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`EXHIBIT 5
`EXHIBIT 5
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`Juul to Pay $40 Million to Settle N. C.
`VapingCase
`The settlement is the first in a streai11 of la suits against the
`compan
`l ich has been accused of decepti e n1ai-keting
`practices that contributed to a a\ e of nicotine addiction in
`teenagers.
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`Jeenah Moon for The New York Times
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`By Sheila Kaplan
`June 28, 2021
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`Juul Labs has agreed to pay North Carolina $40 million to settle the first of a spate of lawsuits brought
`by states and localities claiming the e-cigarette company’s marketing practices fueled widespread
`addiction to nicotine among young people and created a new public health problem.
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`The settlement, which was announced on Monday morning, allows the company to avoid a jury trial
`this summer as the Food and Drug Administration is deciding whether its vaping products can stay on
`the market.
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`The company had urgently sought the settlement, but the deal removes just one of numerous legal
`actions pending against it. Thirteen other states, including California, Massachusetts and New York,
`as well as the District of Columbia, have filed similar lawsuits. The central claim in each case is that
`Juul knew, or should have known, that it was hooking teenagers on pods that contained high levels of
`nicotine.
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`Nearly 2,000 other cases filed by cities, counties, school districts and other plaintiffs in federal courts
`have been combined into multi-district litigation overseen by a single federal judge, similar to what’s
`been done with cases against prescription opioid makers, distributors and retailers.
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`Beyond the litigation, a group of 39 attorneys general from both Republican- and Democratic-led
`states, led by Ken Paxton, the attorney general of Texas, have been investigating Juul’s marketing
`and sales practices for over a year.
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`“For years, Juul targeted young people, including teens, with highly addictive e-cigarettes,” Josh Stein,
`the North Carolina attorney general, who sued the company in May 2019, said in a statement
`announcing the settlement. “It lit the spark and fanned the flames of a vaping epidemic among our
`children — one that you can see in any high school in North Carolina.”
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`But the company was able to reach the settlement deal without admitting to the allegations, one of its
`chief goals in the face of the other lawsuits and the F.D.A. review.
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`In Juul’s statement, Joshua Raffel, a company spokesman, said: “This settlement is consistent with
`our ongoing effort to reset our company and its relationship with our stakeholders, as we continue to
`combat underage usage and advance the opportunity for harm reduction for adult smokers.”
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`E-cigarettes and other vaping products were initially conceived to be a less harmful alternative to
`combustible cigarettes, which are linked to the deaths of about 480,000 people in the United States
`each year. But Juul’s sleek high-tech-looking device, advertised in its 2015 launch with young, hip-
`looking people on billboards and in social media, quickly caught on with teenagers and young adults
`who had never smoked.
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`Over the next few years, e-cigarette use among high-school students began to soar, and in 2018, the
`F.D.A. commissioner declared an epidemic of teen vaping in the United States.
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`Although e-cigarettes do not contain the carcinogens that burning tobacco creates, scientists and
`public health officials worry about their potential health effects on young people. Some research shows
`nicotine could impair the developing brain, for example, and addiction to it could lead users to move
`to regular cigarettes, some people fear.
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`Juul had urgently sought a settlement in the North Carolina trial, which was set for July 12 and would
`have put Juul in court, dealing with testimony from parents and children, while the F.D.A. was deciding
`its fate, which must be done by early September.
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`The money, which will be paid out over six years, will be used to fund programs that will help people
`quit e-cigarettes, prevent e-cigarette addiction and research e-cigarettes.
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`The settlement also requires Juul to sell its products from behind the counter in North Carolina stores,
`and to use third-party age verification systems for online sales. The order commits Juul to sending
`young “mystery shoppers” to 1,000 stores each year, to check whether they are selling to minors. It
`also bans the company from using models younger than 35 in advertisements and states that no
`advertisements should be posted near schools.
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`Carl Tobias, a law professor at the University of Richmond, who teaches product liability, said the
`settlement bodes well for the other states suing Juul.
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`“This opens a similar possibility to every state going forward,” he said. “North Carolina has been in the
`vanguard and deserves some credit. I think this has huge financial and other implications.”
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`Mr. Tobias said he was not surprised that Juul did not admit to wrongdoing.
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`“That almost always happens in these kinds of settlements — that’s a standard clause,” he said.
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`Juul has not begun other serious settlement talks, however, because none of the other 2,600 lawsuits
`against the company have been scheduled to begin during 2021. The company is waiting for the F.D.A.
`ruling before deciding how to move forward. If the F.D.A. will permit Juul’s products to stay on the
`market to help adult smokers quit, industry executives believe the company’s negotiating stance will
`be strengthened.
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`But settling with numerous plaintiffs would be expensive. Juul has seen sales plummet during the past
`year, analysts say. The company is private so does not disclose its financial data.
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`Marc Scheineson, a lawyer with Alston & Bird, whose practice includes small tobacco companies,
`called the $40 million in the North Carolina settlement “a relatively small sum to pay to avoid mounting
`legal fees and the plaintiff pile-on syndrome.”
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`He also noted that most of the steps Juul agreed to take in the consent degree, such as not advertising
`near schools and behind-the-counter sales, are actions that it has already taken in an effort to gain
`public favor. Mr. Scheineson also said that electronic nicotine delivery products, such as Juul, “still
`have an important public health use by adults as a proven effective tool to quit smoking more harmful
`cigarettes.”
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`Juul faces other legal threats, too. The Federal Trade Commission is suing Juul, along with the big
`tobacco company Altria and related parties, seeking to unwind the 2018 deal that gave Altria 35
`percent of Juul. Altria, the maker of Marlboro cigarettes, paid $12.8 billion for that stake, but it has
`since written down the value of the investment to $1.5 billion.
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`The commission says that the two companies entered into a series of agreements, including Altria’s
`investment, that eliminated competition in violation of federal antitrust laws. The F.T.C. also claims
`that Altria and Juul started as competitors in the e-cigarette market, but that as Juul became more
`popular, Altria dealt with the threat by taking its own Mark Ten e-cigarette off the market in exchange
`for a share of Juul’s profits. Both Altria and Juul have denied the charges.
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`The multi-district federal litigation in U.S. District Court for the Northern District of California
`consolidates cases on three tracks: personal injury, which includes plaintiffs claiming addiction, lung
`injuries and other health problems; a consumer class action track, claiming that individuals paid too
`much for a product that addicted them; and a government entity track, consisting of school districts
`and counties seeking monetary reimbursement for vaping-relating damages. Investors in Juul, like
`Altria and other entities, are also involved. Depositions have begun, and the first case is scheduled to
`go to trial in February 2022.
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`Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, called the North Carolina
`settlement a positive step that puts Juul under the same marketing restrictions that already apply to
`other tobacco companies, with some added sales restrictions and protection against the use of social
`influencers.
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`“But,” he added, “these measures will not solve the youth e-cigarette crisis. Nothing short of F.D.A.
`action will reverse the youth e-cigarette epidemic.”
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`Sheila Kaplan is a prize-winning investigative reporter who covers the Food and Drug Administration, the
`tobacco industry and the intersection of money, medicine and politics. @bySheilaKaplan
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`A version of this article appears in print on June 29, 2021, Section A, Page 1 of the New York edition with the
`headline: Juul Will Settle 1st Vaping Suit For $40 Million
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`https://www.nytimes.com/2021/06/28/health/juul-vaping-settlement-north-carolina.html
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