Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 1 of 88 The Honorable 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 King County, on behalf of itself and similarly situated counties, 10 No. Plaintiff, 11 12 13 14 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED v. JUUL Labs, Inc., f/k/a PAX Labs, Inc., PAX Labs Inc., Altria Group, Inc., Altria Client Services, Altria Group Distribution Company, Nu Mark LLC, and Nu Mark Innovations, Ltd., 15 Defendants. 16 17 18 19 20 21 22 23 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () KELLER ROHRBACK L.L.P. AuthorOfficeAddress TELEPHONE: AuthorOfficeGeneralNo1 FACSIMILE: AuthorOfficeFaxNo1 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 2 of 88 1 TABLE OF CONTENTS 2 I. INTRODUCTION ............................................................................................................ 1 3 II. JURISDICTION AND VENUE ....................................................................................... 5 III. PARTIES .......................................................................................................................... 6 IV. ALLEGATIONS OF FACT ............................................................................................. 8 4 5 6 A. The Rise of JUUL: Following Big Tobacco’s Footsteps ...................................... 8 B. The Secret to JUUL’s Success: Hooking Kids ................................................... 16 C. Altria and E-Cigarettes ....................................................................................... 28 D. JUUL and Altria Join Forces to Protect JUUL’s Market Share.......................... 37 11 E. The Cost of JUUL’s Success .............................................................................. 44 12 F. JUUL’s Remedial Measures ............................................................................... 52 13 G. JUUL and Schools .............................................................................................. 53 14 H. Impact on King County....................................................................................... 58 7 8 9 10 15 V. 16 17 A. Class Definitions ................................................................................................. 64 VI. CLASS CERTIFICATION REQUIREMENTS: FEDERAL RULE OF CIVIL PROCEDURE 23 ................................................................................................ 65 VII. CAUSES OF ACTION ................................................................................................... 67 18 19 CLASS ACTION ALLEGATIONS ............................................................................... 64 VIOLATIONS OF THE WASHINGTON PUBLIC NUSIANCE LAW, RCW 7.48.010 ET SEQ. ..................................................... 67 20 21 VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT (“RICO”), 18 U.S.C. § 1961, et seq. ..................................................................................................... 73 22 23 24 A. Description of the Defendants’ Enterprises ........................................................ 74 25 B. The Enterprises Sought to Fraudulently Increase Defendants’ Profits and Revenues........................................................................................... 75 C. Predicate Acts: Mail and Wire Fraud................................................................. 78 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - i KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 3 of 88 1 D. Plaintiff Has Been Damaged by Defendants’ RICO Violations ......................... 83 2 PRAYER FOR RELIEF ............................................................................................................. 83 3 JURY TRIAL DEMANDED ...................................................................................................... 84 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - ii KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 4 of 88 1 I. 2 3 4 1. INTRODUCTION One of the great public health success stories over the past decade has been a reduction in youth tobacco use and in nicotine addiction. Youth smoking rates plummeted from 28% in 2000 to 7.6% in 2017.1 This success has been the result of years of litigation and strict 5 6 7 regulation. It is also due to a public health message that Big Tobacco can no longer dispute or contradict, and which is simple, stark, and effective: smoking kills. 2. 8 This incredible progress towards eliminating youth tobacco use has now largely 9 been reversed due to e-cigarettes and vaping. Between 2011 and 2015, e-cigarette use among 10 high school and middle school students increased 900%.2 Between 2017 and 2018, e-cigarette 11 12 use increased 78% among high school students, from 11.7% of high school students in 2017 to 20.8% of high schoolers in 2018.3 Among middle school students, e-cigarette use increased 48% 13 14 between 2017 and 2018.4 In 2018, 4.9 million middle and high school students used tobacco 15 products, with 3.6 million of those students using e-cigarettes.5 Between 2017 and 2018, the 16 number of youth e-cigarette users increased by 1.5 million.6 17 18 3. Consistent with these national numbers, King County youth are vaping at high rates—which continue to climb. One in every four King County high school seniors reported 19 20 21 22 23 24 25 26 1 Meredith Berkman, Testimony of Meredith Berkman, Parents Against Vaping E-cigarettes, U.S. House Committee on Oversight & Reform (July 24, 2019), https://oversight.house.gov/sites/democrats.oversight.house.gov/files/2019.07.24%20BerkmanPAVe%20Testimony.pdf. 2 Jerome Adams, Surgeon General’s Advisory on E-cigarette Use Among Youth, Ctrs. for Disease Control & Prevention (Dec. 2018), https://e-cigarettes.surgeongeneral.gov/documents/surgeon-generals-advisory-on-ecigarette-use-among-youth-2018.pdf. 3 Id. 4 2018 NYTS Data: A startling rise in youth e-cigarette use, U.S. Food & Drug Admin. (Feb. 2, 2019), https://www.fda.gov/tobacco-products/youth-and-tobacco/2018-nyts-data-startling-rise-youth-e-cigarette-use. 5 Id. 6 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 1 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 5 of 88 1 vaping in the past 30 days.7 Between 2016 and 2018, e-cigarette use increased 82% among King 2 County 10th graders.8 In the largest school district in King County, Seattle Public Schools, 90% 3 4 percent of tobacco and nicotine violations during the 2017-2018 school year were for vaping, and over 60% of those violations were for JUUL use specifically.9 5 4. 6 According to the Centers for Disease Control and Prevention (“CDC”) Director 7 Robert Redfield, “The skyrocketing growth of young people’s e-cigarette use over the past year 8 threatens to erase progress made in reducing tobacco use. It’s putting a new generation at risk for 9 nicotine addiction.”10 The U.S. Food and Drug Administration (“FDA”) Commissioner Scott 10 11 Gottlieb described the above statistics as “astonishing” and both the FDA and the U.S. Surgeon General have appropriately characterized youth vaping as an “epidemic.”11 The National Institute 12 on Drug Abuse found that the 2018 spike in nicotine vaping was the largest for any substance 13 14 recorded in 44 years, and the Secretary of the U.S. Department of Health and Human Services 15 declared that “[w]e have never seen use of any substance by America’s young people rise as 16 rapidly as e-cigarette use [is rising].”12 17 18 7 19 20 21 22 23 24 25 26 VAPOR & E-CIGARETTE USE IN SEATTLE & KING COUNTY, Public Health – Seattle & King County https://kingcounty.gov/depts/health/tobacco/~/media/depts/health/tobacco-vapor/documents/vapinginfographic.ashx 8 Id. 9 Amy Radil, Seattle experts say restrictions on vaping must go further, KUOW (Nov.21, 2018), https://kuow.org/stories/as-students-embrace-juuling-seattle-experts-say-restrictions-must-go-farther. 10 Texas governor signs law increasing the age to buy tobacco products to 21, CNN (June 8, 2019), https://m.cnn.com/en/article/h_b4cf0b92fd821251a4ae48df9b717145. 11 Angelica LaVito, FDA chief Gottlieb threatens to pull e-cigarettes off market if ‘astonishing’ surge in teen use doesn’t slow, CNBC (Nov. 16, 2018), https://www.cnbc.com/2018/11/16/fda-chief-gottlieb-threatens-to-pull-ecigarettes-off-market.html; Jayne O’Donnell, FDA declares youth vaping an epidemic, announces investigation, new enforcement, USA Today (Sept. 12, 2018), https://www.usatoday.com/story/news/politics/2018/09/12/fdascott-gottlieb-youth-vaping-e-cigarettes-epidemic-enforcement/1266923002/. 12 Jan Hoffman, Study Shows Big Rise in Teen Vaping This Year, N.Y. Times (Dec. 17, 2018), https://www.nytimes.com/2018/12/17/health/ecigarettes-teens-nicotine-.html; Rajiv Bahl, Teen Use of Flavored Tobacco was Down, But E-Cigarettes Are Bringing It Back Up, Healthline (Jan. 9, 2019), https://www.healthline.com/health-news/flavored-tobacco-use-rising-again-among-teens#An-unhealthy-habit. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 2 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 6 of 88 1 5. A major cause of this epidemic is JUUL Labs, Inc., the maker of the JUUL e- 2 cigarette. JUUL entered the e-cigarette market in 2015 and now controls over 70% of it.13 Over a 3 million JUUL e-cigarettes were sold between 2015 and 2017.14 In 2017, JUUL generated over 4 $224 million in retail sales, a 621% year-over-year increase.15 By June 2018, sales had 5 6 skyrocketed another 783%, reaching $942.6 million.16 The e-cigarette category as a whole grew 7 97% to $1.96 billion in the same period, largely based on JUUL’s market success.17 JUUL’s 8 dominance of the e-cigarette market has been so rapid, and so complete, that the act of vaping is 9 now often referred to as “juuling.” 10 11 6. JUUL’s market dominance attracted the attention of government regulators, including the FDA. On February 24, 2018, the FDA sent a letter to JUUL expressing concern 12 about the popularity of its products among youth and demanding that JUUL produce documents 13 14 regarding its marketing practices.18 On September 12, 2018, the FDA sent letters to JUUL and 15 other e-cigarette manufacturers putting them on notice that their products were being used by 16 youth at disturbing rates.19 In October 2018, the FDA raided JUUL’s headquarters and seized 17 18 19 13 20 21 22 23 24 25 26 Richard Craver, Juul ends 2018 with 76 percent market share, Winston-Salem J. (Jan. 8, 2019), https://www.journalnow.com/business/juul-ends-with-percent-market-share/article_6f50f427-19ec-50be-8b0cd3df18d08759.html. 14 Melia Robinson, How a startup behind the ‘iPhone of vaporizers’ reinvented the e-cigarette and generated $224 million in sales in a year, Bus. Insider (Nov. 21, 2017), https://www.businessinsider.com/juul-e-cigarette-onemillion-units-sold-2017-11/. 15 Id. 16 Angelica LaVito, Popular e-cigarette Juul’s sales have surged almost 800 percent over the past year, CNBC Health & Sci. (Sept. 11, 2018), https://www.cnbc.com/2018/07/02/juul-e-cigarette-sales-have-surged-over-thepast-year.html. 17 Id. 18 Matthew Holman, Letter from Director of Office of Science, Center for Tobacco Products, to Zaid Rouag, at JUUL Labs, Inc., U.S. Food & Drug Admin. (Apr. 14, 2018), https://www.fda.gov/media/112339/download. 19 Letter From US FDA to Kevin Burns, U.S. Food & Drug Admin. (Sept. 12, 2018), https://www.fda.gov/media/119669/download. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 3 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 7 of 88 1 more than a thousand documents relating to JUUL’s sales and marketing practices.20 As of 2 October 2019, the FDA, the Federal Trade Commission, multiple state attorneys general, and the 3 4 U.S. House of Representatives Committee on Oversight and Reform have all commenced investigations into JUUL’s role in the youth vaping epidemic and whether JUUL’s marketing 5 6 practices purposefully targeted youth. 7. 7 As the pressure on JUUL intensified in late 2018, Altria—maker of Marlboro 8 cigarettes, parent company of Philip Morris USA, and one of the largest tobacco companies in 9 the world—stepped in to assist. On December 20, 2018, Altria announced a $12.8 billion equity 10 investment in JUUL, which gave it a 35% stake in the company. Just several weeks prior to this 11 12 announcement, Altria had criticized JUUL’s marketing practices in a letter to the FDA and declared that “pod-based products significantly contribute to the rise in youth use of e-vapor 13 14 products.” Altria removed its own pod-based products, the MarkTen Elite and Apex by 15 MarkTen, from the market—only to commit its substantial resources, regulatory knowledge, and 16 lobbying muscle to protecting and expanding JUUL’s market share, which, as Altria and JUUL 17 both know, relies heavily on youth. 18 19 8. JUUL and Altria are now describing their collaboration as a “harm reduction opportunity,” and JUUL insists it never marketed to youth. These assertions fall flat against the 20 21 22 facts, as detailed below. Altria has described JUUL’s device as “compelling” and “a terrific product.” In fact, JUUL has compelled a generation of youth, who were never cigarette smokers, 23 into nicotine addiction and put them at risk for severe lung injury or other health harms resulting 24 from aerosol inhalation. JUUL and Altria are working to maintain JUUL’s record-breaking sales 25 26 20 Laurie McGinley, FDA seizes Juul e-cigarette documents in surprise inspection of headquarters, Wash. Post (Oct. 2, 2018), https://www.washingtonpost.com/health/2018/10/02/fda-seizes-juul-e-cigarette-documentssurprise-inspection-headquarters/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 4 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 8 of 88 1 and market dominance—which is not possible if the customer base is only adult smokers seeking 2 to quit. 3 9. Plaintiff King County, namely through the work of its Public Health Department, 4 has made tremendous progress in reducing youth tobacco use—but it must now address the 5 6 epidemic of youth vaping. Public Health — Seattle & King County (“Public Health”) is the one 7 of the largest metropolitan health departments in the United States with 1,400 employees serving 8 a resident population of nearly 2.2 million people. Public Health works to protect the public from 9 threats to their health and improve the health and well-being of all people in King County. The 10 epidemic rise of vaping among youth threatens Public Health’s mission. In September, Public 11 Health confirmed that a King County teenager was the first person in Washington State to be 12 diagnosed with a severe lung disease associated with e-cigarettes, and has since confirmed a 13 14 second case in King County. Even without the risk of severe lung illness, the harm from regular 15 nicotine use at a young age is considerable. Nicotine is an incredibly addictive substance, and 16 addiction fundamentally changes the developing brain. 17 18 19 10. King County brings this action against Defendants JUUL Labs, Inc. (“JUUL”), Altria Group, Inc., Altria Client Services, Altria Group Distribution Company, and Nu Mark, LLC (collectively “Altria Defendants”) for damages and injunctive relief, including abatement of 20 21 the public health crisis caused by Defendants’ wrongful conduct. II. 22 23 11. JURISDICTION AND VENUE This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 24 1332(d) because: (i) there are 100 or more class members; (ii) the aggregate amount in 25 controversy exceeds $5,000,000, exclusive of interest and costs; and (iii) at least one plaintiff 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 5 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 9 of 88 1 and defendant are citizens of different states. This Court has supplemental jurisdiction over the 2 state law claims pursuant to 28 U.S.C. § 1367. 3 12. The Court has personal jurisdiction over Defendants because they do business in 4 the Western District of Washington and have sufficient minimum contacts with this District. 5 6 Defendants intentionally avail themselves of the markets in this State through the promotion, 7 marketing, and sale of the products at issue in this lawsuit to render the exercise of jurisdiction 8 by this Court permissible under Washington law and the U.S. Constitution. 9 10 11 13. Venue is proper in the Western District of Washington pursuant to 28 U.S.C. § 1391 (b)(2) and (3) because a substantial part of the events or omissions giving rise to the claims at issue in this Complaint arose in this District and Defendants are subject to the Court’s personal 12 jurisdiction with respect to this action. 13 III. 14 15 14. PARTIES Plaintiff King County (“Plaintiff” or “King County” or “County”) is a 16 Washington County organized and existing under the laws of the State of Washington, RCW 17 36.01 et seq. 18 19 15. Defendant JUUL Labs, Inc., f/k/a PAX Labs, Inc. (“JUUL”), incorporated in Delaware on March 12, 2007 (file no. 4315504), and has its principal place of business in San 20 21 22 23 Francisco, California. JUUL manufactures, designs, sells, markets, promotes and distributes JUUL e-cigarettes, JUULpods and accessories. 16. Defendant PAX Labs, Inc., incorporated in Delaware on April 21, 2017 (file no. 24 6387684), has its principal place of business in San Francisco, California. PAX Labs, Inc.’s 25 current website says it was founded in 2007. For much of the relevant time period and until at 26 least 2017, PAX Labs, Inc. and JUUL operated as the same company. During that time, JUUL CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 6 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 10 of 88 1 manufactured, designed, sold, marketed, promoted, and distributed JUUL e-cigarettes, 2 JUULpods, and accessories as a part of PAX Labs, Inc. 3 4 17. Defendant Altria Group, Inc. is a Virginia corporation, having its principal place of business in Richmond, Virginia. Altria is one of the world’s largest producers and marketers 5 6 7 of tobacco products. On December 20, 2018, Altria purchased a 35% stake in JUUL. 18. Defendant Altria Client Services Inc. is a New York corporation and wholly 8 owned subsidiary of Altria Group, Inc. with its principal place of business in Henrico County, 9 Virginia. Altria Client Services Inc. provides Altria Group, Inc. and its companies with services 10 11 in many areas including digital marketing, packaging design & innovation, product development, and safety, health, and environmental affairs. On September 25, 2019, the former senior vice 12 president and chief growth officer of Altria Client Services Inc., K.C. Crosthwaite, became the 13 14 15 new chief executive of JUUL. 19. Defendant Altria Group Distribution Company is a Virginia corporation and 16 wholly owned subsidiary of Altria Group, Inc. with its principal place of business in Henrico 17 County, Virginia. Altria Group Distribution Company provides sales, distribution and consumer 18 engagement services to Altria’s tobacco companies. 19 20. Defendant Nu Mark LLC is a Virginia corporation and wholly owned subsidiary 20 21 22 of Altria Group, Inc., with its principal place of business in Richmond, Virginia. Nu Mark LLC was engaged in the manufacture and sale of Altria’s electronic vapor products. Shortly before 23 Altria purchased a 35% stake in JUUL in December 2018, Altria Group, Inc. announced that Nu 24 Mark would be discontinuing the production and sale of all e-vapor products. 25 26 21. Defendant Nu Mark Innovations, Ltd. is a subsidiary of Nu Mark LLC located in Beit Shemesh, Israel. Nu Mark Innovations, Ltd. provides digital marketing and customer care CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 7 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 11 of 88 1 services for Nu Mark LLC and Altria’s e-vapor brands, as well as product and technology 2 development services. 3 IV. 4 A. ALLEGATIONS OF FACT The Rise of JUUL: Following Big Tobacco’s Footsteps 5 22. JUUL was founded by Adam Bowen and James Monsees. The company’s 6 7 beginnings can be traced to the pair’s collaboration on a product design master’s thesis when 8 they were graduate students at Stanford University in 2004—Monsees completing a Master of 9 Fine Arts in Product Design, and Bowen a Master of Science in Mechanical Engineering in 10 Product Design.21 Their proposed product? A better cigarette. 