HQ Team
May 11, 2023: Altria, one of the world’s largest producers and marketers of tobacco, cigarettes, and related products has agreed to pay $235 million to settle 6,000 lawsuits that claimed its e-cigarettes fanned a teen vaping epidemic.
“While we continue to believe the claims against us are meritless, we believe this settlement avoids the uncertainty and expense of a protracted legal process and is in the best interest of our shareholders,” said Murray Garnick, Altria’s Executive Vice President and General Counsel.
“This settlement brings to a close the vast majority of our pending JUUL-related litigation.”
On December 20, 2018, Altria finalized the acquisition of a 35% stake in JULL Labs, an e-cigarette company based out of San Francisco, California, for $12.8 billion.
$4.5 billion writedown
Almost a year later, Altria was reportedly taking a $4.5 billion writedown on its stake in Juul, which was 35% of its original value. On July 28, 2022, it was reported that Altria’s investment in Juul was worth only 5% of the original amount of $12.8 billion.
In October 2019, the U.S. Judicial Panel on Multi-district Litigation ordered the coordination or consolidation of federal individual and class action lawsuits related to JUUL in the US District Court for the Northern District of California for pretrial.
These cases include about 50 economic class actions, approximately 4,500 personal injury actions, and about 1,500 government entity actions, including 1,400 school district cases.
These cases are covered by the agreement as well as cases in a related state court consolidated proceeding involving 750 cases.
This settlement does not apply to three cases brought by attorneys general, 35 cases brought by Native American tribes, 17 antitrust cases, or three Canadian cases, according to a company statement.
Second quarter of 2023
“We expect to record a pre-tax charge of $235 million in the second quarter of 2023 and intend to treat such amount as a special item and exclude it from our adjusted diluted earnings per share,” the company stated.
Altria Group, previously known as Philip Morris Companies, operates worldwide and is headquartered in Henrico County, Virginia.
In March Altria Group announced that it has exchanged its entire minority economic investment in JUUL Labs, Inc. (JUUL) for a “non-exclusive, irrevocable global license to certain of JUUL’s Heated Tobacco Intellectual Property” rights.
“JUUL faces significant regulatory and legal challenges and uncertainties, many of which could exist for many years. We are continuing to explore all options for how we can best compete in the e-vapor category,” Billy Gifford, Altria’s Chief Executive Officer had said then.
As of December 31, 2022, the carrying value and estimated fair value of Altria’s JUUL investment was $250 million.
