Case 1:20-cv-00393-LO-TCB Document 829-3 Filed 01/21/22 Page 1 of 3 PageID# 21597
`Case 1:20-cv-00393-LO-TCB Document 829-3 Filed 01/21/22 Page 1 of 3 PagelD# 21597
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`EXHIBIT 3
`EXHIBIT 3
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`Case 1:20-cv-00393-LO-TCB Document 829-3 Filed 01/21/22 Page 2 of 3 PageID# 21598
`https://www.nytimes.com/2021/06/28/health/juul-vaping-settlement-north-carolina.html
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`Juul to Pay $40 Million to Settle N.C. Vaping Case
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`The settlement is the first in a stream of lawsuits against the company, which has been accused of deceptive marketing practices that
`contributed to a wave of nicotine addiction in teenagers.
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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.
`
`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.
`
`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.
`
`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.
`
`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.
`
`“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.”
`
`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.”
`
`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.
`
`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.
`
`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.
`
`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.
`
`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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`Case 1:20-cv-00393-LO-TCB Document 829-3 Filed 01/21/22 Page 3 of 3 PageID# 21599
`“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.”
`
`Mr. Tobias said he was not surprised that Juul did not admit to wrongdoing.
`
`“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.
`
`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.”
`
`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.”
`
`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.
`
`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.
`
`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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