11 12 13 14 15 16 17 18 19 20 21 23. Monsees has described the cigarette as “the most successful consumer product of 22 23 24 all time . . . an amazing product.”22 But years of anti-smoking campaigns have successfully denormalized cigarette smoking. As part of their product design research, Monsees and Bowen 25 26 21 Allison Keeley, Vice Made Nice?, Stanford Mag., (Aug. 2012), https://stanfordmag.org/contents/vice-made-nice. Gabriel Montoya, Pax Labs: Origins with James Monsees, Social Underground, https://socialunderground.com/2015/01/pax-ploom-origins-future-james-monsees/ (last visited Sept. 7, 2019). CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 8 TELEPHONE: (206) 623-1900 22 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 12 of 88 1 interviewed smokers who talked about feeling self-conscious of the signs of smoking, for 2 example, coming back into a room after a smoke break and smelling like smoke, or having their 3 hands smell like cigarettes no matter even after washing them multiple times.23 They ended their 4 presentation with a clip from a South Park episode, showing the characters assembled at the 5 6 Museum of Tolerance and shaming a smoker.24 Monsees and Bowen thus set out to “deliver[] 7 solutions that refresh the magic and luxury of the tobacco category” and recreate the lost “ritual 8 and elegance that smoking once exemplified.”25 9 10 11 12 24. Essentially, Monsees and Bowen saw a market opportunity in a generation of consumers brought up on anti-smoking norms. In Monsees’ words, they wanted to redesign the cigarette “to meet the needs of people who want to enjoy tobacco but don’t self-identify with— or don’t necessarily want to be associated with—cigarettes.”26 Monsees saw “a huge opportunity 13 14 15 for products that speak directly to those consumers who aren’t perfectly aligned with traditional tobacco products.”27 25. 16 17 18 At one point during their thesis presentation, Monsees states, “The cigarette is actually a carefully engineered product for nicotine delivery and addiction.”28 This description applies just as well to the product he and Bowen would launch a decade later—JUUL. 19 26. The outcome of Monsees and Bowen’s thesis project was a “heat-not-burn” e- 20 21 cigarette, which uses loose-leaf tobacco. The device heated tobacco contained in pods to a 22 23 24 25 26 23 Jordan Crook, This is the Stanford thesis presentation that launched Juul, Tech Crunch (Feb. 27, 2019), https://techcrunch.com/2019/02/27/this-is-the-stanford-thesis-presentation-that-launched-juul/. 24 Id. 25 Onboardly Interview with Ploom Cofounder and CEO James Monsees, Pax.com (Apr. 30, 2014), https://www.pax.com/blogs/press/onboardly. 26 Id. 27 Id. 28 See supra note 23. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 9 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 13 of 88 1 constant temperature, vaporizing nicotine and flavor without burning the materials or producing 2 smoke. 3 27. After graduation, Bowen and Monsees worked on bringing their thesis project to 4 the market, incorporating under the name Ploom in 2007. In those early years, they spent a lot of 5 6 time talking about what Bowen called “the kind of typical thoughts of evil Big Tobacco 7 companies like coming down and squashing you.”29 But ultimately, that “was not really an 8 issue.”30 In fact, not only did Big Tobacco not squash them, but the opposite. Although Bowen 9 and Monsees characterized their products as aimed toward consumers not aligned with 10 11 traditional tobacco products, they themselves have aligned with Big Tobacco on at least two occasions: first, with Japan Tobacco and then with JUUL. 12 28. In 2010, Ploom launched its e-cigarette as the ModelOne, using pods of loose-leaf 13 14 tobacco heated by butane. It did not catch on. Ploom only sold a few thousand of them. By then a 15 company with a dozen employees, Ploom was faltering, in need of money, technological 16 expertise, and marketing savvy.31 17 18 19 29. Help came from Japan Tobacco International (“JTI”), a division of Japan Tobacco Inc., the fourth-largest tobacco company in the world. In December 2011, JTI and Ploom entered into a strategic agreement, which gave JTI a minority stake in Ploom and made it a strategic 20 21 22 partner. In a statement regarding the agreement, Monsees said, ““We are very pleased to partner with JTI as their deep expertise, global distribution networks and capital resources will enable us 23 24 29 25 26 Keeley, supra note 21. Id. 31 David H. Freedman, How Do You Sell a Product When You Can't Really Say What It Does?, Inc.com, https://www.inc.com/magazine/201405/david-freedman/james-monsees-ploom-ecigarette-company-marketingdilemma.html (accessed Oct. 16, 2019). CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 10 TELEPHONE: (206) 623-1900 30 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 14 of 88 1 to enter our next phase of growth and capitalize on global expansion opportunities.”32 As Bowen 2 explained in an interview, “We were still doing a lot of our own internal product development, 3 but now we had access to floors of scientists at JTI.” 4 30. In 2012, Ploom unveiled the PAX, a loose-leaf vaporizer that didn’t use pods, but 5 6 which was much more successful. The following year, Ploom combined elements of the PAX 7 with the pod system as the ModelTwo. Although consumers were enthusiastic about both the 8 PAX and the ModelTwo, the products were limited to a small, high-end market. The PAX, for 9 example, retailed for $250 when it was first marketed. But, as one of Ploom’s investors remarked 10 11 in 2014, “The company is going to invade the bigger, lower-end market now dominated by ecigarettes.”33 He explained that Ploom had “lots of products in the works” and that “we know 12 we need something cheaper than PAX to go after the mass market. There are still huge 13 14 opportunities out there.”34 31. 15 In February 2015, Ploom and JTI ended their relationship, with buying back JTI’s 16 minority stake in the business. JTI acquired the ModelTwo and pods product line, as well as the 17 Ploom name, while Ploom kept its open-system PAX vaporizer and changed its name to PAX 18 Labs Inc. Monsees characterized the partnership as having “afforded both parties many mutual 19 benefits,” but said that the new arrangement would “fuel continued growth” and that PAX 20 21 intended “rapid rollouts of new products.”35 22 23 32 24 25 26 Innovative Partnership for Ploom and Japan Tobacco International JTI to Take Minority Share in Ploom, Japan Tobacco Int’l, https://www.jti.com/our-views/newsroom/innovative-partnership-ploom-and-japan-tobaccointernational-jti-take-minority (accessed Oct. 16, 2019). 33 Freedman, supra note 51. 34 Id. 35 JTI to Acquire Ploom Product Line, Convenient Store News (Feb. 16, 2015), https://csnews.com/jti-acquireploom-product-line#close-olyticsmodal. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 11 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 15 of 88 1 2 3 32. PAX made good on its promise of new products and invading the bigger, lower- end market. As discussed further below, PAX launched the JUUL in June 2015 with a wellpublicized launch party in New York City and a viral social media marketing campaign. 4 33. The company renamed itself JUUL Labs, Inc. in 2017. 34. By the close of 2017, according to Nielsen data, JUUL had surpassed its 5 6 7 competitors in capturing 32.9 percent of the e-cigarette market, with British American Tobacco 8 at 27.4 percent and Altria at 15.2 percent.36 The total e-cigarette market expanded 40 percent to 9 $1.16 billion.37 10 11 12 35. In 2018, JUUL’s gross profit margins were 70%38 and it represented 76.1% of the national e-cigarette market.39 In a complaint it filed in November 2018 against 24 vape companies for alleged patent infringement, JUUL asserted that it was “now responsible for over 13 14 15 95% of the growth in the ENDS pod refill market in the United States” and included the following chart:40 16 17 18 19 20 21 22 23 24 25 26 36 Ari Levy, E-cigarette maker Juul is raising $150 million after spinning out of vaping company, CNBC (Dec. 19, 2017), https://www.cnbc.com/2017/12/19/juul-labs-raising-150-million-in-debt-after-spinning-out-of-pax.html. 37 Id. 38 Dan Primack, Scoop: The Numbers Behind Juul’s Investor Appeal, Axios (July 2, 2018), https://www.axios.com/numbers-juul-investor-appeal-vaping-22c0a2f9-beb1-4a48-acee-5da64e3e2f82.html. 39 Robert K. Jackler et al., JUUL Advertising Over Its First Three Years on the Market 2, Stanford Res. into the Impact of Tobacco Advert. (2019), http://tobacco.stanford.edu/tobacco_main/publications/JUUL_Marketing_Stanford.pdf. 40 Verified Complaint Under Section 337 of the Tariff Act of 1930 at 6, In the Matter of Certain Cartridges for Elec. Nicotine Delivery Sys. & Components Thereof, Investigation No. 337-TA-1141 (USITC Nov. 19, 2018). CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 12 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 16 of 88 1 2 3 4 5 6 7 8 9 10 11 12 36. 13 JUUL shattered previous records for reaching decacorn status, reaching valuation 14 of over $10 billion in a matter of months—four times faster than Facebook.41 This all came just 15 three years after its product launch. 16 17 18 37. JUUL’s staggering commercial success didn’t come from a blank slate. Under the Master Settlement Agreement between Big Tobacco and the States, the public has access to hundreds of thousands of Big Tobacco’s internal documents. In creating JUUL, Monsees and 19 Bowen carefully studied the marketing strategies, advertisements, and product design of Big 20 21 22 Tobacco. As Monsees candidly acknowledged, the internal tobacco documents “became a very intriguing space for us to investigate because we had so much information that you wouldn’t 23 24 25 26 41 Zack Guzman, Juul Surpasses Facebook As Fastest Startup to Reach Decacorn Status, Yahoo! Fin. (Oct. 9, 2019), https://finance.yahoo.com/news/juul-surpasses-facebook-fastest-startup-reach-decacorn-status153728892.html. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 13 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 17 of 88 1 normally be able to get in most industries. And we were able to catch-up, right, to a huge, huge 2 industry in no time. And then we started building prototypes.”42 3 38. Monsees and Bowen reviewed documents in the Big Tobacco archive that 4 included information on how to manipulate nicotine pH to maximize nicotine delivery in a vapor 5 6 while minimizing the “throat hit” that may potentially deter new smokers. Other records relate to 7 tobacco industry market strategies and advertisements designed to lure non-smoking youth. 8 Monsees and Bowen were able to take advantage of an extensive online tobacco advertising 9 research database maintained by the Stanford Research into the Impact of Tobacco Advertising 10 11 12 (“SRITA”), an inter-disciplinary research group devoted to researching the promotional activities of the tobacco industry. SRITA’s database contains approximately 50,000 original tobacco advertisements. According to Monsees, JUUL’s advertising was informed by traditional tobacco 13 14 advertisements, and SRITA in particular had been very useful to JUUL.43 39. 15 It is no secret that a good portion of the Big Tobacco playbook involved targeting 16 youth. Beginning in the 1950s, JUUL’s now corporate affiliate, Philip Morris, intentionally 17 marketed cigarettes to young people under the age of 21 to recruit “replacement smokers” to 18 ensure the economic future of the tobacco industry.44 Philip Morris knew that youth smoking 19 was essential to the tobacco industry’s success and longevity, as an internal Philip Morris 20 21 22 23 document makes clear: “It is important to know as much as possible about teenage smoking patterns and attitudes. Today’s teenager is tomorrow’s potential regular customer, and the overwhelming majority of smokers first begin to smoke while still in their teens.”45 For this 24 42 25 26 Montoya, supra note 22. Jackler et al., supra note 39 at 27. 44 Amended Final Opinion at 972, U.S. v. Philip Morris, No. 99-cv-2496 (D.D.C. Aug. 17, 2006), ECF 5750. 45 Tobacco Company Quotes on Marketing to Kids, Campaign for Tobacco-Free Kids (May 14, 2001), https://www.tobaccofreekids.org/assets/factsheets/0114.pdf. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 14 TELEPHONE: (206) 623-1900 43 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 18 of 88 1 reason tobacco companies focused on the 14-24 year-old age group, because “young smokers 2 have been the critical factor in the growth” of tobacco companies and the 14-18 year-old group is 3 an increasing segment of the smoking population.46 As the Vice-President of Marketing at R.J. 4 Reynolds Tobacco Company [“RJR”] explained in 1974, the “young adult market . . . 5 6 represent[s] tomorrow’s cigarette business. As this 14-24 age group matures, they will account 7 for a key share of the total cigarette volume—for at least the next 25 years.”47 RJR’s now- 8 infamous Joe Camel “ambassador of Cool” advertising campaign, which ran from 1988 through 9 1997, exemplifies the importance the tobacco industry placed on hooking young smokers early: 48 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 46 Id. C.A. Tucker, Marketing Plans Presentation to RJRI B of D, Truth Tobacco Industry Documents, U. of S.F. (Sept. 30, 1974), https://www.industrydocumentslibrary.ucsf.edu/tobacco/docs/#id=ypmw0091. 48 Joe Camel: Character of the Year Advertisement, Stanford U. Res. into the Impact of Tobacco Advert. (1990), http://tobacco.stanford.edu/tobacco_main/images.php?token2=fm_st138.php&token1=fm_img4072.php&theme_ file=fm_mt015.php&theme_name=Targeting%20Teens&subtheme_name=Joe%20Camel. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 15 TELEPHONE: (206) 623-1900 47 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 19 of 88 1 2 3 40. Big Tobacco, of course, is now prohibited from employing these tactics and strategies to market traditional cigarettes by virtue of the Master Settlement Agreement and subsequent regulations. But nothing prevented JUUL from doing so. 4 B. The Secret to JUUL’s Success: Hooking Kids 5 41. Because of Big Tobacco’s demonstrated effectiveness at addicting youth to 6 7 8 nicotine, cigarette manufacturers operate under tight restrictions regarding their advertising and marketing activities. By way of example, cigarette companies may not: 9 A. use outdoor advertising such as billboards; 10 B. sponsor events; C. give free samples; 11 12 D. pay any person to “use, display, make reference to or use as a prop any Tobacco Product, Tobacco Product package . . . in any “Media;” 13 14 E. pay any third party to conduct any activity which the tobacco manufacturer is prohibited from doing; or 15 F. 16 42. 17 sell “flavored” cigarettes. All of these above activities were prohibited because of their effectiveness at 18 appealing to youth. As described below, all of these activities figured prominently in JUUL’s 19 marketing campaign. 20 21 43. According to Dr. Robert Jackler, an otolaryngologist and professor at Stanford University School of Medicine and principal investigator for SRITA, JUUL’s initial marketing 22 23 was “patently youth oriented.”49 The JUUL’s 2015 ad campaign, called “Vaporized” was 24 25 26 49 Robert K. Jackler, The Role of the Company in the Juul Teen Epidemic, Testimony of Robert Jackler before the House Subcommittee on Economic and Consumer Policy (July 24, 2019), https://oversight.house.gov/sites/democrats.oversight.house.gov/files/2019.07.24%20Jackler%20Testimony.pdf at 2 [hereinafter “Jackler Testimony”]. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 16 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 20 of 88 1 designed to create a “cult-like following.”50 Its imagery featured a vivid color scheme and 2 models in their twenties in poses that researchers note are evocative of behaviors more 3 characteristic of underage teens than mature adults. 51 Dr. Jackler and his colleagues found it 4 “clear” that this imagery resonated with underage teens who aspire to emulate trendsetting young 5 6 adults.52 44. 7 Tobacco advertisers have long understood that teens are attracted to such imagery. 8 The Vaporized campaign was featured on the front page of VICE magazine, “the #1 youth media 9 company in the world.”53 In the summer of 2015, an animated series of Vaporized billboards, 10 with the campaign’s youth-appealing imagery, were displayed in New York’s Times Square.54 11 45. Over the first year after JUUL launched its ad campaign in June 2015, it held a 12 series of at least 50 highly stylized parties, typically with rock music entertainment, in cities 13 14 across the United States.55 Thousands of young people were given free nicotine-filled JUULpods 15 (appropriately named “JUUL starter kits”), and JUUL posted photos of various young people 16 enthusiastically puffing on JUULs across their social media channels.56 JUUL also featured 17 popular stars such as Katy Perry holding a JUUL at the Golden Globes.57 18 19 20 21 22 23 24 25 26 50 Id. at 4. Jackler et al., supra note 39. 52 Id. at 7. 53 Id. at 5. 54 Id. at 17-18. 55 Id. at 3. 56 Id. 57 Jackler Testimony, supra note 49 at 8. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 17 51 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 21 of 88 1 2 3 4 5 6 7 8 9 10 58 11 12 13 14 15 16 17 18 19 59 20 21 22 23 24 25 26 58 Kathleen Chaykowski, The Disturbing Focus of Juul’s Early Marketing Campaigns, Forbes (Nov. 16, 2018), https://www.forbes.com/sites/kathleenchaykowski/2018/11/16/the-disturbing-focus-of-juuls-early-marketingcampaigns/#3da1e11b14f9. 59 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 18 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 22 of 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 46. JUUL knew these images would be successful in achieving this result because it 22 intentionally crafted them to mimic specific traditional tobacco advertisements that Big Tobacco 23 had used to target teens. In fact, many of JUUL’s ads are nearly identical to old cigarette ads that 24 were designed to get teens to smoke. Like its Big Tobacco predecessors, the focus of Juul’s 25 initial marketing was on colorful ad campaigns using eye-catching designs and youth-oriented 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 19 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 23 of 88 1 imagery with themes of being cool, carefree, stylish, attractive, sexy, and popular—unusual 2 themes and images if one’s objective is to promote an adult’s only smoking cessation device. 3 4 5 6 7 8 9 60 10 11 12 13 14 15 61 16 17 18 47. JUUL used Big Tobacco’s advertising imagery, but coupled it with a modern, state-of-the-art marketing campaign designed to target youth. It relied heavily on social media, 19 crafting a powerful online presence, which persists even after JUUL deleted its accounts in the 20 21 22 face of mounting public scrutiny. JUUL was particularly active on Instagram, which is the most popular social media site among teens.62 JUUL cultivated hashtags, allowing it to blend its ads in 23 24 25 26 60 Virginia Slims vs Juul Advertisement, Stanford U. Res. into the Impact of Tobacco Advert. (2015), http://tobacco.stanford.edu/tobacco_main/imagescomp.php?token2=fm_tn_st328.php&token1=fm_tn_img10799.php&theme_file=fm_tn_mt035.php&theme_nam e=Cigs%20vs.%20eCigs&subtheme_name=Cigs%20vs%20eCigs%20JUUL. 61 Julia Belluz, The Vape Company Juul Said It Doesn’t Target Teens. Its Early Ads Tell a Different Story, Vox (Jan. 25, 2019), https://www.vox.com/2019/1/25/18194953/vape-juul-e-cigarette-marketing. 62 Jackler et al., supra note 39. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 20 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 24 of 88 1 with wide range of user content, increasing exposure while concealing the commercial nature of 2 the content.63 JUUL then used hashtags to reinforce the themes it crafted in its product design, 3 like #style, #technology, #smart, and #gadget. JUUL’s hashtags attracted an enormous 4 community of youthful posts on a wide array of subjects. According to Dr. Jackler, #Juul 5 6 7 contains literally thousands of juvenile postings, and numerous Instagram hashtags contain the JUUL brand name.64 48. 8 9 10 11 Even after JUUL halted its own social media posts in November 2018, viral peer- to-peer promotion among teens insured continued corporate and product visibility among youth.65 In fact, community posts about JUUL increased after JUUL itself quit social media in the Fall of 2018. Prior to November 2018, over a quarter of a million posts appeared. In the eight 12 months after JUUL halted its promotional postings, the rate of community postings increased 13 14 significantly, resulting in the number of posts doubling to over half a million.66 49. 15 JUUL also paid social media influencers to post photos of themselves with JUUL 16 devices and to use the hashtags that it was cultivating.67 JUUL entered a contract with an 17 advertising agency specifically to identify and recruit social media influencers that had at least 18 30,000 followers to, according to an internal JUUL email, “establish a network of creatives to 19 leverage as loyalists” for the JUUL brand.68 One such influencer was Christina Zayas, whom 20 21 JUUL paid $1,000 for just one blog post and one Instagram post in the Fall of 2017. 22 23 63 Id. at 23. Jackler Testimony, supra note 49 at 10. 65 Id. at 11. 66 Id. 67 Jackler et al., supra note 39. 68 Kenrick Cai, Juul Funded High Schools, Recruited Social Media Influencers To Reach Youth, House Panel Charges, Forbes (July 25, 2019), https://www.forbes.com/sites/kenrickcai/2019/07/25/juul-high-schoolsinfluencers-reach-youth-house-investigation/#57735a4a33e2. