Altria subsidiary NJOY sues 34 e-vapor businesses

Henrico County-based Altria Group’s NJOY e-vapor subsidiary filed a federal lawsuit Thursday against nearly three dozen U.S. and international manufacturers, distributors and retailers of e-vapor products, claiming that the businesses are selling products that are illegal under California’s flavored vape ban.

The lawsuit, filed in the U.S. District Court of the Central District of California, accuses 34 companies — including the makers and retailers of the popular Elf Bar and Esco Bar products manufactured in China — of illegally selling fruit- and candy-flavored vaping products in California. In November 2022, California voters passed a proposition to ban all flavored tobacco products statewide, including vape tanks and menthol cigarettes.

NJOY argues in the suit that the 34 defendants are breaking California’s law, as well as federal laws and policies set by the federal Food and Drug Administration. According to the suit, “none of the defendants’ [flavored disposable vaping devices] has received premarket authorization from FDA.” The suit accuses the defendants of unfair competition, false advertising and violating the Lanham Act and the Prevent All Cigarette Trafficking Act of 2009. In addition to multiple Chinese manufacturers, other businesses included in the suit are based in Arizona, California, Delaware, Florida, Michigan, Minnesota, New Jersey, New York and Texas.

Altria said in a statement it may add other e-vapor manufacturers, distributors and retailers to the complaint.

In June, the FDA sent warning letters to retailers selling flavored e-cigarettes, including Elf Bar, and in May, the agency issued orders allowing customs officials to seize shipments of Elf Bar, Esco Bar and Breeze Smoke, which are not authorized to be marketed and sold in the United States. According to the FDA, flavored e-cigarettes appeal to youths, the basis of thousands of lawsuits against Juul Labs, the e-vapor business that Altria invested $12.8 billion for a 35% stake in 2018, shortly before an avalanche of civil litigation that led to a total ban on its products in the U.S. Ultimately, Altria settled 6,000 Juul-related lawsuits in May for $235 million.

Altria ended its noncompete deal with Juul in September 2022. With Altria’s stake in Juul worth only $250 million by the end of 2022, Altria exchanged its investment in Juul for some of its heated tobacco intellectual property in a deal that was effective March 3.

Also in March, Altria entered into a definitive agreement to acquire e-vapor maker NJOY Holdings for about $2.75 billion in cash, with a potential additional $500 million in payments.

NJOY is a competitor of the 34 defendants, and sells tobacco-flavored NJOY products in California, as well as menthol products outside the state in locations where they are legal, according to the lawsuit.

“These companies knowingly violate federal and state laws and need to be held accountable,” Murray Garnick, Altria’s executive vice president and general counsel, said in a statement Thursday. “Today there are two markets — one for those who play by the rules and one for those who flagrantly ignore them. We are taking this action because the current state of the illicit e-vapor market is intolerable, and we must see more action from FDA and others.”

The suit claims that between January 2020 and December 2022, legally sold tobacco-flavored vape products decreased retail sales from 28.4% to 20.1%, while sales of flavored products (other than mint) rose from 29.2% to 41.3% in the same period, according to a Centers for Disease Control and Prevention study released in June. The same study, which examined retail scanner data, showed that disposable flavored e-cigarettes increased their market share from 24.7% to 51.8%, but prefilled, pod-based tobacco products like NJOY ACE fell from 75.2% share to 48%.

The five top-selling e-cigarette brands for the four-week period ending Dec. 25, 2022, were Vuse, Juul, Elf Bar, NJOY and Breeze Smoke, CDC researchers reported.