People v. JUUL Labs.

• Decision Date: 05 July 2022
• Docket Number: Index No. 452168/2019,Motion Seq. No. 6
• Citation: 2022 NY Slip Op 32121 (U)
• Parties: THE PEOPLE OF THE STATE OF NEW YORK BY LETITIA JAMES, Plaintiff, v. JUUL LABS, INC., JAMES MONSEES, ADAM BOWEN, NICHOLAS PRITZKER, RIAZ VALANI, HOYOUNG HUH Defendant.
• Court: New York Supreme Court

2022 NY Slip Op 32121(U)

THE PEOPLE OF THE STATE OF NEW YORK BY LETITIA JAMES, Plaintiff,
v.
JUUL LABS, INC., JAMES MONSEES, ADAM BOWEN, NICHOLAS PRITZKER, RIAZ VALANI, HOYOUNG HUH Defendant.

Index No. 452168/2019, Motion Seq. No. 6

Supreme Court, New York County

July 5, 2022

Unpublished Opinion

MOTION DATE 02/15/2022

DECISION + ORDER ON MOTION

HON. MARGARET CHAN, J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 006) 76, 77, 103, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 183, 192, 193, 194, 228, 229, 239, 240 were read on this motion to/for DISMISS

This action commenced by the People of the State of New York by the New York State Office of the Attorney General (the State) arises from defendants' alleged deceptive, unfair, and illegal practices in designing, marketing, and distributing electronic nicotine delivery system (ENDS) products. Defendant JUUL Labs, Inc. (JUUL) moves pursuant to CPLR 3211 for an order dismissing the State's Amended Complaint (Amended Complaint). The State opposes the motion.

Background

JUUL is a San Francisco-based electronic cigarette company that makes an ENDS consisting of an electronic cigarette (JUUL device) and a one-time use nicotine cartridge called a JUULpod. Since 2015, JUUL has manufactured, promoted, advertised, distributed, and sold its products in New York State (NYSCEF # 53-Amended Complaint, ¶ 20). The remaining defendants in this action are JUUL's current and former officers James Monsees and Adam Bowen, and JUUL's current and former directors Nicholas Pritzker, Riaz Valani, and Hoyoung Huh (together, individual defendants) (id., ¶ l), who have filed separate motions to dismiss. The following facts are derived from the State's Amended Complaint and are accepted as true for purposes of the motion.

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The State alleges that beginning in mid-2015, JUUL adopted the strategies previously used by large tobacco companies to market products to youth (id., ¶¶ 34-37, 41). Briefly, the State alleges that JUUL launched its "Vaporized" marketing campaign, sold fruity and sweet flavored JUULpods, and used bright and colorful advertisements featuring sexy, youthful, and hip users of its products to appeal to young and underage demographics while misleading consumers about the safety, healthiness, and nicotine content of its products including falsely representing that its products could be used therapeutically as smoking cessation devices (id., ¶¶ 34-43, 55-76). The State alleges that New York was central to JUUL's product launch and marketing campaign. As a result, the people of the State of New York were harmed by a public nuisance that led to a statewide "public health crisis" or a "teen vaping epidemic" (id., ¶¶ 52-54, 160). And by targeting the youth market, JUUL was "addicting a new generation of consumers to nicotine" (id., ¶ 35).

JUUL's design and Savors. With the JUULpod inserted, a JUUL device is about three and one-half inches in length and about the size and shape of a USB drive, and it can fully charge via USB port in one hour (id., ¶ 7). The sleek USB-look of a JUUL device, as alleged by the State, could be easily concealed in a consumer's hand or pocket (id., ¶ 63). Unlike a combustible cigarette, when used, a JUUL device heats the liquid nicotine contained in the JUULpod to release nicotine and other chemicals in aerosol particles, which a consumer then inhales (id, ¶ 7).

Since 2015, JUUL has developed fruity and sweet-tasting flavors for liquid nicotine (id., ¶ 36). The State alleges that, to appeal to young and underage consumers, JUUL gave the flavors fun names such as "Cool Cucumber," "Creme Brulee," "Fruit Medley," and "Cool Mint," and advertised them in its social media posts with slogans such as "Make it a Mango Monday" and "Fruit Friday" (id., ¶¶ 36, 58). The State also refers to two JUUL-sponsored studies, which reveal that those fruity and sweet flavors, together with the mint flavor, are among the most attractive flavors to youth in electronic cigarette use (id., ¶ 87). In response to the Food and Drug Administration (FDA)'s increasing concerns about the prevalence of youth vaping problems, JUUL ended its sale of flavored JUULpods in late 2018 and removed the mint flavor from the market in late 2019 (id., ¶¶ 88, 90).