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 21 TELEPHONE: (206) 623-1900 64 24 25 26 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 25 of 88 1 2 3 4 5 6 7 8 9 10 11 69 12 50. JUUL instituted an “affiliate program” to recruit those who authored favorable 13 reviews of its products by providing such reviewers with a 20% discount of purchases of JUUL 14 15 16 products.70 It even recruited JUUL users to act as part of their marketing team by asking users to “refer a friend and get a discount.”71 51. 17 Such tactics masked what were in fact JUUL advertisements as user content, 18 further increasing exposure and ultimately solidifying the company in teen pop culture as a form 19 of cultural currency. JUUL’s strategy was so successful in embedding its products into pop 20 culture that it entered the vernacular as a verb. The JUUL device and the term “juuling” are so 21 22 23 pervasive that JUUL effectively eliminated not only competitors, but also any potentially alarming terms like “smoking” or “e-cigarette,” which could alert users to the true nature of the 24 25 26 69 Michael Nedelman et al., #Juul: How social media hyped nicotine for a new generation, CNN Health (Dec. 19, 2018), https://www.cnn.com/2018/12/17/health/juul-social-media-influencers/index.html. 70 Id. at 9-10. 71 Id. at 9. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 22 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 26 of 88 1 device or activity. A recent study found that 63% of adolescent JUUL users did not know that 2 JUULpods contain nicotine.72 This has worked to JUUL’s advantage and was in fact a deliberate 3 part of the its strategy. In the first year after its launch, not one of JUUL’s 171 promotional 4 emails said anything about nicotine content,73 and it did not include nicotine warnings on the 5 6 JUUL packaging until August 2018, when it was forced to do so. 52. 7 The design of JUUL’s product is also acutely attractive to youth. Unlike most of 8 its predecessors, JUUL looks nothing like a cigarette. Instead, JUUL is sleek and linear and 9 seems like the latest tech invention. This is not surprising, given the founders’ Silicon Valley 10 11 12 product design education and training. JUUL co-founder Adam Bowen drew on his experience as a design engineer at Apple to make JUUL’s design mimic technology children were already familiar with, like Apple’s I-Phone.74 This made JUULs look “more like a cool gadget and less 13 14 like a drug delivery device. This wasn’t smoking or vaping, this was JUULing.”75 The evocation 15 of technology makes JUUL device familiar and desirable to the younger tech-savvy generation, 16 particularly teenagers. According to 19-year-old Michelle Williams, “our Grandma’s have 17 iPhones now, normal kids have JUULs now. Because it looks so modern, we kind of trust 18 modern stuff a little bit more so we’re like, we can use it, we’re not going to have any trouble 19 with it because you can trust it.”76 15 year old Sam Friedman agrees: “The tech aspect definitely 20 21 helps people get introduced to it and then once they’re introduced to it, they’re staying, because 22 23 72 24 25 26 Juul e-Cigarettes Gain Popularity Among youth, But Awareness of Nicotine Presence Remains Low, Truth Initiative (Apr. 18, 2018), https://truthinitiative.org/sites/default/files/media/files/2019/03/JUUL-E-cigarettesGain-Popularity-Among-Youth-But-Awareness-of-Nicotine-Presence-Remains-Low.pdf. 73 Jackler et al., supra note 39 at 25. 74 How JUUL made nicotine go viral, Vox (Aug. 10, 2018), https://www.youtube.com/watch?v=AFOpoKBUyok. 75 Id. 76 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 23 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 27 of 88 1 they are conditioned to like all these different products. And then this is another product. And it’s 2 just another product. Until you’re addicted to nicotine.”77 3 4 53. The JUUL device even has features reminiscent of youth-oriented tech culture and gaming, like “secret” features users can unlock, such as making the indicator light flash 5 6 7 rainbow colors in “party mode.” JUUL has been so successful in emulating technology that the small, rectangular devices are often mistaken for—or passed off as—flash drives. 54. 8 9 10 11 The ability to conceal a JUUL is also part of the appeal for adolescents. The devices are small and slim, so they fit easily in a closed hand or a pocket. The ease and simplicity of use—there is nothing to light or unwrap, not even an on-off switch—also make it possible to covertly use a JUUL behind a turned back, which has become a trend in many 12 schools. Finding new ways to hide the ever-concealable JUUL has spawned products designed 13 14 15 just for that purpose, such as apparel that allows the wearer to use the device while it is concealed in the drawstring of a hoodie or the strap of a backpack.78 55. 16 17 18 19 JUUL also created special flavors that make its addictive, high-tech device even more attractive to adolescents. Tobacco companies have known for decades that flavored products are key to nicotine adoption by youth. A 1972 Brown & Williamson memorandum: “Youth Cigarette – New Concepts,” specifically noted the “well known fact that teenagers like 20 21 22 sweet products.”79 A 1979 Lorillard memorandum concluded that younger customers would be “attracted to products with ‘less tobacco taste,” and even proposed borrowing data from the “Life 23 24 25 26 77 Id. Evie Blad, ‘Juuling’ and Teenagers: 3 Things Principals and Teachers Need to Know, Educ. Wk. (July 18, 2018), https://www.edweek.org/ew/articles/2018/07/18/juuling-and-teenagers-3-things-principals-and.html. 79 Marketing Innovations, Inc., Brown & Williamson Tobacco Corp. Project Report: Youth Cigarette—New Concepts, U.C.S.F. Truth Tobacco Industry Documents (Sept. 1972), https://www.industrydocuments .ucsf.edu/tobacco/docs/#id=hzpd0040. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 24 TELEPHONE: (206) 623-1900 78 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 28 of 88 1 Savers” candy company to determine which flavors enjoyed the widest appeal among youth.80 2 According to 2004 data, 17 year old smokers were more than three times likely as those over 25 3 to smoke flavored cigarettes and viewed flavored cigarettes as safer.81 For this reason, in 2009 4 the FDA banned flavored cigarettes pursuant to its new authority under the Family Smoking 5 6 Prevention and Tobacco Control Act of 2009. In announcing the ban, FDA Commissioner Dr. 7 Margaret Hamburg declared that “flavored cigarettes are a gateway for many children and young 8 adults to become regulator smokers.”82 9 10 11 12 56. There is no reason to believe that flavors play any different role with respect to e- cigarettes and youth. In fact, a 2017 study of the cigarette flavor ban found that the ban was effective in lowering the number of smokers and the amount smoked by smokers, though it was associated with an increased use of menthol cigarettes (the only flavor still available).83 13 14 15 According to the Surgeon General, 85% of adolescents who use e-cigarettes use flavored varieties.84 Studies also show that flavors motivate e-cigarette initiation among youth,85 and that 16 17 18 19 20 21 22 23 24 25 26 80 Flavored Tobacco FAQs, Students Working Against Tobacco, (citing, Sedgefield Idea Sessions 790606-790607. June 8, 1979. Bates No. 81513681/3691) http://swatflorida.com/uploads/fightresource/Flavored%20Tobacco%20Industry%20Quotes%20 and%20Facts.pdf (as of Oct. 16, 2019). 81 Gardiner Harris, Flavors Banned From Cigarettes to Deter Youth, N.Y. Times (Sept. 22, 2009) https://www.nytimes.com/2009/09/23/health/policy/23fda.html. 82 Id. 83 Charles J. Courtemanche et al., Influence of the Flavored Cigarette Ban on Adolescent Tobacco Use, American Journal of Preventive Medicine 52(5):e139 - e146 (2017), https://tobacco.ucsf.edu/more-evidence-supporteliminating-flavors-reduce-youth-cigarette-and-e-cigarette-use; MB. Harrell, et al., Flavored e-cigarette use: Characterizing youth, young adult, and adult users, Prev Med Rep. 2017; 5: 33–40 (Nov. 11, 2016), doi: 10.1016/j.pmedr.2016.11.001 PMCID: PMC5121224. 84 E-Cigarette Use Among Youth and Young Adults, U.S. Dept. of Health and Human Services (2016), https://www.ctclearinghouse.org/Customer-Content/www/topics/2444-E-Cigarette-Use-Among-Youth-AndYoung-Adults.pdf (accessed Oct. 4, 2019). 85 Karl Paul, Flavored Vapes Lure Teens Into Smoking and Nicotine Addiction, Study Shows, MarketWatch (Feb. 26, 2019), https://www.marketwatch.com/story/flavored-vapes-lure-teens-into-smoking-and-nicotine-addictionstudy-shows-2019-02-25. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 25 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 29 of 88 1 youth are much more likely to use flavored tobacco products than adults are.86 In fact, in 2 September 2019, the State of Michigan banned flavored e-cigarettes, a step the governor said 3 was needed to protect young people from the potentially harmful effects of vaping, Governor 4 Andrew Cuomo of New York announced that he would pursue emergency regulations to ban the 5 6 sake of flavored e-cigarettes, and Governor Jay Inslee of Washington State ordered the 7 Washington State Department of Health to ban all flavored vapor products.87, 88 Despite JUUL’s 8 claims that its target market is adult smokers, JUUL sold its product in flavors like Cool Mint, 9 Crème Brulee, Fruit Medley, Cucumber, and Mango. These flavors were the reason countless 10 adolescents started using JUUL products. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 86 A.C. Villanti et al., Flavored Tobacco Product Use in Youth and Adults: Findings From the First Wave of the PATH Study, 53 Am. J. of Preventative Med. 139 (2017), https://www.ncbi.nlm.nih.gov/pubmed/28318902. 87 Jesse McKinley & Christina Goldbaum, New York Moves to Ban Flavored E-Cigarettes by Emergency Order, N.Y.Times (Sept. 15, 2019), https://www.nytimes.com/2019/09/15/nyregion/vaping-banny.html?smid=nytcore-ios-share. 88 Jay Inslee, Executive Order 19-03: Addressing the Vaping Use Public Health Crisis, State of Washington Office of the Governor (Sept. 27, 2019), https://www.governor.wa.gov/sites/default/files/19-03%20%20Addressing%20the%20Vaping%20Public%20Health%20Crisis%20%28tmp%29.pdf?utm_medium=email &utm_source=govdelivery. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 26 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 30 of 88 1 2 3 4 5 6 7 8 9 10 11 12 89 13 57. The flavors pose dangers beyond luring young people into trying nicotine. Studies 14 now show these sweet and fruity flavors present distinct additional health hazards. Researchers 15 16 have found that some of the chemicals JUUL uses for flavor and perfume—particularly in the 17 Crème Brulee flavor—contain relatively high levels of acetals.90 Acetals are airway-irritating 18 chemicals that may cause lung damage.91 Dr. Robert Jackler said that test results have shown that 19 JUUL’s sweet and fruity flavors “contribute[] to the increasing body of evidence documenting 20 toxicological effects of e-cig vapor.”92 21 22 23 24 89 Chaykowski, supra note 58. Susie Neilson, Irritating Compounds Can Show Up in ‘Vape Juice’, NPR (July 30, 2019), https://www.npr.org/sections/health-shots/2019/07/30/746238009/irritating-compounds-discovered-in-vapejuice. 91 Id. 92 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 27 TELEPHONE: (206) 623-1900 90 25 26 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 31 of 88 1 58. It is clear that JUUL, like Philip Morris and RJR before it, targeted youth as a key 2 business demographic. A recent study showed that 15-17 year-olds are 16 times more likely to 3 use JUUL than 25-34 year-olds.93 4 59. JUUL was well aware from the beginning that its products would appeal to youth. 5 6 A former JUUL manager, who spoke to The New York Times on the condition that his name not 7 be used because he worried about facing the ire of the company, said that within months of 8 JUUL’s 2015 introduction, it became evident that teenagers were either buying JUULs online or 9 finding others who made the purchases for them. Some people bought more JUUL kits on the 10 company’s website than they could individually use—sometimes 10 or more devices at a time. 11 12 “First, they just knew it was being bought for resale,” said the former senior manager, who was briefed on the company’s business strategy. “Then, when they saw the social media, in fall and 13 14 winter of 2015, they suspected it was teens.”94 60. 15 This “suspicion” has been confirmed by the U.S. Surgeon General, who found 16 that JUUL’s Twitter account was being followed by adolescents and that 25% of those re- 17 tweeting official JUUL tweets were under 18 years old.95 18 C. 19 Altria and E-Cigarettes 61. Altria entered the e-cigarette market a year before JUUL did. E-cigarettes have 20 been sold in the United States since the early 2000s, but Big Tobacco did not make its first 21 22 23 forays into that space until a decade later. Big Tobacco—including Altria—has been one of the biggest losers in the fight against smoking. Altria estimates that the cigarette industry declined 24 25 26 93 D.M. Vallone et al., Prevalence and correlates of Juul use among a national sample of youth and young adults, Tobacco Control (Oct. 29, 2018), http://dx.doi.org/10.1136/tobaccocontrol-2018-054693. 94 Matt Richtel & Sheila Kaplan, Did Juul Lure Teenagers and Get ‘Customers for Life’? N.Y. Times (Aug. 27, 2019), https://www.nytimes.com/2018/08/27/science/juul-vaping-teen-marketing.html. 95 Adams, supra note 2. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 28 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 32 of 88 1 by -4% in 2017 and by -4.5% in 2018. For 2019 through 2023, Altria estimated for the average 2 annual U.S. cigarette industry volume declines is -4% to -5%.96 Altria later revised this estimate 3 4 in the second quarter of 2019 from 4-5% to 4-6%, in light of efforts to increase the legal age for cigarette smoking to 21.97 5 62. 6 In the face of these numbers, Altria turned to e-cigarettes, along with other “non- 7 combustible products,” to “enhance” its business platform.98 Altria boasted to shareholders that it 8 “aspire[d] to be the U.S. leader in authorized, non-combustible, reduced-risk products.”99 9 10 11 12 63. Altria entered the e-cigarette market with a cigarette-lookalike, or “cigalike,” style of e-cigarette, sold under the brand MarkTen. Following a phased roll-out of MarkTen in Indiana and Arizona in late 2013, Altria launched the MarkTen nationwide in 2014 with an aggressive marketing campaign, eclipsing the advertising expenditures for Imperial Tobacco’s e-vapor 13 14 product, blu.100 15 16 17 18 19 20 21 22 23 24 25 26 96 Presentation for Altria’s Fourth-Quarter 2018 Earnings Conference Call, Altria (Jan. 31, 2019), http://investor.altria.com/Cache/1001247877.PDF?O=PDF&T=&Y=&D=&FID=1001247877&iid=4087349. 97 Altria Shares Slide As Cigarette Sales Continue to Decline, Tobacco Bus. (July 31, 2019), https://tobaccobusiness.com/altria-shares-slide-as-cigarette-sales-continue-to-decline/. 98 Presentation for Altria’s Second-Quarter 2019 Earning Conference Call, Altria (July 30, 2019), http://investor.altria.com/Cache/1001255076.PDF?O=PDF&T=&Y=&D=&FID=1001255076&iid=4087349. 99 Presentation for Annual Meeting of Shareholders, Altria (May 17, 2018), http://investor.altria.com/Cache/1500113050.PDF?O=PDF&T=&Y=&D=&FID=1500113050&iid=4087349. 100 Jennifer Cantrell et al., Rapid increase in e-cigarette advertising spending as Altria’s MarkTen enters the marketplace, Tobacco Control 25 (10) (2015), 1136/tobaccocontrol-2015-052532. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 29 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 33 of 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 64. 15 E-cigarette advertising spending for 2014 totaled $88.1 million, a 52 percent 16 increase from 2013.101 Of that $88.1 million spent in 2014, nearly 40% of that was Altria’s 17 MarkTen campaign, at $35 million.102 More than 18 million middle school and high school 18 children were exposed to e-cigarette advertisements in 2014.103 Approximately 1 in 2 middle 19 20 21 school and high school age children saw advertisements for e-cigarettes in retail stores and almost 2 in 5 saw advertisements for e-cigarettes online.104 22 23 101 24 25 26 Id. Id. 103 Carley Thompson, How JUUL cornered the youth tobacco market and what you should know, King County Public Health Insider (Aug. 6, 2018), https://web.archive.org/web/20190329100340/https://publichealthinsider.com/2018/08/06/how-juul-cornered-theyouth-tobacco-market-and-what-you-should-know/. 104 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 30 TELEPHONE: (206) 623-1900 102 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 34 of 88 1 65. Altria’s MarkTen advertising tag line, “Let It Glow,” was criticized by public 2 health advocates for playing off Disney’s popular children’s movie “Frozen” and its hit song 3 “Let it Go.”105 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 66. Even the then-president of R.J. Reynolds Vapor Company, Stephanie Cordisco, 20 21 22 23 criticized Altria for irresponsible marketing, calling this tag line “terrible” and saying that the companies “running the most irresponsible campaigns are the ones who know better.”106 At the time, the president of the Campaign for Tobacco-Free Kids said that companies like Altria were 24 25 26 105 Matt Richtel, A Bolder Effort by Big Tobacco on E-Cigarettes, N.Y. Times (June 17, 2014), https://www.nytimes.com/2014/06/17/business/a-bolder-effort-by-big-tobacco-on-e-cigarettes.html. 106 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 31 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 35 of 88 1 using “exactly the same themes we saw work with kids in the U.S. for decades with 2 cigarettes.”107 3 4 5 6 7 8 9 10 11 12 67. 13 Although free samples of tobacco products are prohibited under the terms of the 14 Tobacco MSA as well as FDA regulations issued in 2010, Altria took advantage of the grey area 15 in the regulation of e-cigarettes and distributed coupons for free sample nicotine cartridges as 16 part of its MarkTen launch. (The FDA has since issued finalized guidance clarifying the scope of 17 the ban on distributing free samples or coupons for e-cigarettes or components.) 18 19 20 21 22 23 24 25 26 107 Id. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 32 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 36 of 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 68. Altria also took full advantage of its distribution network, reaching 60,000 stores in a month.108 In Arizona, for example, Altria’s distribution network allowed MarkTen to 23 24 achieve a 48% e-cigarette market share in just seven weeks after launch, according to then-CEO 25 26 108 Melissa Kress, MarkTen National Rollout Hits 60,000 Stores, Convenience Store News (July 22, 2014), https://csnews.com/markten-national-rollout-hits-60000-stores. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 33 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 37 of 88 1 Marty Barrington’s statements on an earnings call.109 Altria was clear in its intent to dominate 2 the e-cigarette market as it has the traditional cigarette one: “We are the market leader today and 3 we will continue to be,” Barrington told investors.110 4 69. Altria began acquiring small companies in the vaping industry, starting in 2014 5 6 with Green Smoke, Inc., whose e-cigarettes were also the “cigalike” style.111 In 2016, Altria 7 acquired a vape product called Cync, from Vape Forward.112 Cync is a small vapor device that 8 uses prefilled pods, similar to JUUL. It also made a minority investment in Avail Vapor, one of 9 the largest vape store chains in the U.S., which also produces and sells its own branded e-liquids 10 for so-called open-system devices, which are refillable.113 11 12 70. In February 2018, with JUUL dominating the e-cigarette market, Altria announced the national launch of a pod-based, “closed-tank” e-cigarette like the JUUL, which it 13 14 branded as the MarkTen Elite: “a pod-based product with a premium, sleek battery design” and 15 having the “convenience of prefilled, magnetic click pods.” Altria had initially brought the Elite 16 to market in 2016, telling investors that the product “offers a variety of flavorful liquids in a 17 modern, discrete device format.”114 The product was sold in flavors such as Hazelnut Cream, 18 Apple Cider, and Strawberry Brulee.115 At an analyst conference in February 2018, former Altria 19 20 21 22 23 24 25 26 109 Id. Id. 111 Mike Esterl, Altria To Launch MarkTen E-Cigarette Nationally, Wall Street Journal (Feb. 19, 2014), https://www.wsj.com/articles/altria-to-launch-markten-e-cigarette-nationally-1392832378. 112 Remarks by Jody Begley, 2017 Altria Investor Day (Nov. 2, 2017), http://media.corporateir.net/media_files/IROL/80/80855/2017InvestorDay/Remarks_and_Reconciliations.pdf 113 Timothy S. Donahue, At the Forefront, Tobacco Reporter (Dec. 1, 2017), https://www.tobaccoreporter.com/2017/12/at-the-forefront/. 114 Supra note 112. 115 Angel Abcede, Altria Introducing Closed Vapor System, CSP Daily News (Feb. 27, 2018), https://www.cspdailynews.com/tobacco/altria-introducing-closed-vapor-system#page=0. