Henrico Fortune 500 corporation owned 35% stake in e-cig co.
Henrico Fortune 500 corporation owned 35% stake in e-cig co.
Kate Andrews// May 10, 2023//
Henrico County-based Altria Group Inc. has settled at least 6,000 state and federal lawsuits related to Juul Labs Inc. for $235 million, the Fortune 500 tobacco manufacturer announced Wednesday. The settlements will be paid in the second quarter of 2023.
Altria purchased a 35% stake in e-cigarette company Juul for $12.8 billion in 2018. Months after Altria’s investment, Juul’s value fell under an avalanche of civil lawsuits over accusations that its products were being marketed to minors, leading to widespread vaping addiction among teens; Juul settled many of the suits last year.
According to Altria’s announcement Wednesday, approximately 50 class-action lawsuits, 4,500 personal injury suits, 1,500 governmental entity actions and 1,400 school district cases, as well as 750 state lawsuits, have been consolidated and are included in the $235 million settlement, although the parties to the lawsuits must sign final settlement agreements. The settlement does not apply to three cases brought by state attorneys general, 35 cases brought by Native American tribes, 17 antitrust cases or three Canadian cases, Altria said.
In September 2022, Virginia was among 33 states and Puerto Rico that settled with Juul; Virginia is set to receive $16.61 million over the next six to 10 years, the attorney general’s office said at the time. The state’s lawsuit did not name Altria as a plaintiff, so Virginia is not included in Wednesday’s settlement.
“While we continue to believe the claims against us are meritless, we believe this settlement avoids the uncertainty and expense of a protracted legal process and is in the best interest of our shareholders,” Murray Garnick, Altria’s executive vice president and general counsel, said in a statement. “This settlement brings to a close the vast majority of our pending Juul-related litigation.”
The Wednesday statement noted that the settlement amount will be treated as a special item that will be excluded from adjusted diluted earnings per share.
The plaintiffs’ attorneys in the 6,000 consolidated lawsuits said in a statement Wednesday that the settlement brings to a close four years of extensive litigation.
“To call this global settlement with Altria momentous is an understatement,” Lieff Cabraser partner Sarah R. London, co-lead counsel for the plaintiffs, said. “Unprecedented in speed of attainment, scope and impact, it will provide extraordinary and truly meaningful relief for youth, parents, and governmental organizations nationwide in a comprehensive resolution that avoids the delay of further trial and possible appeals, bringing closure to litigation brought on behalf of children, teens, young adults, parents, schools, health departments and, really, on behalf of everyone across the nation.”
In September 2022, Altria ended its noncompete deal with Juul, and in March, the corporation exchanged its investment in Juul — which fell from $12.8 billion in 2018 to $250 million in December 2022 — for some of its heated tobacco intellectual property. Altria had already moved on from the disastrous deal last fall, after signing a partnership with Japan Tobacco Group, in which Altria subsidiary Philip Morris USA purchased a 75% economic interest for $150 million in October 2022.
In March, Altria entered into a definitive agreement to acquire e-vapor maker NJOY Holdings Inc. for about $2.75 billion in cash, with a potential additional $500 million in payments. Part of the funding of the deal will come from an expected $1.7 billion payment plus interest from Philip Morris International Inc. by July, the company said in March.
On March 6, Altria’s attorneys asked the Federal Trade Commission to drop its 2020 antitrust challenge of Altria’s 35% stake in Juul Labs, since Altria had exited the investment, but the matter is still pending, according to FTC documentation. As of 3:45 p.m. Wednesday, Altria’s stock was at $45.95 a share, down 1.03% from the start of trading.
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