Juul Labs Inc. has agreed to pay $1.2 billion to settle approximately 10,000 lawsuits accusing the e-cigarette maker of being a major cause of a youth vaping epidemic in the United States, according to people familiar with the matter.
The agreement, which has not yet been finalized, was announced on Tuesday, but no dollar amount was given. According to the people, the agreement aims to resolve all personal-injury, class-action, and school-district claims against Juul that have been gathered before a judge in California for pre-trial information exchanges.
The proposed settlement comes as the embattled e-cigarette manufacturer likely avoided bankruptcy last month thanks to a cash infusion from long-term investors and the layoff of hundreds of workers to cut costs. The company announced earlier this week that the new financing will cover the settlement.
Arik Ben-Zvi, a Juul spokesman, declined to comment on the settlement on Friday. If enough injured plaintiffs and school districts sign on, the multi-district litigation (MDL) case that has been before US District Judge William Orrick in San Francisco since 2019 would be mostly resolved. The settlement must be approved by Orrick.
According to a release issued earlier this week by the San Francisco-based Lieff Cabraser law firm, which is representing the plaintiffs, the Juul settlements include over 8,500 personal injury cases, over 1,400 governmental-entity cases, and 32 tribal cases.
The specifics of who is eligible to participate in the settlement are still being worked out, according to the people. According to a form letter issued by plaintiffs’ lawyers leading the litigation, personal-injury claimants, for example, will learn in February how much they can expect to receive.
“At this time, we can advise that eligible plaintiffs will receive a minimum of $1,000 gross (before attorneys’ fees, costs, and any liens are deducted) and that the gross value of the majority of claims in the settlement program is expected to be significantly higher,” the letter said.
Juul was hit with a slew of lawsuits accusing the company of failing to warn consumers about the dangers of vaping and illegally marketing nicotine-delivery devices to minors. School districts across the United States have sued the company, which was once backed by tobacco company Altria Group, for causing a “public nuisance” by marketing to children. District officials say vaping disrupts classes.
San Francisco Unified School District officials, who sued Juul over its vaping marketing, said Thursday that they were “very pleased” with the settlement. According to CDC research, 16% of San Francisco high school students surveyed in 2019 reported using vapes, compared to 7.1% of SF high school students in 2017.
Altria paid $12.8 billion for a 35% stake in the e-cigarette company, which has since been written down to $1.5 billion. According to the CDC, vaping-related lung injuries have been linked to more than 60 deaths and 2,700 hospitalizations.
The $1.2 billion agreement comes as states finalize a separate $439 million settlement over the e-cigarette manufacturer’s marketing and sales practices, particularly those aimed at children. As part of the agreement, Juul agreed in September to accept strict limits on its marketing campaigns.