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 34 TELEPHONE: (206) 623-1900 110 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 38 of 88 1 chief Marty Barrington boasted that the Elite’s pods held more than twice as much liquid as 2 JUUL’s.116 3 4 5 6 7 8 9 10 71. Altria quickly followed with another pod-based product, the Apex by MarkTen. 72. Because e-cigarettes are subject to more relaxed regulation than cigarettes, Altria 11 12 13 14 15 16 17 was able to market its products in ways it could not have done for traditional tobacco products. 18 Altria marketed its e-cigarettes in flavors that would appeal to youth: Strawberry Brulee, Apple 19 20 Cider, Hazelnut Cream, Spiced Fruit, Piña Colada, Glacier Mint, and Mardi Gras (apparently a 21 mixed berry flavor). Most of these flavors were marketed with the Elite and Apex products, 22 Altria’s “pod” e-cigarettes. 23 24 25 26 116 Marty Barrington, Remarks by Marty Barrington, Altria Group, Inc.’s Chairman, CEO and President, and other members of Altria’s senior management team, US SEC (Feb.21, 2018), https://www.sec.gov/Archives/edgar/data/764180/000076418018000020/exhibit992-2018cagnyremarks.htm. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 35 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 39 of 88 1 73. Altria’s push to gain the youth market gained the attention of the FDA. On 2 September 12, 2018, the FDA sent a warning letter to Altria, requesting that Altria respond with 3 a “detailed plan” to address and mitigate the widespread use of its e-cigarette products by 4 minors.117 Due to the “epidemic rate of increase in youth use” of e-cigarettes, the FDA had 5 6 recently conducted an “enforcement blitz” of retailers nationwide and confirmed that Altria’s 7 MarkTen products were being sold to minors. The FDA did not mince words, telling Altria that 8 “[t]his is unacceptable, both legally and as a matter of public health.” The FDA warned Altria 9 that it has a responsibility to ensure minors are not getting access to its products and that it was 10 “crucial” that manufacturers like Altria take steps to prevent youth from using its products. First 11 and foremost, the FDA asked Altria to “take prompt action to address the rate of youth use of 12 MarkTen products.” The FDA suggested that Altria could revise its current marketing practices, 13 14 15 eliminate online sales, and remove flavored products from the market. The FDA’s expectation and motivation was clear: “steps must be taken to protect the nation’s young people.” 74. 16 On October 25, 2018, Altria responded to the FDA, claiming to have “serious 17 concerns” about youth access to e-vapor products.118 It admitted that the use of e-cigarettes by 18 youth had risen to “epidemic levels.” In response, Altria agreed to remove its pod-based e- 19 cigarettes from the market and stop selling any flavored traditional e-cigarettes other than 20 21 22 23 tobacco, menthol, and mint. It acknowledged that “[b]ased on publicly-available information from FDA and others, we believe pod-based products significantly contribute to the rise in youth use of e-vapor products. We don’t believe our products are the issue, but we don’t want to risk 24 25 26 117 Scott Gottlieb, Letter to Altria Client Services, U.S. Food and Drug Admin. (Sept. 12, 2018), https://www.fda.gov/media/119666/download. 118 Howard A. Willard, Letter to Scott Gottlieb, Commissioner, Altria (Oct. 25, 2018), http://www.altria.com/About-Altria/Federal-Regulation-of-Tobacco/Regulatory-Filing/FDAFilings/AltriaResponse-to-FDA-E-vapor-October-25-2018.pdf. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 36 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 40 of 88 1 contributing to the problem.” Altria’s letter went on to disclaim a number of practices that it 2 associated with marketing to youth—strategies that were key components of JUUL’s marketing 3 strategy. Altria specifically identified the use of flavors that go beyond traditional tobacco 4 flavors, digitally advertising on websites with a large percentage of youth visitors, using social 5 6 media to promote the brand, allowing online purchases and promotional sign-ups without age 7 verification, advertising e-cigarettes on billboards, advertising with models who appear to be 8 under 25 years old, distributing branded merchandise, and paying celebrities or other third 9 parties to market or use a particular brand’s e-cigarette. Altria also claimed to support “banning 10 11 vaping in schools” in order to reduce “social access.” Altria ended the letter by committing to “reverse the current use trend among youth.” 12 75. Less than two months later, Altria changed its tune. On December 20, 2018, 13 14 Altria announced that it would be making a $12.8 billion dollar investment in JUUL, the biggest 15 equity investment in United States history.119 The deal gave Altria a 35% stake in JUUL. 16 D. 17 JUUL and Altria Join Forces to Protect JUUL’s Market Share 76. By the fall of 2018, JUUL was under intense scrutiny. A group of eleven United 18 States senators wrote JUUL’s CEO, Kevin Burns, a letter in April 2018, declaring that the JUUL 19 device and JUULpods “are undermining our nation’s efforts to reduce tobacco use among youth 20 and putting an entire new generation of children at risk of nicotine addiction and other health 21 22 consequences.”120 Less than a week later, then FDA Commissioner Gottlieb announced a 23 24 25 26 119 Cromwell Schubarth, Vaping Unicorn Juul Opens Lab in Mountain View Amid Furor in S.F., Silicon Valley Bus. J. (Feb. 5, 2019), https://www.bizjournals.com/sanjose/news/2019/02/05/juul-opens-lab-in-mountainview.html. 120 Richard Durbin et al., Letter from 11 U.S. Senators, to Kevin Burns, CEO of JUUL Labs, Inc., United States Senate (April 18, 2018), https://www.durbin.senate.gov/imo/media/doc/JUUL%20Letter%20%20S%20IGNED.pdf. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 37 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 41 of 88 1 crackdown on retailers to limit youth access to e-cigarettes and enforcement actions against 2 JUUL in particular.121 At the same time, the FDA sent JUUL a request for documents relating to 3 marketing, product design, and public health impact.122 In July 2018, Massachusetts Attorney 4 General Maura Healey announced an investigation into JUUL regarding marketing and sale to 5 6 minors.123 In September 2018, FDA Commissioner Gottlieb called youth vaping an “epidemic” 7 and sent letters to JUUL, Altria, and other e-cigarette manufacturers demanding a plan to reduce 8 youth use.124 Then, in October 2018, as alleged above, the FDA raided JUUL’s headquarters and 9 seized more than a thousand documents relating to JUUL’s sales and marketing practices.125 10 11 12 77. On November 13, 2018, JUUL responded with an “Action Plan,” declaring its intent to stop selling certain flavors in brick-and-mortar stores, restrict purchases of those flavors on the JUUL website to adults age 21 and over, and shut down its social media accounts.126 13 78. 14 As the pressure on JUUL intensified, Altria stepped in to assist. Despite the clear 15 criticism of JUUL’s conduct in its October 25th letter to the FDA, Altria announced its $12.8 16 billion investment in JUUL on December 20, 2018.127 Altria characterized its investment as one 17 18 19 20 21 22 23 24 25 26 121 Scott Gottlieb, Statement from FDA Commissioner Scott Gottlieb, M.D., on new enforcement actions and a Youth Tobacco Prevention Plan to stop youth use of, and access to, JUUL and other e-cigarettes, U.S. Food and Drug Admin. (April 23, 2018), https://www.fda.gov/news-events/press-announcements/statement-fdacommissioner-scott-gottlieb-md-new-enforcement-actions-and-youth-tobaccoprevention?utm_campaign=04242018_Statement_Youth%20Tobacco%20Prevention&utm_medium=email&utm_ source=Eloqua. 122 Id. 123 AG Healey Announces Investigation into JUUL, Other Online E-Cigarette Retailers Over Marketing and Sale to Minors, Mass.gov (July 24, 2018), https://www.mass.gov/news/ag-healey-announces-investigation-into-juulother-online-e-cigarette-retailers-over-marketing. 124 Letters to Manufacturers Regarding Plans to Address Youth Access and Use, U.S. Food & Drug Admin. (Sept. 12, 2018), https://www.fda.gov/tobacco-products/rules-regulations-and-guidance/ctp-letters-industry#youthaccess. 125 McGinley., supra note 20. 126 Juul Labs Action Plan, Juul Labs (Nov. 13, 2018), https://newsroom.juul.com/juul-labs-action-plan/. 127 Altria Makes $12.8 Billion Minority Investment in JUUL to Accelerate Harm Reduction and Drive Growth, BusinessWire (Dec. 20, 2018), https://www.businesswire.com/news/home/20181220005318/en/Altria-12.8Billion-Minority-Investment-JUUL-Accelerate [hereinafter Altria Minority Investment]. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 38 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 42 of 88 1 intended to “accelerate harm reduction and drive growth.”128 In an investor presentation in 2019, 2 Altria described JUUL as having a “unique and compelling product” and included the following 3 graphic:129 4 5 6 7 8 9 10 11 12 79. 13 But as the president of the Campaign for Tobacco-Free Kids observed upon 14 announcement of the deal, “Altria has no interest in seriously reducing the number of people who 15 smoke cigarettes.”130 16 17 80. Altria would not have made such an investment if it did not intend to grow JUUL’s already enormous market even more. In fact, Altria said as much when announcing its 18 19 investment, explaining that its investment in JUUL “enhances future growth prospects” and 20 committing to applying “its logistics and distribution experience to help JUUL expand its reach 21 and efficiency.”131 Since the deal was inked in December 2018, Altria’s actions have clearly 22 helped JUUL maintain, if not expand, its market share—a market share that, based on Altria’s 23 24 128 Id. Howard Willard, 2019 CAGNY Investor Presentation, Altria (2019), http://investor.altria.com/Cache/1500117496.PDF?O=PDF&T=&Y=&D=&FID=1500117496&iid=4087349. 130 Sheila Kaplan & Matt Richtel, Juul Closes Deal with Tobacco Giant Altria, N.Y. Times (Dec. 20, 2018), https://www.nytimes.com/2018/12/20/health/juul-reaches-deal-with-tobacco-giant-altria.html. 131 Altria Minority Investment, supra note 127. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 39 TELEPHONE: (206) 623-1900 129 25 26 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 43 of 88 1 own October 25, 2018 letter to the FDA, it believes was gained by employing marketing and 2 advertising practices that contributed to youth vaping. Altria’s Second Quarter 2019 Earnings 3 4 Call reported that JUUL continued to grow in the first half of 2019, from a 33% category share in 2018 to 48% by the second quarter 2019. JUUL’s expected revenue for 2019 is $3.4 billion, 5 6 nearly triple what it was in 2018.132 81. 7 From JUUL’s beginnings, Altria had “followed Juul’s journey rather closely.”133 8 Altria Chairman and CEO Howard Willard said that, for years, his company “watched Juul 9 carefully to see if it had staying power.”134 Altria decided it did. As Willard explained: “During 10 2018, we concluded that JUUL had not only become the retail share leader in the U.S. e-vapor 11 12 category, but that no other brand was close to it in share or future growth potential.”135 This was enough for Altria, one of the world’s largest producers and marketers of tobacco products, to call 13 14 JUUL’s alleged smoking cessation device a “terrific product” and take a 35% stake in JUUL 15 with its $12.8 billion investment.136 With this investment, Altria now owns both the number one 16 youth initiation cigarette in the United States (the Marlboro cigarette) and the number one youth 17 initiation e-cigarette in the United States, JUUL. 18 19 82. Notwithstanding Altria’s statements to the FDA just two months previously about its concerns that JUUL was marketing and advertising its products in a way that contributed to 20 21 the youth vaping epidemic, Willard stated that the deal would allow Altria to “work[] with JUUL 22 132 23 24 25 26 Olivia Zaleski & Ellen Huet, Juul Expects Skyrocketing Sales of $3.4 Billion, Despite Flavored Vape Restrictions, Bloomberg (Feb. 22, 2019), https://www.bloomberg.com/news/articles/2019-02-22/juul-expectsskyrocketing-sales-of-3-4-billion-despite-flavored-vape-ban. 133 Altria Group, Inc., Current Report (Form 8-K), Ex. 99.1 (Feb. 20, 2019), https://www.sec.gov/Archives/edgar/data/764180/000076418019000018/exhibit991-2019cagnyremarks.htm at 4. 134 Id. at 4. 135 Id. at 4. 136 Angelica LaVito, E-Cigarette Sales Are Booming Thanks to Juul, CNBC (Aug. 21, 2018), https://www.cnbc.com/2018/08/21/e-cigarette-sales-are-booming-thanks-to-juul.html. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 40 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 44 of 88 1 to accelerate its mission.”137 Altria committed to applying “its logistics and distribution 2 experience to help JUUL expand its reach and efficiency” and offering JUUL the support of 3 “Altria’s sales organization, which covers approximately 230,000 retail locations.” It also gave 4 JUUL access to its “premier” retail shelf space while allowing it to continue to sell its flavored 5 6 products online and provided JUUL with access to the databases of all of Altria’s companies. 7 According to Willard, Altria was “excited to support JUUL’s highly-talented team and offer 8 [Altria’s] best-in-class services to build on their tremendous success.” Altria admitted that 9 minors were using JUUL products and that “underage use of e-cigarette product is a problem.” 10 11 Nevertheless, that it believed its investment in JUUL “strengthens its financial profile and enhances future growth prospects.” 12 83. Altria’s decision to prioritize profits over the dangers of youth vaping did not go 13 14 unnoticed. On February 6, 2019, former FDA Commissioner Scott Gottlieb, sent Altria another 15 letter “regarding representations” made by Altria acknowledging that it “has an obligation to take 16 action to help address the mounting epidemic of youth addiction to tobacco products.”138 17 Commissioner Gottlieb told Altria that its recent purchase of a 35% ownership of JUUL 18 “contradict[s] the commitments you made to the FDA.” The FDA demanded Altria be prepared 19 to explain itself regarding its “plans to stop marketing e-cigarettes and to address the crisis of 20 21 22 23 youth use of e-cigarettes.” Commissioner Gottlieb told Altria that “deeply concerning data” shows that “youth use of JUUL represents a significant proportion of overall use of e-cigarette products by children” and despite any steps the companies had taken to address the issue he 24 25 26 137 Altria Minority Investment, supra note 127. Scott Gottlieb, Letter to Howard Willard, U.S. Food and Drug Admin. (Feb. 6, 2019), https://www.fda.gov/media/122589/download. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 41 TELEPHONE: (206) 623-1900 138 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 45 of 88 1 “ha[d] no reason to believe these youth patterns of use are abating in the near term, and they 2 certainly do not appear to be reversing.” 3 4 84. The companies met with Gottlieb in March 2019 in a meeting the Commissioner described as “difficult.”139 Gottlieb “did not come away with any evidence that public health 5 6 7 concerns drove Altria’s decision to invest in JUUL, and instead sa[id] it looks like a business decision.” Just a few weeks later, Gottlieb resigned his position. 85. 8 9 10 11 12 As mentioned above, Altria’s investment in JUUL is not only a financial contribution. Altria is working to actively help run JUUL’s operations and expand JUUL’s sales. Altria’s investment brings legal and regulatory benefits to JUUL, by helping with patent infringement battles and consumer health claims and helping to navigate the regulatory waters and FDA pressure. Altria also brings lobbying muscle. In addition, Altria’s arrangement with 13 14 JUUL gives JUUL greater access to retail. JUUL has been in 90,000 US retail outlets, while 15 Altria reaches 230,000 US outlets. Altria brings its logistic and distribution experience. 16 Importantly, Altria gives JUUL access to shelf space—and not just shelf space, but space near 17 Altria products and retail displays. The arrangement allows JUUL’s tobacco and menthol-based 18 products to receive prominent placement alongside a top-rated brand of combustible cigarettes. 19 86. Altria is closely intertwined with JUUL. Not only does Altria’s investment also 20 21 22 allow it to appoint a third of JUUL’s board, but in the last month, JUUL’s CEO resigned to be replaced by a career Altria executive, K.C. Crosthwaite. Crosthwaite had most recently served as 23 the vice president and chief growth officer of Altria Client Services LLC, overseeing the 24 company’s work, including digital marketing, packaging design & innovation, product 25 26 139 Kate Rooney and Angelica LaVito, Altria shares fall after FDA’s Gottlieb describes ‘difficult’ meeting on Juul, CNBC (Mar. 19, 2019), https://www.cnbc.com/2019/03/19/altria-shares-fall-after-fdas-gottlieb-describes-difficultmeeting-on-juul.html. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 42 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 46 of 88 1 development, and safety, health, and environmental affairs. Crosthwaite is a career Altria 2 executive who knows Big Tobacco’s playbook all too well, having previously serving as the 3 president and CEO of Phillip Morris USA, the vice president and general manager at Marlboro, 4 and the vice president of strategy and business development of at Altria Client Services LLC. 5 87. 6 This arrangement was profitable for both companies. JUUL employees received 7 $2 billion in bonuses, which, split among the Company’s 1,500 employees, was approximately 8 $1.3 million per employee,140 and Altria received millions of teen customers. 9 10 11 88. Since JUUL and Altria joined forces, JUUL’s spending on lobbying has risen significantly. JUUL spent $1.95 million on lobbying in the first two quarters of 2019, compared to $1.64 million in all of 2018.141 12 89. JUUL claims its mission is to “improve the lives of the world’s one billion adult 13 14 smokers by eliminating cigarettes” and its advertising now encourages “making the switch.”142 90. 15 In March 2019, JUUL’s CEO Ken Burns wrote an op-ed piece declaring his 16 agreement with HHS Secretary Azar and FDA Commissioner Gottlieb “that companies such as 17 ours must step up with meaningful measures to limit access and appeal of vapor products to 18 young people. And that’s exactly what we’ve done, and we will do more to combat teen use in 19 order to save the harm-reduction opportunity for the 34 million adult smokers in the United 20 21 States.”143 22 23 24 140 25 26 Olivia Zaleski, Juul Employees to Get $2 Billion Bonus in Altria Deal, Bloomberg (Dec. 20, 2018), https://www.bloomberg.com/news/articles/2018-12-20/juul-employees-said-to-get-2-billion-bonus-in-altria-deal. 141 https://thehill.com/business-a-lobbying/business-a-lobbying/456449-embattled-juul-seeks-allies-in-washington 142 Our Mission, JUUL Labs (2019), https://www.juul.com/mission-values. 143 https://www.washingtonpost.com/opinions/2019/03/30/vape-makers-must-do-more-stop-kids-using-e-cigarettes/ CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 43 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 47 of 88 1 91. In September 2019, JUUL spokesperson Ted Kwong said the company agreed 2 with the need for “aggressive category-wide action on vapor products,” adding that it had taken 3 “the most aggressive actions of anyone in the industry to combat youth usage.”144 4 92. Similarly, Altria’s CEO Howard Willard claimed that it invested in JUUL to help 5 6 “switching adult smokers” and “reduce harm.”145 But JUUL does not have FDA approval as a 7 cessation device. This may be because, as one Company engineer said: “We don’t think a lot 8 about addiction here because we’re not trying to design a cessation product at all … anything 9 about health is not on our mind.”146 10 11 12 93. JUUL also does not have authority to claim that is product is healthier than cigarettes. On September 9, 2019, the FDA warned JUUL that it has violated federal law by making unauthorized representations that JUUL products are safer than cigarettes.147 13 94. 14 Moreover, even if JUUL were to obtain FDA approval as a legitimate smoking 15 cessation device, this has no impact—and certainly does not excuse—the Defendants’ conduct 16 that targets youth. Regardless of the potential health benefits to chain smokers from switching to 17 vaping from smoking, there is no benefit to kids from starting to vape. 18 E. 19 The Cost of JUUL’s Success 95. In addition to designing its devices to be particularly attractive to youth, JUUL 20 designed its devices to be highly addictive. Unlike most other e-cigarettes, which use freebase 21 22 nicotine, JUUL uses patented nicotine salts from which it makes liquid nicotine cartridges, or 23 144 24 25 26 https://www.reuters.com/article/us-health-vaping-california/california-governor-acts-to-stem-epidemic-of-youthvaping-idUSKBN1W12DD 145 See Altria Minority Investment supra note 127. 