in any of the state licensing statutes which they cited in the lawsuit petition.
The judge also tossed the plaintiffs’ breach of express warranty claim, finding that Juul’s one-year warranty covers only defects in materials and workmanship related to the e-cigarette device. He ruled the warranty doesn’t cover the pod that contains nicotine.
High Nicotine Content not divulged
The class claims in its lawsuit that Juul’s e-cigarettes contain 20% more nicotine than the product labeling claims. This false advertising and labeling, they say, influenced them to buy and use the products in the hopes of quitting smoking. In reality, the products actually gave them more nicotine than if they had continued smoking traditional cigarettes.
Judge Orrick rejected Juul’s argument that the plaintiffs have attempted to reallege preempted labeling claims in breach of his prior order in October, which dismissed some of the class’ previous warning label claims.
Claims Based on Advertisements are alive
The judge denied Juul’s motion to strike allegations related to its point-of-sale displays. He found the plaintiffs’ consumer protection claims were not based on labeling, but on advertisements. He said his prior order held that claims based on advertisements were not preempted.
Judge Orrick cited the case of Fontem US Inc. when he wrote his opinion: “Other courts have considered arguments similar to Juul’s concerning POS displays and concluded that POS displays do not constitute labeling because they are ‘not attached to the immediate container of a product and will not accompany the product during the period of use.’”
The judge also denied Juul’s motion as to the plaintiff’s claim of misrepresentation about the amount of nicotine in the e-cigarettes. He rejected Juul’s argument that the class hadn’t plausibly alleged their claim. Juul argued that because nicotine risks are well known, Juul has no duty to warn beyond U.S. FDA labeling requirements and California’s Prop 65 requirement.
The judge, however, found the plaintiffs sufficiently alleged a claim regarding Juul’s claim that one pod contains as much nicotine as a pack of cigarettes.
Twice the Nicotine of a Cigarette Pack
The judge wrote: “Although the dangers of nicotine are known to the community, it would go too far to say that Juul need not warn consumers that using Juul’s product will cause their bodies to absorb twice as much nicotine as they would from a pack of cigarettes.”
False Advertising, Fraud, Unjust Enrichment, other Claims. . .
The judge also allowed the plaintiffs to move forward with their false advertising, fraud, unjust enrichment, design defect, manufacturing defect, negligent marketing, breach of implied warranty, and deceptive trade practices’ claims.
No Binding Arbitration
Judge Orrick also denied Juul’s motion to compel arbitration against five of the plaintiffs. He found that because the plaintiffs did not have actual notice of an arbitration provision included in the terms and conditions of Juul’s website when they created or logged into their accounts, they are not bound by the provision.
HiddenTerms & Conditions
The plaintiffs pointed out that the hyperlink to read Juul’s terms and conditions is inconspicuous and wasn’t a different color, underlined, italicized, or made visually distinct in any other way from the surrounding text.
Judge Orrick agreed, calling the hyperlink “wholly indistinguishable” from the text. He wrote: “Users cannot be reasonably expected to click on every word of the sentence in case one of them is actually a link.”
Juul also faces a proposed class action in Florida federal court which claims the company tailors its advertising to appeal to minors and hides the high amounts of nicotine that users get from Juul products. Juul is also one of several e-cigarette makers to receive an ultimatum from the FDA to propose solutions to the epidemic of youth e-cigarette use within 60 days.
Juul told Law360 it was pleased Judge Orrick partially granted its motion. Juul said it isn’t allowed to present any evidence at this stage and that the court is obligated to treat the plaintiffs’ allegations as true. Juul also said it “respectfully disagrees” with the judge’s ruling on its motion to compel arbitration and said it is considering whether to appeal that issue.
Juul must face e-cigarette lawsuit filing
The case is Colgate et al. v. Juul Labs Inc., case number 3:18-cv-02499, in the U.S. District Court for the Northern District of California.
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