JUUL's product launch and marketing campaign. JUUL has designed and used bright and colorful advertisements on websites, magazines, and its social media posts. The State alleges that in addition to marketing those flavored products, the advertisements also contain "flashy images of young people looking hip, cool, and sexy while holding their JUUL devices" and were "full of bright colors, funky patterns, and attractive, young models. . . . The ads portray JUUL as a hip and fun brand for millennials and young people" (id, ¶¶ 36-37, 41).

In 2015, to launch its products, JUUL started a multifaceted "Vaporized" marketing campaign and hosted multiple product launch events in New York. The

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State alleges that JUUL branded itself on magazines and social media platforms widely used by adolescents with the hashtag "#Vaporized," using stylish young models, bold colors, and memorable imagery (id., ¶¶ 39-41). As part of the "Vaporized" campaign, JUUL also advertised its products on its Times Square video billboards in midtown Manhattan (id., ¶ 42). Additionally, JUUL promoted itself via an email subscription list that was not age-restricted (id., ¶¶ 46, 83).

According to the Amended Complaint, JUUL's in-person marketing campaign in New York primarily involved product launch parties and outreach efforts to high school students. The State alleges that in 2015 JUUL invited young and underaged celebrities and influencers to its launch parties, with youth-focused invitations circulated on social media platforms, and it also recruited young people as "brand ambassadors" to distribute JUUL products without requiring proof of age (Id. ¶¶ 43-47). The State adds that JUUL directly reached out to high schoolers in New York and gave presentations that largely consisted of propaganda and promotion of JUUL (id, ¶¶ 48-49), during which a JUUL representative assured that JUUL products are "totally safe" and "a safer alternative than smoking cigarettes" (id., ¶ 50). The JUUL representative also allegedly represented that JUUL products were in FDA approval at that time and that "the FDA was about to come out and say that JUUL was 99% safer than cigarettes" (id, ¶ 51).

JUUL's safety statement. Nicotine is an addictive substance and particularly dangerous for young people in their brain development (id., ¶ 56). The State alleges that JUUL failed to mention nicotine or its harmful effects in its advertisements and social media posts until approximately 2017 and failed to do so in its promotional emails until April 2016 (id., ¶¶ 57-58). In addition, the State alleges that JUUL took many steps to deceptively suggest that its products were safer than traditional cigarettes and could be used therapeutically as smoking cessation devices, including its focus on the use of the word "vapor" to connote cleanliness and lightness, its "#SmokingEvolved" marketing campaign, its "Make the Switch" campaign, and other misrepresentations about JUUL products' safeness (id., ¶¶ 59-61). In connection with the above, the State alleges that JUUL marketed its products as modified risk tobacco products without FDA approval (id., ¶¶ 91-97).

JUUL also declared on its website and product packaging that one JUULpod contains ~0.7 mL with 5% nicotine by weight, equivalent to about one pack of cigarettes (id., ¶¶ 67-68). The State alleges that this statement is misleading and cites studies showing that the pulmonary absorption of nicotine in JUUL products may be four times that of a combustible cigarette for reasons including that (1) the vaporized nicotine in JUUL products is easier for human body to inhale and absorb than the nicotine in cigarettes,' (2) the less throat irritation from using JUUL products will cause ingestion of more nicotine; (3) the flavored vapor can result in inhaling more nicotine; and (4) unlike a cigarette that continuously burns, all the liquid nicotine in a JUULpod could be inhaled and consumed (id., ¶¶ 69-74, 76). The

3

State also points to other aspects of JUUL products that make vaping more accessible and frequent for consumers than smoking combustible cigarettes (id., ¶ 75).

Sale of JUUL products to underage consumers. The State alleges that JUUL offered its products for sale through its website with a deficient age verification system, allowing underage purchasers to buy JUUL products online (id., ¶¶ 79-82). The State also alleges that, until approximately August 2018, JUUL had sent mass promotional emails to hundreds of thousands of consumers who had not passed its age verification system (id., ¶ 83). Moreover, the State alleges that JUUL has sold its products to minors through retail stores in New York and continued business with retailers that failed JUUL's "shopper audit" regarding age verification practices (id., ¶¶ 84-85). JUUL counters that it had stopped selling JUUL products to New York residents through its website before the vapor-products shipping ban took effect in 2020 (NYSCEF # 77 at 9).

The practices above have led to what the State alleges a youth vaping epidemic in New York, leaving countless New Yorkers including teenagers addicted to the harmful JUUL products (Amended Complaint, ¶¶ 1-4, 52-54). The State alleges that the JUUL device became the "it" product for high schoolers to have (id). As an illustration, between 2017...