146 Nitasha Tiku, Startup Behind the Lambo of Vaporizers Just Launched an Intelligent e-Cigarette, The Verge (Apr. 21, 2015), https://www.theverge.com/2015/4/21/8458629/pax-labs-e-cigarette-juul. 147 Juul Labs, Inc. Warning Letter, U.S. Food and Drug Admin. (Sept. 9, 2019), https://www.fda.gov/inspectionscompliance-enforcement-and-criminal-investigations/warning-letters/juul-labs-inc-590950-09092019. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 44 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 48 of 88 1 JUULpods.148 Each JUULpod is, according to the Company, the equivalent of a pack of 2 cigarettes. Each pod contains an alarming amount of nicotine, with up to 59 mg per ml—an 3 amount that is roughly three times the amount of nicotine that can be sold to consumers in the 4 European Union in a JUULpod. On top of ramping up the amount of nicotine, JUULpods 5 6 enabled the Company to increase the rate and amount of nicotine delivery to the JUUL user, 7 roughly doubling the concentration and tripling the delivery speed of nicotine of the average e- 8 cigarette.149 9 10 11 12 96. Big Tobacco spent decades manipulating nicotine in order to foster and maintain addiction in their customers. RJR developed and patented nicotine salt additives, including nicotine benzoate, to increase nicotine delivery in cigarette smoke. The objective was to provide an additional “nicotine kick” based on increased nicotine absorption associated with lower pH. 13 14 JUUL uses this very same concept for its market-dominating e-cigarettes. The Company’s patent 15 for its nicotine salts describes a process for combining benzoic acids with nicotine, a formulation 16 that mimics the nicotine salt additive developed by RJR. JUUL’s use of benzoic acid and 17 manipulation of pH affect the palatability of nicotine inhalation by reducing the “throat hit” that 18 19 users experience when vaping. Indeed, this was the objective behind using nicotine salts (as compared to “free base nicotine” which has a higher pH). According to Ari Atkins, one of the 20 21 inventors of the JUUL device, “[i]n the tobacco plant, there are these organic acids that naturally 22 23 24 25 26 148 Rachel Becker, Juul’s Nicotine Salts Are Dominating the Market – And Other Companies Want In, The Verge (Nov. 21, 2018), https://www.theverge.com/2018/11/21/18105969/juul-vaping-nicotine-salts-electroniccigarettes-myblu-vuse-markten. 149 How Much Nicotine is In Juul?, Truth Initiative (Feb. 26, 2019), https://truthinitiative.org/researchresources/emerging-tobacco-products/how-much-nicotine-juul. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 45 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 49 of 88 1 occur. And they help stabilize the nicotine in such a way that makes it . . . I’ve got to choose my 2 words carefully here: Appropriate for inhalation.”150 3 4 97. Because smokers are already accustomed to a certain level of harshness and throat hit, developing a product with low levels of harshness and minimal “throat hit” is only a critical 5 6 concern if your goal is to appeal to non-smokers, for example, youth. Minimizing the harshness 7 of nicotine also allows one to vape more frequently and for longer periods of time and masks the 8 amount of nicotine being delivered by eliminating the unpleasant throat hit normally associated 9 with large doses of nicotine. The harshness of free base nicotine makes prolonged vaping 10 11 difficult; the use of nicotine salts solves that problem. Put another way, the nicotine salt technology behind JUULpods makes JUUL “smoke” highly potent yet hardly perceptible. 12 98. The increased nicotine exposure facilitated by the JUUL device has serious health 13 14 consequences. The ease of use and “smoothness” strip away external inhibitors and enable 15 extreme levels of unfettered use. Using the JUUL’s own calculations, consuming two JUULpods 16 in a day is the equivalent of consuming two to four packs of cigarettes a day. In this way, JUUL 17 has not only created a new generation of e-cigarette smokers, but has also pioneered a new style 18 of smoking—vaping—that is more nicotine-saturated than ever before. 19 99. Increased rates and duration of smoking lead to greater overall exposure to 20 21 22 23 nicotine. Nicotine is a neurotoxin. A highly addictive, psychoactive substance that targets brain areas involved in emotional and cognitive processing, nicotine poses a particularly potent threat to the adolescent brain, as it can “derange the normal course of brain maturation and have lasting 24 25 26 150 David Pierce, This Might Just Be the First Great E-Cig, Wired.com (Apr. 21, 2015), https://www.wired.com/2015/04/pax-juul-ecig/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 46 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 50 of 88 1 consequences for cognitive ability, mental health, and even personality.”151 Animal researchers 2 from the Yale University School of Medicine has found that vaping during adolescence can lead 3 to long-term brain changes, like attention deficit hyperactivity disorder.152 4 100. Studies also show that exposure to nicotine as a teen—even minimal exposure— 5 6 biologically primes the brain for addiction and greatly increases likelihood of dependence on 7 nicotine as well as other substances later in life.153 In a study done on mice, even “very brief, 8 low-dose exposure to nicotine in early adolescence increases the rewarding properties of other 9 drugs, including alcohol, cocaine, methamphetamine—and these are long-term changes.”154 10 11 12 101. JUUL’s use of flavors only amplifies its addictive qualities. Research done by Nii Addy, associate professor of psychiatry and cellular and molecular physiology at the Yale School of Medicine, found that “sweet flavors can make the nicotine more palatable . . . but also act in 13 14 the brain to increase nicotine taking.”155 This effective is especially troubling for teenage brains, 15 which are more sensitive than adult brains to rewards. According to University of Pennsylvania 16 psychologist Janet Audrain-McGovern, research shows that “if the first e-cigarette you used was 17 flavored, then you’re more likely to go on and use an e-cigarette again.”156 18 19 102. According to congressional testimony from Dr. Jonathan Winickoff, a professor of pediatrics at Harvard Medical School and the Director of Pediatric Research in the Tobacco 20 21 151 22 23 24 25 26 N.A. Goriounova & H.D. Mansvelder, Short- and Long-Term Consequences of Nicotine Exposure during Adolescence for Prefrontal Cortex Neuronal Network Function, Cold Spring Harbor Persp. in Med. 2(12) (Dec. 2012), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3543069/. 152 Jon Hamilton, How Vaping Nicotine Can Affect A Teenage Brain, NPR (Oct. 10, 2019), https://www.npr.org/sections/health-shots/2019/10/10/768588170/how-vaping-nicotine-can-affect-a-teenage-brain. 153 National Institute on Drug Abuse, Principles of Adolescent Substance Use Disorder: A Research Based Guide (2014), https://www.drugabuse.gov/publications/principles-adolescent-substance-use-disorder-treatmentresearch-based-guide/introduction. 154 Hamilton, supra note 152. 155 Id. 156 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 47 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 51 of 88 1 Research and Treatment Center, “[n]icotine addiction can take hold in only a few days, 2 especially in the developing adolescent brain that is particularly vulnerable to addiction to 3 nicotine. . . Many of my patients find Juul nearly impossible to stop. Nicotine withdrawal can 4 cause headaches, insomnia, irritability, anxiety, and depression, and these withdrawal symptoms 5 6 are one of the primary reasons a nicotine addiction is difficult to overcome.”157 Moreover, there 7 is a lack of effective tools to help adolescents overcome nicotine addiction: there is no good data 8 on how to treat adolescents with e-cigarette dependence; there has not been enough research on 9 youth tobacco cessation strategies; and most of the pharmacological therapies approved for 10 adults have been shown to be ineffective or only marginally effective in adolescents.158 11 103. Research in Massachusetts indicates that daily JUUL and other e-cigarette use is 12 much more likely to continue than daily cigarette smoking. Out of the surveyed students who 13 14 reported ever using cigarettes, only 17% indicated that they remained daily smokers. Out of the 15 surveyed students who reported ever using e-cigarettes daily, 58% remained daily users. This 16 data demonstrates both that e-cigarette use in teens is very persistent, a result consistent with the 17 addictiveness of JUUL and the difficulty teens have in trying to quit.159 18 19 104. E-cigarette use also puts adolescents at increased risk for cigarette smoking. Compared to adolescents who do not use e-cigarettes, those who do are 3.5 times more likely to 20 21 begin smoking cigarettes. 22 23 24 25 26 157 Jonathan Winickoff, Testimony of Jonathan Winickoff before the U.S. House of Representatives Committee on Oversight and Reform Subcommittee on Economic and Consumer Policy, U.S. House Committee on Oversight & Reform (July 24, 2019), https://oversight.house.gov/sites/democrats.oversight.house.gov/files/2019.07.24%20 Winickoff%20AAP%20Testimony.pdf at 2 [hereinafter “Winickoff Testimony”]. 158 Id. at 2. 159 Id. at 2. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 48 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 52 of 88 1 2 3 105. The dangerous and destructive nature of nicotine is no recent discovery. As a key ingredient in tobacco products, the drug and its deleterious effects have been the subject of scientific research and public health warnings for decades. Nicotine causes cardiovascular, 4 reproductive, and immunosuppressive problems with devastating effects. Part of the reason the 5 6 national decline in cigarette use in recent years was such a victory for public health was because 7 there was a corresponding decline in teen exposure to nicotine. From 2000 to 2017, the smoking 8 rate among high school students fell by 73%.160 9 10 11 12 106. That trend has completely reversed. In 2018, more than one in four high school students in the United States reported using a tobacco product in the past thirty days, a dramatic increase from just one year before.161 But there was no increase in the use of cigarettes, cigars, or hookahs during that same time period.162 There was only increased use in a single tobacco 13 14 product: e-cigarettes. While use of all other tobacco products continued to decrease as it had 15 been for decades, e-cigarette use increased 78% in just one year.163 This drastic reversal caused 16 the CDC to describe youth vaping an “epidemic.”164 17 18 19 20 21 22 23 24 25 26 Matthew L. Myers, Press Release: On 20th Anniversary of State Tobacco Settlement (the MSA), It’s Time for Bold Action to Finish the Fight Against Tobacco, Campaign for Tobacco-Free Kids (Nov. 26, 2018), https://www.tobaccofreekids.org/press-releases/2018_11_26_msa20. 161 Progress Erased: Youth Tobacco Use Increased During 2017-2018, Ctrs. for Disease Control and Prevention (Feb. 11, 2019), https://www.cdc.gov/media/releases/2019/p0211-youth-tobacco-use-increased.html. 162 Tobacco Use By Youth Is Rising: E-Cigarettes are the Main Reason, Ctrs. for Disease Control & Prevention (Feb. 2019), https://www.cdc.gov/vitalsigns/youth-tobacco-use/index.html. 163 Scott Gottlieb, Statement from FDA Commissioner Scott Gottlieb, M.D., on proposed new steps to protect youth by preventing access to flavored tobacco products and banning menthol in cigarettes, U.S. Food & Drug Admin. (Nov. 15, 2018), https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scottgottlieb-md-proposed-new-steps-protect-youth-preventing-access. 164 Adams, supra note 2. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 49 TELEPHONE: (206) 623-1900 160 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 53 of 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 107. The teen vaping epidemic of which JUUL is the architect has and will continue to have significant costs, both for individual users and for society. Nicotine addiction alone has significant health care costs, and these costs are exacerbated when adolescents are involved. 16 Adolescent nicotine addiction leads to memory and attention problems, and increase chances of 17 18 addiction later in life, all of which will continue to have long-lasting impacts on society. 108. 19 Science is also beginning to show that e-cigarettes have the potential to cause 20 even more, distinct health risks and costs. The very same liquids that enable e-cigarettes to 21 deliver nicotine with such potency are proving to be increasingly dangerous. When heated, the 22 vape liquid turns into aerosol, which may contain, in addition to nicotine, ultrafine toxic particles 23 such as lead, additional chemicals, and volatile organic compounds.165 These chemicals have the 24 25 26 165 Lena H. Sun, He went from hiking enthusiast to ‘on death’s door’ within days. Doctors blamed vaping, Wash. Post (Aug. 24, 2019), https://www.washingtonpost.com/health/one-mans-near-death-experience-with-vapingrelated-lung-failure/2019/08/24/ca8ce42c-c5b4-11e9-9986-1fb3e4397be4_story.html?arc404=true. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 50 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 54 of 88 1 potential to be deadly. Vaping is now linked to conditions like chronic obstructive pulmonary 2 disease and seizures, and there were 193 possible cases of severe lung illness associated with e- 3 cigarette product use in 22 states in less than two months in the summer of 2019 alone.166 Public 4 health officials reported the first known death from a vaping-related illness on August 23, 5 6 2019.167 On September 11, 2019, a teenager in King County became the first person in 7 Washington State to be diagnosed with a severe lung disease associated with vaping.168 By 8 October 10, 2019, lung illness tied to vaping had killed 26 people, and there were over 1,300 9 possible cases of serious illness reported from 49 states.169 Only Alaska has not yet seen a case. 10 16% of these patients have been under the age of 18.170 In October 2019, a 17-year-old boy from 11 the Bronx, New York became the first child to die from vaping-related respiratory illness.171 12 109. Many teenagers are simply unaware of these risks, an ignorance that JUUL preys 13 14 on. According to Dr. Winickoff, many of his patients believe JUULing is harmless: Counseling teens and preteens on e-cigarette use is challenging. Many of my patients have wildly incorrect beliefs about e-cigarettes. They know that cigarettes are dangerous, but assume that Juul—since it’s ubiquitous, comes in childfriendly flavors, and is marketed as a healthier alternative to smoking—must be harmless. I have to explain to kids that e-cigarettes do not have the same positive 15 16 17 18 19 166 20 21 22 23 24 25 26 CDC, FDA, States Continue to Investigate Severe Pulmonary Disease Among People Who Use E-cigarettes, Ctrs. for Disease Control & Prevention (Aug. 21, 2019), https://www.cdc.gov/media/releases/2019/s0821-cdc-fdastates-e-cigarettes.html. 167 Matt Richtel & Sheila Kaplan, First Death in a Spate of Vaping Sicknesses Reported by Health Officials, N.Y. Times (Aug. 23, 2019), https://www.nytimes.com/2019/08/23/health/vaping-death-cdc.html. 168 Nicole Brodeur & Ryan Blethen, King County teen is first in state diagnosed with severe lung disease related to vaping, Seattle Times (Sept. 11, 2019), https://www.seattletimes.com/seattle-news/health/king-county-teen-isfirst-in-state-diagnosed-with-severe-lung-disease-related-to-vaping/. 169 Nicole Brodeur & Ryan Blethen, King County teen is first in state diagnosed with severe lung disease related to vaping, Seattle Times (Sept. 11, 2019), https://www.seattletimes.com/seattle-news/health/king-county-teen-isfirst-in-state-diagnosed-with-severe-lung-disease-related-to-vaping/. 170 Denise Grady, Vaping Illnesses Top 1,000, C.D.C., N.Y. Times (Oct. 3, 2019), https://www.nytimes.com/2019/10/03/health/vaping-illnesses-cdc.html. 171 Ed Shanahan and Azi Paybarah, Bronx Teenager’s Death Is the Youngest Vaping Fatality in U.S., N.Y. TIMES (Oct. 8, 2019), https://www.nytimes.com/2019/10/08/nyregion/vaping-death.html. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 51 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 55 of 88 1 health benefits as the fruits whose flavor they copy. Even the term vapor calls to mind harmless water vapor. There is no water in these products. 2 3 4 5 Winickoff Testimony at 1. F. JUUL’s Remedial Measures 110. In the face of increasing public scrutiny and pressure, JUUL has taken action to 6 curb underage use of its products, but its efforts have been ineffective at best and aggravating at 7 worse. After media and researchers brought JUUL’s advertising tactics front and center, it 8 9 launched a new ad campaign focusing on former smokers and deleted social media accounts. But, JUUL designed its social media campaign to subsist off of user-made content, which 10 11 12 13 remains unaffected by the absence of a JUUL-run account. In fact, as noted above, posts relating to JUUL increased after it stopped its direct social advertising campaign. 111. JUUL’s efforts to curb underage use through alterations to the product itself are 14 similarly either ineffective or potentially damaging. JUUL’s approach to its flavored products 15 illustrates this point. In response to serious concerns about flavored products and youth vaping, 16 JUUL did the following: (1) it slightly modified the flavor names (i.e., “Cool Mint” is now 17 “Mint,” “Crème Brulee” is now “Creme”); and (2) it limited the flavors carried by retail stores to 18 19 tobacco and mint, while continuing to offer the full range of flavors (including popular ones such 20 as Mango) online—a market which teens are particularly aware and adept at navigating. As Dr. 21 Winickoff testified before Congress: 22 23 24 25 [it is] completely false to suggest that mint is not an attractive flavor to children. From candy canes to toothpaste, children are introduced to mint flavor from a young age. Not only do children enjoy mint, but it has special properties that make it an especially dangerous flavor for tobacco. Menthol’s anesthetic properties cool the throat, mask the harshness of nicotine, and make it easier for children to start using and continue using tobacco products. The impact of mint and menthol flavors on increasing youth tobacco addiction is well documented. 26 Winickoff Testimony at 3. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 52 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 56 of 88 1 112. Similarly, restricting other flavors to online sales is of limited effectiveness. 2 According to Dr. Winickoff, 80% of children get e-cigarettes from social sources, such as older 3 friends, meaning that if the products are available for sale somewhere, children will get them.172 4 G. JUUL and Schools 5 113. In addition to severe health consequences, widespread “JUULing” has placed 6 7 severe burdens on society and schools in particular. It is not an overstatement to say that JUUL 8 has changed the educational experience of students across the nation. As one vape shop manager 9 told KOMO News, “It’s the new high school thing. Everyone’s got the JUUL.”173 10 11 12 114. JUUL use has completely changed school bathrooms—now known as “the Juul room.”174 As one high school student explained, “it’s just a cloud.”175 The ubiquity of JUUL use in high school bathrooms has generated numerous online spoofs about “the juul room.” 13 14 15 16 17 18 19 20 21 22 172 23 24 25 26 Id. Juuling at School, KOMO News (2019), https://komonews.com/news/healthworks/dangerous-teen-trendjuuling-at-school. 174 Moriah Balingit, In the ‘Juul room’: E-cigarettes spawn a form of teen addiction that worries doctors, parents and schools, Wash. Post (July 26, 2019), https://www.washingtonpost.com/local/education/helpless-to-the-drawof-nicotine-doctors-parents-and-schools-grapple-with-teens-addicted-to-e-cigarettes/2019/07/25/e1e8ac9c-830a11e9-933d-7501070ee669_story.html. 175 Greta Jochem, Juuling in School: e-Cigarette Use Prevalent Among Local Youth, Daily Hampshire Gazette (Nov. 13, 2018), https://www.gazettenet.com/Juuling-in-Schools-21439655. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 53 TELEPHONE: (206) 623-1900 173 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 57 of 88 1 2 3 4 5 6 7 8 9 10 11 12 176 13 14 15 16 115. Kids have also coined the term “nic sick”—which, as one high school student explained to CBS News, “kinda seems like a really bad flu, like, just out of nowhere. Your face goes pale, you start throwing up and stuff, and you just feel horrible.”177 17 116. Such rampant JUUL use has effectively added another category to teachers’ and 18 19 school administrators’ job descriptions; many now receive special training to respond to the 20 various problems that JUUL use presents, both in and out of the classroom. A national survey of 21 middle schools and high schools found that 43.3% of schools have had to implement not only an 22 23 24 25 26 176 Juul Hashtag Meme, Stanford U. Res. into the Impact of Tobacco Advert. (2018), http://tobacco.stanford.edu/tobacco_main/images_pods.php?token2=fm_pods_st681.php&token1=fm_pods_im g37610.php&theme_file=fm_pods_mt068.php&theme_name=JUUL&subtheme_name=%23juul. 177 High school students say about 20% of their peers are vaping, some as young as 8th grade, CBS News (Aug. 31, 2019), https://www.cbsnews.com/news/high-school-students-say-about-20-of-their-peers-are-vaping-some-asyoung-as-8th-grade/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 54 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 58 of 88 1 e-cigarette policy but a JUUL-specific policy.178 Participants in the survey reported multiple 2 barriers to enforcing these policies, including the discreet appearance of the product, difficulty 3 pinpointing the vapor or scent, and the addictive nature of the product.179 4 117. Across the United States, schools have had to divert resources and administrators 5 6 have had to go to extreme lengths to respond to the ever-growing number of students using 7 JUULs on school grounds. According to the Truth Initiative, more than 40 percent of all teachers 8 and administrators reported that their school uses camera surveillance near the school’s restroom, 9 almost half (46 percent) reported camera surveillance elsewhere in the school, and 23 percent 10 11 12 reported using assigned teachers for restroom surveillance.180 Some schools have responded by removing bathroom doors or even shutting bathrooms down,181 and schools have banned flash drives to avoid any confusion between flash drives and JUULs.182 Schools have also paid 13 14 thousands of dollars to install special monitors to detect vaping, which they say is a small price 15 to pay compared to the plumbing repairs otherwise spent as a result of students flushing vaping 16 paraphernalia down toilets.183 Other school districts have sought state grant money to create new 17 18 178 19 20 21 22 23 24 25 26 Barbara A. Schillo, et al., JUUL in School: Teacher and Administrator Awareness and Policies of E-Cigarettes and JUUL in U.S. Middle and High Schools, Truth Initiative (Sep. 2019), https://journals.sagepub.com/doi/full/10.1177/1524839919868222?url_ver=Z39.88-2003&rfr_id=ori:rid :crossref.org&rfr_dat=cr_pub%3dpubmed. 179 Id. 180 How are schools responding to JUUL and the youth e-cigarette epidemic?, Truth Initiative, (Jan. 18, 2019), https://truthinitiative.org/research-resources/emerging-tobacco-products/how-are-schools-responding-juul-andyouth-e-cigarette. 181 Ana B. Ibarra, The Juul’s So Cool, Kids Smoke It In School, Kaiser Health News (Mar. 26, 2018), https://khn.org/news/the-juuls-so-cool-kids-smoke-it-in-school/; Evie Blad, ‘Juuling’ Craze: Schools Scramble to Deal With Student Vaping, Educ. Wk. (May 4, 2018), https://www.edweek.org/ew/articles/2018/05/09/juuling-craze-schools-scramble-to-deal-with.html. 182 Ana B. Ibarra, Why ‘juuling’ has become a nightmare for school administrators, Kaiser Health News (Mar. 26, 2018), https://www.nbcnews.com/health/kids-health/why-juuling-has-become-nightmare-school-administratorsn860106. 183 Suzanne Monaghan, Many schools installing vape detectors in bathrooms to discourage e-cigarette use, KYW Newsradio (June 10, 2019), https://kywnewsradio.radio.com/articles/news/many-schools-installing-vapedetectors-bathrooms-address-rise-e-cigarette-use. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 55 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 59 of 88 1 positions for tobacco prevention supervisors, who get phone alerts when vape smoke is detected 2 in bathrooms.184 3 118. Many schools have shifted their disciplinary policies in order to effectively 4 address the JUUL epidemic. Rather than immediately suspending students for a first offense, 5 6 school districts have created anti-vaping curricula which students are required to follow in 7 sessions held outside of normal school hours, including on Saturdays.185 Teachers prepare 8 lessons and study materials for these sessions with information on the marketing and health 9 dangers of vaping186—extra work which requires teachers to work atypical hours early in the 10 mornings and on weekends.187 Some schools will increase their drug testing budget to include 11 random nicotine tests for students before they join extracurricular activities.188 Under this drug- 12 testing protocol, first offenders will undergo drug and alcohol educational programming; second 13 14 15 and third offenders with be forced to sit out from extracurriculars and attend substance abuse counseling.189 119. 16 17 18 JUUL actively sought to enter school campuses. The Subcommittee on Economic and Consumer Policy (“Subcommittee”) conducted a months-long investigation of JUUL, including reviewing tens of thousands of internal documents, and concluded that JUUL 19 20 21 22 23 24 25 26 184 Lauren Katims, California Fights Vaping in Schools, U.S. News & World Report (Apr. 30, 2019), https://www.usnews.com/news/best-states/articles/2019-04-30/california-focuses-on-education-to-curb-vapingin-schools. 185 Id. 186 Pat Eaton-Robb, Discipline or treatment? Schools rethinking vaping response, Concord Monitor (May 26, 2019), https://www.concordmonitor.com/Discipline-or-treatment-Schools-rethinking-vaping-response-25822972. 187 Kathy Brown, School trustees OK discipline for juuling/vaping offenses, Gillette News Record (Aug. 29, 2019), https://www.gillettenewsrecord.com/news/local/article_5ec28c96-fd48-5ae0-b267-4e417272d020.html. 188 Christine Hauser, This School District Has a Way to Combat Vaping: Random Nicotine Tests, N.Y. Times (June 17, 2019), https://www.nytimes.com/2019/06/17/us/nebraska-vaping-schools.html. 189 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 56 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 60 of 88 1 “deliberately targeted children in order to become the nation’s largest seller of e-cigarettes.”190 2 The Subcommittee found that “(1) Juul deployed a sophisticated program to enter schools and 3 convey its messaging directly to teenage children; (2) Juul also targeted teenagers and children, 4 as young as eight years-old, in summer camps and public out-of-school programs; and (3) Juul 5 6 recruited thousands of online “influencers” to market to teens.”191 120. 7 According to the Subcommittee, JUUL was willing to pay schools and 8 organizations hundreds of thousands of dollars to have more direct access to kids. Such attempts 9 included paying a Baltimore charter school organization $134,000 to start a summer camp to 10 11 12 teach kids healthy lifestyles, for which JUUL itself would provide the curriculum; offering schools $10,000 to talk to students on campus; and giving the Police Activities League in Richmond, California, $90,000 to provide JUUL’s own vaping education program, “Moving 13 14 15 On,” to teenage students suspended for using cigarettes.192 Meanwhile, JUUL would collect data about test scores, surveys, and activity logs about the students. 121. 16 Among the more egregious incidents reported by the Subcommittee was a July 17 24, 2019 presentation in which no parents or teachers were in the room for the presentation, the 18 message conveyed was that the JUUL product was “totally safe,” and the presenter even 19 demonstrated to the students how to use a JUUL.193 The school was presumably paid for this 20 21 22 23 24 25 26 190 Supplemental Memorandum for Hearing on ‘Examining JUUL’s Role in the Youth Nicotine Epidemic: Parts I & II’ from Committee Staff, to Democratic Members of the Subcommittee on Economic and Consumer Policy (July 25, 2019), https://oversight.house.gov/sites/democrats.oversight.house.gov/files/Supplemental%20Memo.pdf . [hereinafter “JUUL’s Role in Youth Nicotine Epidemic”] 191 Id. at 1. 192 Sheila Kaplan, Juul Targeted Schools and Youth Camps, House Panel on Vaping Claims, N.Y. Times (July 25, 2019), https://www.nytimes.com/2019/07/25/health/juul-teens-vaping.html. 193 JUUL’s Role in Youth Nicotine Epidemic, supra note 190. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 57 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 61 of 88 1 meeting, which was marketed to the school as an anti-smoking initiative. A JUUL spokesman 2 said JUUL is no longer funding such programs.194 3 H. 4 Impact on King County 122. In Washington, although the percentage of teens reporting cigarette smoking in 5 2018 is less than half of what it was a decade ago, e-cigarette use increased significantly between 6 7 2016 and 2018.195 Specifically, use of vapor products among 12th grade students increased from 8 20% in 2016 to nearly 30% in 2018.196 Washington students also do not understand the dangers 9 of vaping. According to a statewide survey of Washington students, “only about a third of 10th 10 graders thought vaping was harmful.”197 11 12 123. On September 27, 2019, Governor Jay Inslee ordered the Washington State Department of Health to ban all flavored vaping products.198 Governor Inslee agreed with the 13 14 15 FDA: “e-cigarette use among youth has reached epidemic proportions and this epidemic presents a clear and present danger.”199 He explained that “vapor products containing nicotine are the 16 most commonly used nicotine products in Washington among youth,” that “vapor product use 17 increased dramatically among 8th, 10th, and 12th graders between 2016 and 2018” and that “an 18 overwhelming majority” of youth who use vape using flavored products.”200 Inslee found that 19 “the appeal of flavored nicotine products, as well as advertising and promotion activities targeted 20 21 22 194 Id. Amy Blondin and Kristen Maki, Alcohol use remains at an all time low while vaping use increases among Washington youth, Washington State Health Youth Survey (Mar. 18, 2019), http://www.askhys.net/Docs/Healthy%20Youth%20Survey%20Substance%20Use%20Press%20Release%20Fin al.pdf. 196 Inslee, supra note 88. 197 Blondin & Maki, supra note 195. 198 Inslee, supra note 88. 199 Id. 200 Id. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 58 TELEPHONE: (206) 623-1900 195 23 24 25 26 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 62 of 88 1 at youth, are contributing to the dramatic increase in youth vaping.”201 When announcing his 2 executive order, Inslee recognized that flavored vaping products are attractive to children, saying 3 flavors such as bubble gum and cinnamon exist for “one reason and one reason only - make it 4 more appealing to young children.” 5 124. 6 The Washington State Board of Health agreed. On October 9, 2019, the 7 Washington State Board of Health approved an emergency ban on the sale of flavored vaping 8 products.202 Inslee welcomed the decision, saying that it was necessary to “act on this very 9 important public health issue” to “protect the health of Washingtonians, especially young people. 10 These emergency rules will help protect public health and save lives.” 11 12 125. In response to Washington’s ban, the American Heart Association issued a statement from Seattle’s Dr. Mary Ann Baumann supporting the ban: “As youth use is increasing 13 14 15 at an alarming rate and recent research finds that young people are especially influenced by flavors in e-cigarette products, emergency action was vital.” 126. 16 17 18 King County has been directly affected by this surge in youth vaping caused by the Defendants’ misconduct. King County spends substantial sums and resources in addressing and responding to the youth vaping epidemic. 19 127. King County is one of the largest counties in the country, with approximately 2.23 20 21 million residents.203 It is also the third-fastest growing county in the last decade, and in 2018, it 22 23 24 25 26 201 Id. King 5 Staff, Washington Board of Health bans flavored vaping products, King 5 News, (Oct. 9,2019) https://www.king5.com/article/news/local/washington-board-of-health-bans-flavored-vaping-products/281ddad5104-7d18-4f96-a2c5-6ff1ed162428. 203 Quick Facts: King County, Washington, United States Census Bureau, https://www.census.gov/quickfacts/fact/map/kingcountywashington/PST045216 (accessed Oct. 11, 2019). CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 59 TELEPHONE: (206) 623-1900 202 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 63 of 88 1 recorded the sixth largest increase in residents of all U.S. counties.204 In fact, since 2000, King 2 County’s population has grown by almost 500,000 people.205 3 128. King County contains 39 cities, the largest number of any county in Washington 4 State, including Seattle, Bellevue, Kirkland, Kent, Snoqualmie, and Burien—six of the fastest 5 6 7 growing cities in the state. From 2017 to 2018, Seattle was the second-fastest growing city in the United States.206 129. 8 9 10 11 In King County, as in many other communities in the United States, “youth vapor use has reached epidemic levels.” 207 The latest data shows that 25% of King County high school seniors reported vaping in the past 30 days.208 From 2016 to 2018, the number of King County youth who vape surged 110% for 8th graders, 82% for 10th graders, and 50% for 12th graders.209 12 130. On September 11, 2019, a teenager in King County became the first person in 13 14 15 Washington State to be diagnosed with a severe lung disease associated with vaping, requiring him to be hospitalized.210 In response, King County Executive Dow Constantine called for swift 16 17 18 204 19 20 21 22 23 24 25 26 King 5 Staff, King County see smallest population growth in 10 years, King 5 News (Apr. 18, 2019), https://www.king5.com/article/news/king-county-sees-smallest-population-growth-in-10-years/281-56ecf492-e2ff4a12-a020-9381f8e86da0 (reporting that even with the smallest growth in a decade, almost 32,000 people moved to King County in 2018, making it one of the fasted growing counties in the nation). 205 Total King County Population, 2000-2010, King County Open Data, https://data.kingcounty.gov/CountyOperations/Total-King-County-Population-2000-2010/xa7q-is96/data (accessed Oct. 11, 2018). 206 Gene Balk, Big-city growth slows across U.S. – but Seattle still ranks No. 2 in 2018, Seattle Times (May 23, 2018) https://www.seattletimes.com/seattle-news/data/big-city-growth-slows-across-u-s-but-seattle-still-ranks-no2-in-2018/. 207 Seattle & King County Department of Public Health, Vapor & E-Cigarette Use in Seattle & King County 1, https://www.kingcounty.gov/depts/health/tobacco/~/media/depts/health/tobacco-vapor/documents/vapinginfographic.ashx (accessed Oct. 11, 2019). 208 Id. 209 Id. 210 Nicole Brodeur & Ryan Blethen, King County teen is first in state diagnosed with severe lung disease related to vaping, Seattle Times (Sept. 11, 2019), https://www.seattletimes.com/seattle-news/health/king-county-teen-isfirst-in-state-diagnosed-with-severe-lung-disease-related-to-vaping/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 60 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 64 of 88 1 action to tackle the risks that vaping nicotine and other products pose to public health, especially 2 young people.211 3 131. The vaping epidemic in King County is especially prevalent in vulnerable 4 populations of youth, including lesbian, gay, and bisexual youth: 5 6 7 8 9 10 11 12 13 14 15 16 17 212 18 132. 19 This dramatic increase in youth rates is directly tied to Defendants conduct; As 20 the King County Public Health Insider put it: “Youth are using e-cigarettes more than any other 21 tobacco products, and when they do, they’re probably using JUUL.”213 In an interview from 22 23 24 25 26 211 Dow Constantine, Executive Constantine on urgent action needed to address youth vaping, King County (Sept. 11, 2019) https://kingcounty.gov/elected/executive/constantine/news/release/2019/September/11-vapingregulations.aspx. 212 Seattle & King County Department of Public Health, supra note 207. 213 Carley Thompson, How JUUL cornered the youth tobacco market and what you should know, King County Public Health Insider (Aug. 6, 2018), https://web.archive.org/web/20190329100340/https://public healthinsider.com/2018/08/06/how-juul-cornered-the-youth-tobacco-market-and-what-you-should-know/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 61 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 65 of 88 1 2018, Lisa Davidson, Prevention and Intervention Manager at Seattle Public Schools in King 2 County described the impact JUUL is having on Seattle Public Schools: 3 We even had a few instances of students as young as 5th grade vaping at school this year. Students have been found vaping on campus, in bathrooms and hallways, and in parking lots. Students report not knowing that vaping is illegal on campus or for people under age 18. Students also report not knowing the potential negative effects vaping may have on their health.214 4 5 6 133. 7 In response to this crisis, the King County Board of Health found that electronic 8 smoking devices like JUULs “presents a threat to the public health.”215 The Board of Health 9 recognized that these products “have a high appeal to youth due to their high tech design and 10 child-friendly flavors” and that they “present a substantial risk of nicotine addiction and resultant 11 harm to the public health and safety.”216 King County regulations prohibit anyone from 12 providing an vaping product to a minor and prohibit certain practices that are likely to allow 13 14 15 minors to get access to these products, such as giving away free samples or selling vaping products from vending machines.217 134. 16 17 about the dangers of youth vaping in an attempt to curb the youth vaping epidemic. 18 19 20 King County has spent time and resources publishing and spreading information 135. For example, King County conducted research and developed an infographic to warn the community about the dangers of youth vaping. King County recognized that “podbased units like JUUL are popular among youth” and “contain extremely high levels of 21 22 nicotine.”218 King County understands that “kids are especially vulnerable to the harmful and 23 214 24 25 26 Id. Tobacco Products, Electronic Smoking Devices and Unapproved Nicotine Delivery Products, King County Board of Health Regulation (Feb. 15, 2019), https://www.kingcounty.gov/depts/health/tobacco/~/media/depts /health/board-of-health/documents/code/BOH-Code-Title-19.ashx at 19.12.030. 216 Id. 217 Id. at 19.12.050-19.12.090. 218 Seattle & King County Department of Public Health, supra note 207. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 62 TELEPHONE: (206) 623-1900 215 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 66 of 88 1 addictive effects of nicotine. Early nicotine addiction can harm brain development and cause 2 problems with attention, memory and impulse control and potentially increase the risk for 3 addiction to other substances.”219 4 136. King County has also disseminated resources for teachers, signs and infographics 5 6 about the rates and dangers of youth vaping and flavored tobacco products, and offered tobacco 7 cessation training free of charge. In addition, King County’s Department of Public Health has 8 conducted interviews and published a series of articles about JUUL, the dangers of vaping, and 9 what parents can do to help.220 10 11 137. Fully addressing the harms to King County and counties across the nation that were caused by Defendants’ conduct will require a comprehensive approach, one that includes 12 addiction counselors trained in youth vaping, prevention education that includes information 13 14 about the health consequences of JUUL use on adolescents’ bodies and minds, developing 15 refusal skills, and addiction treatment options. Without the resources to fund these measures, 16 King County and others similarly situated will continue to be harmed by the ongoing 17 consequences of Defendants’ conduct. 18 19 20 21 22 23 24 25 26 219 Id. Carley Thompson, How JUUL cornered the youth tobacco market and what you should know, King County Public Health Insider (Aug. 6, 2018), https://web.archive.org/web/20190329100340/https://publichealth insider.com/2018/08/06/how-juul-cornered-the-youth-tobacco-market-and-what-you-should-know/; Carly Thompson, Tips from teachers: How to talk to your kids about vaping, King County Public Health Insider (Aug. 14, 2018), https://web.archive.org/web/20190806150422/https://publichealthinsider.com/2018/08/14/tips-fromteachers-how-to-talk-to-your-kids-about-vaping/; Carly Thompson, Not just water vapor: Why e-cigarettes are so dangerous, King County Public Health Insider (Aug. 28, 2018), https://web.archive.org/web/20190806151229 /https://publichealthinsider.com/2018/08/28/not-just-water-vapor-why-e-cigarettes-are-so-dangerous/. CLASS ACTION COMPLAINT KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 JURY TRIAL DEMANDED Seattle, W A 98101 -3052 () - 63 TELEPHONE: (206) 623-1900 220 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 67 of 88 1 2 3 4 5 V. A. CLASS ACTION ALLEGATIONS Class Definitions 138. Pursuant to provisions of the Federal Rules of Civil Procedure (“Rule”) 23(a), (b)(2), and (b)(3), Plaintiff brings this action on its own behalf and on behalf of a proposed national class of other similarly situated counties (collectively, “the Nationwide Class”), defined 6 7 8 9 10 11 12 as follows: Nationwide Class: All counties in the United States and its territories that have spent resources addressing, or whose property has been affected by, youth use of JUUL products. 139. In addition to the Nationwide Class and pursuant to Rule 23(c)(5), Plaintiff seeks to represent the following Washington State Sub-Class as well as any subclasses or issue classes Plaintiff may propose an/or the Court may designate at the time of class certification: 13 14 15 16 Washington Sub-Class: All counties in Washington State that have spent resources addressing, or whose property has been affected by, youth use of JUUL products. 140. Excluded from the Classes are Defendants and their subsidiaries and affiliates; all 17 counties who make a timely election to be excluded from the Classes; and the Judge to whom 18 this case is assigned and his or her immediate family. Plaintiff reserves the right to revise the 19 definitions of the Classes based upon information learned through discovery. 20 141. Certification of Plaintiff’s claims for classwide treatment is appropriate because 21 Plaintiff can prove the elements of its claims regarding liability and entitlement to injunctive 22 23 24 25 26 relief, abatement, and damages on a classwide basis using the same evidence as would be used to prove those elements in individual actions alleging the same claim. 142. This action has been brought and may be properly maintained on behalf of the Classes proposed herein under Federal Rule of Civil Procedure 23. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 64 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 68 of 88 1 2 3 4 5 6 7 8 143. Plaintiff reserves the right to modify the definition of the Classes or add Sub-Classes prior to class certification. VI. CLASS CERTIFICATION REQUIREMENTS: FEDERAL RULE OF CIVIL PROCEDURE 23 144. Numerosity: Rule 23(a)(1). The members of the Classes are so numerous and geographically dispersed that individual joinder of all members of the Classes is impracticable. Plaintiff do not know the exact size of the Classes, but there are over 3,000 counties in the United States and 39 counties in Washington State alone. Members of the Classes may be 9 10 11 12 13 14 15 notified of the pendency of this action by recognized, Court-approved notice dissemination methods, which may include U.S. mail, electronic mail, Internet postings, social media, and/or published notice. 145. Commonality and Predominance: Rules 23(a)(2) and 23(b)(3). This action involves significant common questions of law and fact, which predominate over any questions affecting individual members of the Classes, including, but not limited to: 16 A. Whether Defendants engaged in the conduct alleged herein; B. Whether Defendants created a public nuisance; C. Whether Defendants unlawfully contributed to a public nuisance; 17 18 19 20 D. Whether the rise in youth vaping and nicotine addiction was substantially caused by Defendants’ conduct; 21 22 23 24 25 26 E. Whether Defendants’ conduct injures or endangers the health and safety of counties and their communities nationwide; F. Whether Defendants’ conduct injures or endangers the health and safety of Washington counties and their communities; G. Whether Defendants unlawfully marketed JUUL products to minors; H. Whether Defendants continued to market JUUL products to minors after it was on notice that JUUL products were being used in schools; CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 65 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 69 of 88 1 2 3 I. Whether Defendants engaged in a pattern of racketeering; J. Whether the JUUL Enterprise, in whole or in part, has substantially affected interstate or intrastate commerce; K. 4 Whether Plaintiff and members of the Classes are entitled to abatement; and 5 6 L. Whether Plaintiff and members of the Classes are entitled to equitable and injunctive relief. 7 146. 8 Typicality: Rule 23(a)(3). Plaintiff’s claims are typical of the claims of the members of the Classes whom it seeks to represent under Federal Rule of Civil Procedure 9 23(a)(3), because King County and members of the Classes all had to expend resources 10 11 addressing youth JUUL use. Plaintiff and the other members of the Classes suffered damages as 12 a direct proximate result of the same wrongful practices by Defendants. Plaintiff’s claims arise 13 from the same practices and courses of conduct that give rise to the claims of the other members 14 of the Classes. Plaintiff’s claims are based upon the same legal theories as the claims of the other 15 members of the Classes. 16 147. Adequacy: Rule 23(a)(4). Plaintiff will fairly and adequately represent and 17 protect the interests of the members of the Classes as required by Federal Rule of Civil 18 19 Procedure 23(a)(4). Plaintiff has retained counsel competent and experienced in complex class 20 action litigation, including MDL litigation and other public nuisance litigation. Plaintiff intends 21 to prosecute this action vigorously. Neither Plaintiff nor its counsel has interests that conflict 22 with the interests of the other members of the Classes. Therefore, the interests of the members of 23 24 the Classes will be fairly and adequately protected. 148. Declaratory and Injunctive Relief: Rule 23(b)(2). Defendants have acted or 25 26 refused to act on grounds generally applicable to Plaintiff and the other members of the Classes, CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 66 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 70 of 88 1 thereby making appropriate final injunctive relief and declaratory relief, as described below, with 2 respect to the Classes as a whole. 3 149. Superiority: Rule 23(b)(3). A class action is superior to any other available 4 means for the fair and efficient adjudication of this controversy, and no unusual difficulties are 5 6 likely to be encountered in the management of this class action. The damages or other financial 7 detriment suffered by Plaintiff and the other members of the Classes are relatively small 8 compared to the burden and expense that would be required to individually litigate their claims 9 against Defendants, so it would be impracticable for members of the Classes to individually seek 10 11 redress for Defendants’ wrongful conduct. 150. Even if members of the Classes could afford individual litigation, the court 12 system could not. Individualized litigation creates a potential for inconsistent or contradictory 13 14 judgments and increases the delay and expense to all parties and the court system. By contrast, 15 the class action device presents far fewer management difficulties and provides the benefits of 16 single adjudication, economies of scale, and comprehensive supervision by a single court. 17 VII. 18 VIOLATIONS OF THE WASHINGTON PUBLIC NUSIANCE LAW, RCW 7.48.010 ET SEQ. 19 20 151. 21 fully herein. 22 152. 23 CAUSES OF ACTION Plaintiff King County incorporates each preceding paragraph as though set forth Plaintiff brings this claim under RCW 7.48.020 individually and on behalf of the Washington Sub-Class. 24 153. Pursuant to RCW 7.48.010, an actionable nuisance is defined as, inter alia, 25 26 “whatever is injurious to health or indecent or offensive to the senses . . .” CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 67 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 71 of 88 1 2 3 4 154. Specifically, a “[n]uisance consists in unlawfully doing an act, or omitting to perform a duty, which act or omission either annoys, injures or endangers the comfort, repose, health or safety of others, offends decency . . . or in any way renders other persons insecure in life, or in the use of property.” RCW 7.48.120. 5 6 7 8 9 10 11 155. Under Washington law, conduct that substantially and/or unreasonably interferes with the Plaintiff’s use of its property is a nuisance even if it would otherwise be lawful. 156. Pursuant to RCW 7.48.130, “A public nuisance is one which affects equally the rights of an entire community or neighborhood, although the extent of the damage may be unequal.” 157. King County, its residents, and the Washington Sub-Class have a right to be free 12 from conduct that endangers their health and safety. Yet Defendants have engaged in conduct 13 14 which endangers or injures the health and safety of the residents of the County and the 15 Washington Sub-Class by their production, promotion, distribution, and marketing of JUUL 16 products for use by minors in King County and in a manner that substantially interferes with the 17 functions and operations of King County and the Washington Sub-Class and impacts the public 18 19 health, safety, and welfare of the entire King County and Washington State communities. 158. Each Defendant has created or assisted in the creation of a condition that is 20 21 22 23 24 25 26 injurious to the health and safety of Plaintiff and its students and employees and the Washington Sub-Class and interferes with the comfortable enjoyment of life and property of the entire communities of King County and Washington State at large. 159. Defendants’ conduct has directly caused a severe disruption of the public health, order, and safety. Defendants’ conduct is ongoing and continues to produce permanent and longlasting damage. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 68 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 72 of 88 1 2 3 4 160. This harm to the Plaintiff and the members of the Class outweighs any social utility of the Defendants’ wrongful conduct because Defendants’ conduct violates Washington’s public policy against marketing vapor products like JUUL to minors. This policy is expressed through Washington State Governor Jay Inslee’s Executive Order 19-03, finding that “it is the 5 6 policy of the state of Washington to support the health, safety, and well-being of all 7 Washingtonians” and that “e-cigarette use among youth has reached epidemic proportions and 8 that this epidemic presents a clear and present danger.” This policy is also expressed through 9 statutes and regulations, including but not limiting to 10 A. RCW 26.28.080, under which any person who sells, gives, or permits to be sold or given vapor products to a minor is guilty of a gross misdemeanor; B. RCW 70.345.140, under which it is illegal for minors to purchase vapor products C. RCW 70.345.090, under which it is illegal for any person to conduct a delivery sale or otherwise ship or transport, or cause to be shipped or transported, any vapor product ordered or purchased by mail or through the internet to a minor D. King County Board of Health Code 19.12.060, under which it is illegal to sell, give, or furnish, or cause or allow to be sold, given or furnished, electronic smoking devices to a minor. 11 12 13 14 15 16 17 18 19 20 161. Defendants’ conduct violated this public policy, including by A. Actively seeking to enter school campuses, targeting children as young as eight through summer camps and school programs, extensively targeting youth through social media campaigns, and recruiting “influencers” to market to teens; B. Engaging in marketing tactics specifically designed to mislead children and youth and to ensnare minors into nicotine addiction, including by explicitly adopting tactics prohibited from Big Tobacco, with the knowledge that those tactics were likely to ensnare children and youth into nicotine addiction, including using billboards and outdoor advertising, sponsoring events, giving free samples, paying affiliates and “influencers” 21 22 23 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 69 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 73 of 88 to push JUUL products on JUUL’s behalf, and by selling JUUL in flavors designed to appeal to youth; 1 2 3 C. Engaging in advertising modeled on cigarette ads and featuring youthfulappearing models and designing advertising in a patently youth-oriented fashion; D. Directing advertising to youth media outlets and media designed to appeal to children and youth, such as Instagram and other social media channels; E. Hosting youth-focused parties across the United States, at which free JUUL samples were dispensed and in which vaping was featured prominently across JUUL-sponsored social media; F. Formulating JUULpods with flavors with the knowledge that such flavors appealed to youth and with the intent that youth become addicted or dependent upon JUUL products; and G. Promoting and assisting the growth of the JUUL market and its availability with knowledge that JUUL products were being purchased and used by large numbers of youth. 4 5 6 7 8 9 10 11 12 13 14 162. The health and safety of the youth of King County and the Washington Sub-Class, 15 including those who use, have used, or will use JUUL products, as well as those affected by 16 others’ use of JUUL products, are matters of substantial public interest and of legitimate concern 17 to the Plaintiff, as well as to the entire King County and Washington State communities. 18 19 163. Defendants’ conduct has affected and continues to affect a substantial number of people within King County and the Washington Sub-Class and is likely to continue causing 20 21 22 significant harm. 164. But for Defendants’ actions, JUUL use by minors would not be as widespread as 23 it is today, and the youth vaping public health epidemic that currently exists as a result of the 24 Defendants’ conduct would have been averted. 25 26 165. Logic, common sense, justice, policy, and precedent indicate Defendants’ unfair and deceptive conduct has caused the damage and harm complained of herein. Defendants knew CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 70 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 74 of 88 1 or reasonably should have known that their statements regarding the risks and benefits of JUUL 2 were false and misleading, that its marketing methods were designed to appeal to minors, and 3 4 that its false and misleading statements, marketing to minors, and active efforts to increase the accessibility of JUUL products and grow JUUL’s market share were causing harm to minors and 5 6 to counties, including minors in King County, the County itself, and the Washington Sub-Class. 7 Thus, the public nuisance caused by Defendants was reasonably foreseeable, including the 8 financial and economic losses incurred by King County and the Washington Sub-Class. 9 10 11 166. Alternatively, Defendants’ conduct was a substantial factor in bringing about the public nuisance even if a similar result would have occurred without it. By directly marketing to youth and continuing marketing practices after it was evidence that children were using JUUL 12 products in large numbers and were specifically using these products in school, JUUL directly 13 14 facilitated the spread of the youth vaping epidemic and the public nuisance effecting King 15 County and members of the Washington Sub-Class. By investing billions of dollars in JUUL and 16 actively working to promote the sale and spread of JUUL products with knowledge of JUUL’s 17 practice of marketing its products to youth and failure to control youth access to its products, 18 19 Altria directly facilitated the spread of the youth vaping epidemic and the public nuisance effecting King County and members of the Washington Sub-Class. 20 21 22 167. In addition, engaging in any business in defiance of a law regulating or prohibiting the same is a nuisance per se under Washington law. Defendants’ conduct described 23 herein of deceptively marketing JUUL products to minors violates RCW 7.48.010 and therefore 24 constitutes a nuisance per se. 25 26 168. King County has statutory authority to abate a public nuisance pursuant to 7.48.220 as a public body authorized by RCW 36.32.120(10). CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 71 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 75 of 88 1 2 169. Plaintiff has taken steps to address the harm caused by Defendants’ conduct, including the following: 3 A. Spending time and resources assembling information about the dangers of youth vaping and the extent of youth vaping in the County; B. Creating and publishing videos and infographics about JUUL use and the youth vaping epidemic; C. Writing newsletters about JUUL, the dangers of youth vaping, and ways parents can help combat the epidemic; D. Responding to calls from concerned parents seeking help for their children who are addicted to nicotine through vaping; 11 E. Training teachers and parents to recognize JUUL products; 12 F. Educating teachers, parents, and youth about the risks of vaping; and 13 G. Updating King County’s website to address the dangers of JUUL use. 4 5 6 7 8 9 10 14 15 170. Fully abating the epidemic of youth vaping resulting from Defendants’ conduct will require much more than these steps. 16 171. Pursuant to RCW 7.48.020, King County and the Washington Sub-Class request 17 18 19 20 21 22 23 an order providing for abatement of the public nuisance that Defendants have created or assisted in the creation of, and enjoining Defendants from future violations of RCW 7.48.010. 172. Pursuant to RCW 7.48.020, Plaintiff and the Washington Sub-Class also seek the maximum statutory and civil penalties permitted by law, including actual and compensatory damages, as a result of the public nuisance created by Defendants. 173. Pursuant to RCW 4.22.070, Defendants are jointly and severally liable because 24 25 they have acted in concert with each other and because Plaintiff is not at fault. 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 72 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 76 of 88 1 2 VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT (“RICO”), 18 U.S.C. § 1961, ET SEQ. 174. 3 4 preceding paragraphs of this complaint. 5 6 7 Plaintiff hereby incorporates by reference the allegations contained in the 175. This claim is brought by Plaintiff against each Defendant for actual damages, treble damages, and equitable relief under 18 U.S.C. § 1964 for violations of 18 U.S.C. § 1961, et seq. 8 176. At all relevant times, each Defendant is and has been a “person” within the 9 10 11 12 meaning of 18 U.S.C. § 1961(3), because they are capable of holding, and do hold, “a legal or beneficial interest in property.” 177. Plaintiff is a “person,” as that term is defined in 18 U.S.C. § 1961(3), and has 13 standing to sue as it was and is injured in its business and/or property as a result of the 14 Defendants’ wrongful conduct described herein. 15 178. Section 1962(c) makes it “unlawful for any person employed by or associated 16 with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, 17 18 19 20 21 22 23 to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity . . . .” 18 U.S.C. § 1962(c). 179. Section 1962(d) makes it unlawful for “any person to conspire to violate” Section 1962(c), among other provisions. See 18 U.S.C. § 1962(d). 180. Each Defendant conducted the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c) and § 1962(d). 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 73 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 77 of 88 1 2 3 4 A. Description of the Defendants’ Enterprises 181. RICO defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). 5 182. Under 18 U.S.C. § 1961(4) a RICO “enterprise” may be an association-in-fact 6 7 that, although it has no formal legal structure, has (i) a common purpose, (ii) relationships among 8 those associated with the enterprise, and (iii) longevity sufficient to pursue the enterprise’s 9 purpose. See Boyle v. United States, 556 U.S. 938, 946 (2009). 10 11 12 183. Defendant JUUL and the Altria Defendants formed an association-in-fact enterprise—referred to herein as the JUUL Enterprise. The JUUL Enterprise is an ongoing and continuing business organization consisting of “persons” within the meaning of 18 U.S.C. § 13 14 15 16 1961(3) that created and maintained systematic links for a common purpose: to maintain and expand JUUL’s massive, and ill-gotten, share of the e-cigarette market. 184. As set forth above, Big Tobacco has long known the importance of targeting 17 youth and addicting them to nicotine. This profits-above-public-health mentality applies with 18 equal to force to e-cigarette market as well as the market for regular cigarettes. What was 19 20 different here was that Big Tobacco was out-competed by a start-up, albeit a start-up using some of Big Tobacco’s tried and true tactics. As set forth in the complaint, JUUL obtained its massive 21 22 23 24 market share over a short time period by successfully targeting youth and addicting youth to nicotine. 185. JUUL was well aware that its conduct was reprehensible, and that if it became 25 established and widely known that this was how JUUL obtained its massive market share, there 26 would likely be severe consequences. For this reason, it went to great lengths to conceal this CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 74 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 78 of 88 1 conduct by vociferously denying that it was marketing and targeting youth. Instead, JUUL 2 argued that its product was created and designed as a “smoking cessation device”—despite the 3 4 fact that the FDA never approved it as such, and that this smoking cessation device was slickly designed, easily concealable, and had its own “party mode.” These false statements were 5 6 7 8 9 10 11 12 designed to protect JUUL’s market share by concealing its misconduct. B. The Enterprises Sought to Fraudulently Increase Defendants’ Profits and Revenues 186. Not everyone was fooled by JUUL’s deception, particularly JUUL’s competitors in the e-cigarette market. Altria recognized JUUL’s tactics for what they were, designed to addict children, and made this clear in a public letter to the FDA on October 25, 2018. Altria even displayed this letter on its website, disclaiming the very marketing and advertising tactics JUUL relied on. At this time, Altria had apparently concluded that it could not out-compete JUUL— 13 14 15 16 17 18 19 that JUUL’s massive market share was too great to overcome. Altria informed the FDA that it was exiting the market for pod-based e-cigarettes, on the grounds that these products contributed to the youth vaping epidemic. 187. Unfortunately, Altria’s purported concern for the public health was short-lived. A mere two months after publicly condemning JUUL’s tactics for targeting youth, in December of 2018, Altria once again chose to place profits before the public health by making a $12.8 billion 20 equity investment in JUUL, the largest equity investment in US history. Having long followed 21 22 JUUL’s market share dominance with envy, Altria decided to go from a competitor to a co- 23 conspirator. Altria and JUUL thus formed a RICO enterprise—the JUUL Enterprise—with the 24 goal of preserving, and profiting from, JUUL’s ill-gotten market share. 25 26 188. The JUUL Enterprise recognized that one of the keys to preserving JUUL’s market share was to continue to falsely deny that JUUL marketed its tobacco products to youth. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 75 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 79 of 88 1 Thus, in furtherance of their Enterprise, JUUL and Altria repeatedly made statements denying 2 that one of JUUL’s intended targets for its product was children, that JUUL’s product was really 3 created and designed as a smoking cessation device, and that JUUL’s product was all along 4 intended for “switchers” (existing smokers that were open to vaping). These statements are false, 5 6 7 and constitute mail and wire fraud, predicate acts under RICO. 189. Thus, at all relevant times, each Defendant was aware of the conduct of the JUUL 8 Enterprise, was a knowing and willing participant in that conduct, and reaped profits from that 9 conduct in the form of sales and distribution of JUUL products. 10 11 190. The persons engaged in the JUUL Enterprise are systematically linked through contractual relationships, financial ties, and continuing coordination of activities. The Altria 12 Defendants have invested $12.8 billion dollars in JUUL—the largest equity investment in United 13 14 15 States history. This investment gives Altria a 35% stake in JUUL. 191. Altria has already publicly acknowledged that under the terms of its financial 16 relationship with JUUL, Altria will provide its considerable legal, regulatory and lobbying 17 expertise to help JUUL navigate its relationship with regulators. Presumably this would also 18 include former Commissioner Gottlieb’s agency, the FDA. After receiving Altria’s October letter 19 criticizing JUUL’s tactics, and learning of Altria’s $12.8 billion investment, FDA Commissioner 20 21 22 Gottlieb was outraged and demanded a meeting. Commissioner Gottlieb described this meeting as “difficult” and “did not come away with any evidence that public health concerns drove 23 Altria’s decision to invest in JUUL, and instead sa[id] it looks like a business decision.” Roughly 24 one month later, he abruptly resigned his position. 25 26 192. There is regular communication between JUUL and the Altria Defendants in which information regarding Defendants’ scheme to protect, maintain and expand JUUL’s CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 76 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 80 of 88 1 market share is shared. Typically, this communication occurred, and continues to occur, through 2 the use of the wires and the mail in which Defendants share information regarding the operation 3 of the JUUL Enterprise and its cover-up of JUUL’s efforts to target and addict youth. 4 193. The JUUL Enterprise functions as a continuing unit for the purposes of executing 5 6 7 8 accomplishing its objectives, and when issues arise, each member of the Enterprise agrees to take actions to support the Enterprise. 194. Each Defendant participated in the operation and management of the JUUL 9 Enterprise by directing its affairs as described herein. Altria’s $12.8 billion investment gives it a 10 35% ownership stake in JUUL, and allows it to appoint a third of its board. In a sign of Altria’s 11 management influence and control, last month, JUUL’s CEO resigned to be replaced by a career 12 Altria executive, K.C. Crosthwaite. Mr. Crosthwaite had most recently served as the vice 13 14 president and chief growth officer of Altria Client Services LLC, overseeing the company’s 15 work, including digital marketing, packaging design & innovation, product development, and 16 safety, health, and environmental affairs. Crosthwaite is intimately familiar with Big Tobacco’s 17 practices, having previously served as the president and CEO of Phillip Morris USA, the vice 18 19 president and general manager at Marlboro, and the vice president of strategy and business development of at Altria Client Services LLC. 20 21 22 23 24 25 195. While Defendants participate in, and are members of, the JUUL Enterprise, they have an existence separate from the Enterprise, including distinct legal statuses, affairs, offices and roles, officers, directors, employees, and individual personhood. 196. Without the willing participation of each Defendant, the JUUL Enterprise’s common course of conduct would not be successful. 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 77 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 81 of 88 1 2 3 4 C. Predicate Acts: Mail and Wire Fraud 197. To carry out, or attempt to carry out, the objectives of the JUUL Enterprise, the members of the Enterprise, each of whom is a person associated-in-fact with the Enterprise, did knowingly conduct or participate in, directly or indirectly, the affairs of the Enterprise through a 5 pattern of racketeering activity within the meaning of 18 U.S.C. §§ 1961(1), 1961(5) and 6 7 8 9 10 11 12 1962(c), and employed the use of the mail and wire facilities, in violation of 18 U.S.C. § 1341 (mail fraud) and § 1343 (wire fraud). 198. Specifically, the members of the JUUL Enterprise have committed, conspired to commit, and/or aided and abetted in the commission of, at least two predicate acts of racketeering activity (i.e., violations of 18 U.S.C. §§ 1341 and 1343), within the past ten years. 199. The multiple acts of racketeering activity which the members of the JUUL 13 14 15 16 17 18 19 Enterprise committed, or aided or abetted in the commission of, were related to each other, posed a threat of continued racketeering activity, and therefore constitute a “pattern of racketeering activity.” 200. The racketeering activity was made possible by the Enterprise’s regular use of the facilities, services, and employees of the Enterprise. 201. The members of the JUUL Enterprise participated in the Enterprise by using mail, 20 telephone, and the internet to transmit mailings and wires in interstate or foreign commerce. 21 22 202. The members of the JUUL Enterprise used, directed the use of, and/or caused to 23 be used, thousands of interstate mail and wire communications in service of the Enterprise’s 24 objectives through common misrepresentations, concealments, and material omissions. 25 26 203. In devising and executing the objectives of the JUUL Enterprise, its members devised and knowingly carried out a material scheme and/or artifice to defraud the public by CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 78 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 82 of 88 1 denying that JUUL’s products were marketed to youth, and that JUUL was really created and 2 designed as a smoking cessation device. 3 204. For the purpose of furthering its desire to preserve and increase its market share, 4 even at the expense exposing and addicting children to nicotine, the JUUL Enterprise committed 5 6 7 8 9 10 11 12 these racketeering acts, which number in the thousands, intentionally and knowingly with the specific intent to advance its objectives. 205. The JUUL Enterprise’s predicate acts of racketeering (18 U.S.C. § 1961(1)) include, but are not limited to: A. Mail Fraud: the JUUL Enterprise violated 18 U.S.C. § 1341 by sending or receiving, or by causing to be sent and/or received, fraudulent materials via U.S. mail or commercial interstate carriers for the purpose of deceiving the public regarding its efforts to market to youth and the true purpose and design behind its products. 13 14 15 B. Wire Fraud: The JUUL Enterprise violated 18 U.S.C. § 1343 by transmitting and/or receiving, or by causing to be transmitted and/or received, fraudulent materials by wire for the purpose of deceiving the public regarding its efforts to market to youth and the true purpose and design behind its products. 16 The JUUL Enterprise falsely and misleadingly used the mails and wires in violation of 18 U.S.C. 17 18 19 20 21 22 23 24 25 26 § 1341 and § 1343. Illustrative and non-exhaustive examples include the following: A. “JUUL Labs was founded by former smokers, James and Adam, with the goal of improving the lives of the world's one billion adult smokers by eliminating cigarettes. We envision a world where fewer adults use cigarettes, and where adults who smoke cigarettes have the tools to reduce or eliminate their consumption entirely, should they so desire.” (JUUL Labs Website as of Oct. 7, 2019); B. “JUUL Labs exists to help adult smokers switch from combustible cigarettes.” (JUUL Labs Website as of Oct. 7, 2019); C. “JUUL was designed with adult smokers in mind. . . . JUUL provides satisfaction to meet the standards of adult smokers looking to switch from smoking cigarettes.” (JUUL Labs Website as of Oct. 7, 2019); D. “Our Intent[:] . . . [W]e believe that vaping can have a positive impact when used by adult smokers, and can have a negative impact when used by nonsmokers. Our goal is CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 79 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 83 of 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 to maximize the positive and reduce the negative.” (JUUL Labs Website as of Oct. 7, 2019); E. “It’s a really, really important issue. We don’t want kids using our products.”( JUUL Chief Administrative Officer Ashely Gould, CNBC Interview, Dec. 14, 2017); F. “We market our products responsibly, following strict guidelines to have material directly exclusively toward adult smokers and never to youth audiences.” (JUUL Social Media Post, Mar. 14, 2018); G. “We don’t want anyone who doesn’t smoke, or already use nicotine, to use JUUL products. We certainly don’t want youth using the product. It is bad for public health, and it is bad for our mission. JUUL Labs and FDA share a common goal – preventing youth from initiating on nicotine. To paraphrase Commissioner Gottlieb, we want to be the offramp for adult smokers to switch from cigarettes, not an on-ramp for America’s youth to initiate on nicotine. We won’t be successful in our mission to serve adult smokers if we don’t narrow the on-ramp. . . . Our intent was never to have youth use JUUL products. But intent is not enough, the numbers are what matter, and the numbers tell us underage use of e-cigarette products is a problem. We must solve it.” (Statement of Former CEO of JUUL, Ken Burns posted on the JUUL website Nov. 13, 2018); H. “We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in JUUL, a world leader in switching adult smokers. We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction.” (Statement of Howard Willard, Altria Chairman and Chief Executive Officer in a Altria Press Release, Dec. 20, 2018); I. “First of all, I’d tell them that I’m sorry that their child’s using the product. It’s not intended for them. I hope there was nothing that we did that made it appealing to them. As a parent of a 16-year-old, I’m sorry for them, and I have empathy for them, in terms of what the challenges they’re going through.” (JUUL CEO Ken Burns, CNBC Interview, July 13, 2019); J. “We never wanted any non-nicotine user, and certainly nobody under the legal age of purchase, to ever use Juul products. . . .That is a serious problem. Our company has no higher priority than combatting underage use.” (Testimony of JUUL Founder James Monsees Before the House Committee on Oversight and Reform Subcomittee on Economic and Consumer Policy, July 25, 2019); K. “We have no higher priority than to prevent youth usage of our products which is why we have taken aggressive, industry leading actions to combat youth usage.” (JUUL statement in response to lawsuits, Aug. 13, 2019); L. James Monsees, one of the company’s co-founders, said selling JUUL products to youth was “antithetical to the company’s mission.” (Quoted in New York Times article, Did JUUL Lure Teenagers and Get ‘Customers for Life’?, Aug. 27, 2018); CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 80 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 84 of 88 1 2 3 4 5 M. “Our focus is and will remain entirely on helping adult smokers switch away from combustible cigarettes, the leading cause of preventable death in the world.” (Joshual Raffel, Juul spokesperson, quoted in New York Times article, Philip Morris and Altria Are in Talks to Merge,August 27, 2019); N. “We have never marketed to youth and we never will.” (JUUL statement quoted in Los Angeles Times article, Studies show how Juul exploited social media to get teens to start vaping, Sep. 24, 2019) 6 7 206. The mail and wire transmissions described herein were made in furtherance of 8 Defendants’ scheme and common course of conduct designed to cover-up JUUL’s marketing to 9 youth, thereby increasing or maintaining JUUL’s market share, resulting in corresponding high 10 11 12 profits for all Defendants. 207. Many of the precise dates of the fraudulent uses of the U.S. mail and interstate wire facilities have been deliberately hidden and cannot be alleged without access to Defendants’ 13 14 15 16 17 18 19 20 books and records. However, Plaintiff has described the types of predicate acts of mail and/or wire fraud, including the specific types of fraudulent statements upon which, through the mail and wires, the JUUL Enterprise engaged in fraudulent activity in furtherance of its scheme. 208. The members of the Enterprise have not undertaken the practices described herein in isolation, but as part of a common scheme and conspiracy. In violation of 18 U.S.C. § 1962(d), the members of the JUUL Enterprise conspired to violate 18 U.S.C. § 1962(c), as described herein. Various other persons, firms, and corporations, including third-party entities 21 22 23 and individuals not named as defendants in this Complaint, have participated as co-conspirators with Defendants and the members of the JUUL Enterprise in these offenses and have performed 24 acts in furtherance of the conspiracy to increase or maintain revenue, maintain or increase market 25 share, and/or minimize losses for the Defendants and their named and unnamed co-conspirators 26 throughout the illegal scheme and common course of conduct. CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 81 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 85 of 88 1 2 3 209. The members of the JUUL Enterprise aided and abetted others in the violations of the above laws. 210. To achieve their common goals, the members of the Enterprise hid from Plaintiff 4 and the public: (1) the fraudulent nature of the JUUL Enterprise scheme; (2) the fraudulent 5 6 nature of statements made by the JUUL Defendant regarding its efforts to target youth and the 7 nature of its product; and (3) the true nature and objective of the relationship between the 8 members of the Enterprise. 9 10 11 211. Each member of the JUUL Enterprise, with knowledge and intent, agreed to the overall objectives of the schemes and participated in the common course of conduct. Indeed, for the conspiracy to succeed, each of the member of the JUUL Enterprise had to agree to conceal 12 their fraudulent scheme. 13 14 15 16 212. The members of the JUUL Enterprise knew, and intended that, the public would rely on the material misrepresentations and omissions made by them. 213. As described herein, the members of the JUUL Enterprise engaged in a pattern of 17 related and continuous predicate acts for years. The predicate acts constituted a variety of 18 unlawful activities, each conducted with the common purpose of maintaining JUUL’s ill-gotten 19 market share and thereby continuing to receive significant monies and revenues from the public, 20 21 22 23 24 including youth, based on their misconduct. 214. The predicate acts also had the same or similar results, participants, victims, and methods of commission. 215. The predicate acts were related and not isolated events. 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 82 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 86 of 88 1 2 3 216. pattern of racketeering activity described above is currently ongoing and open-ended, and threatens to continue indefinitely unless this Court enjoins the racketeering activity. 4 D. 5 Defendants’ fraudulent concealment was material to Plaintiff and the public. The Plaintiff Has Been Damaged by Defendants’ RICO Violations 217. Plaintiff has been injured by Defendants’ predicate acts. The repeated 6 7 misstatements by the Defendants denying that JUUL marketed to youth and addicted children 8 to nicotine serve to preserve JUUL’s market share—a market share that is based upon children 9 purchasing JUUL’s tobacco products. The creation and maintenance of this youth e-cigarette 10 11 12 market directly harms Plaintiff by imposing costs on its business and property. 218. Defendants’ violations of 18 U.S.C. § 1962(c) and (d) have directly and proximately caused injuries and damages to King County, its community, and the public, and the 13 14 15 County is entitled to bring this action for three times its actual damages, as well as injunctive/equitable relief, costs, and reasonable attorneys’ fees pursuant to 18 U.S.C. § 1964(c). PRAYER FOR RELIEF 16 17 18 19 20 WHEREFORE, Plaintiff prays for judgment as follows: 1. Certifying this class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of the proposed Nationwide Class and Washington Sub-Class; 2. Entering an Order that the conduct alleged herein constitutes a public nuisance 21 22 23 24 25 under Washington law, including RCW 7.48 et seq.; 3. Entering an Order that the Defendants are jointly and severally liable; 4. Entering an Order requiring the Defendants to abate the public nuisance described herein and to deter and/or prevent the resumption of such nuisance; 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 83 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 87 of 88 1 5. 2 Enjoining Defendants from engaging in further actions causing or contributing to the public nuisance as described herein; 3 6. Awarding equitable relief to fund prevention education and addiction treatment; 7. Awarding actual and compensatory damages; 8. Awarding statutory damages in the maximum amount permitted by law; 7 9. Awarding reasonable attorneys’ fees and costs of suit; 8 10. Awarding pre-judgment and post-judgment interest; and 9 11. Such other and further relief as the Court deems just and proper under the 4 5 6 10 circumstances. 11 JURY TRIAL DEMANDED 12 Plaintiff hereby demands a trial by jury. 13 14 // 15 16 17 18 19 20 21 22 23 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 84 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384 Case 2:19-cv-01664 Document 1 Filed 10/16/19 Page 88 of 88 1 2 RESPECTFULLY SUBMITTED this 16th day of October, 2019. BriefSig KELLER ROHRBACK L.L.P. 3 4 By /s/ Derek W. Loeser Derek W. Loeser, WSBA #24274 5 __ /s/ Gretchen Freeman Cappio __ Gretchen Freeman Cappio, WSBA #29576 6 7 /s/ Dean Kawamoto Dean Kawamoto, WSBA #43850 8 __ /s/ Alison S. Gaffney ________ Alison S. Gaffney, WSBA #45565 9 10 /s/ Felicia J. Craick ________ Felicia J. Craick, WSBA #54505 11 1201 Third Avenue, Suite 3200 Seattle, WA 98101 Tel: (206) 623-1900 Fax: (206) 623-3384 Email: dloeser@kellerrorhback.com gcappio@kellerrohrback.com dkawamoto@kellerrohrback.com agaffney@kellerrohrback.com fcraick@kellerrohrback.com 12 13 14 15 16 17 Attorneys for Plaintiff King County 18 19 20 21 4810-9265-9881, v. 5 22 23 24 25 26 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED () - 85 KELLER ROHRBACK L.L.P. 1201 Third Avenue, Suite 3200 Seattle, W A 98101 -3052 TELEPHONE: (206) 623-1900 FACSIMILE: (206) 623-3384