Juul MDL Established in California

E-CigaretteFor good reason, 2019 has been a tough year for manufacturers of e-cigarettes and vaping products. Now, there is a full-blown Juul class action lawsuit. Every Juul case filed in federal court will now be transferred to California for consolidated proceedings. That means all of the cases will be grouped together for pre-trial discovery before the cases go to trial.

Once viewed as a less harmful alternative to traditional smoking, vaping and e-cigarettes are now the focal point of a new public health crisis. Thousands of serious respiratory injuries and at least 18 deaths have recently been linked to vaping. Reports of a mysterious vaping-relating danger killing young adults has sparked intense public concerns and scrutiny.

One of the primary scapegoats in the vaping safety crisis has been Juul Labs Inc. (Juul). Juul's extremely popular e-cigarettes have come to dominate the e-cig market, making Juul the very public face of the vaping/e-cigarette industry. Juul has been under siege over the last 6 months. The company's marketing practices have been under investigation by the Food and Drug Administration (FDA) and the state of California recently launched a criminal probe. Most recently Juul announced that its embattled CEO, Kevin Burns, was immediately stepping down and that the company would suspend all advertisements of its product.

Juul Requests MDL

Since the start of the vaping safety crisis, Juul has been named as the primary defendant in a growing number of product liability lawsuits across the country. As of now, a total of 55 separate lawsuits have been filed against Juul. Most legal experts are expecting thousands more vaping lawsuits to get filed against Juul and other manufacturers over the next few years.

In August Juul sought to create a Multi-District Litigation (MDL) to help manage the anticipated avalanche of litigation. Lawyers for Juul filed a motion with the Judicial Panel on Multidistrict Litigation requesting all federal court cases be centralized into a Multi-District Litigation (MDL): In re: Juul Labs, Inc., Marketing, Sales, Practices and Product Liability Litigation (MDL No. 2913). Juul's MDL motion sought immediate consolidation of 10 pending actions and the JPML Panel identified another 40 potentially-related "tag-along" actions.

The cases at issue involve common allegations. First, all of the cases allege that Juul intentionally marketed its e-cigarette product to minors and misrepresented the fact that its product was actually more addictive than traditional cigarettes. The actions also assert traditional product liability claims on the theory that Juul's e-cigarettes are defective and unreasonably dangerous. Counsel for Juul requested that the MDL be created either in the Northern District of California or the District of New Jersey.

JPML Grants Juul MDL Motion

On October 2, 2019, the JPML granted Juul's request and created an MDL. The JMPL ruled that the related actions involved common questions of fact, and that centralization would be in the best interests of the parties:

[t]hese actions share multiple factual issues concerning the development, manufacture, labeling, and marketing of Juul products, and the alleged risks posed by [the] use of those products.

Several of the responding plaintiffs had urged the JPML to create 2 MDLS - one for the cases that were class actions and another for those cases that involved individual plaintiffs. The class action cases were mostly suits filed by state and local governments seeking damages for the public costs of nicotine addiction among their citizens.

The JPML rejected the proposal to split the class action and individual cases in separate MDLs. In the Panel's view, a single MDL made more sense given the overlap between factual allegations in the cases. The JPML also noted that it frequently creates MDLs comprising both government class actions and individual plaintiff cases.

Northern District of California Selected as Venue

The choice of where to locate the Juul MDL came down to either the District of New Jersey or the Northern District of California. The JPML ultimately decided to establish the Juul MDL in the Northern District of California. Northern California was chosen as the venue for 2 key reasons. First, the Panel noted that most of the key evidence and witnesses were located at Juul's corporate headquarters in San Francisco. Second, 5 of the constituent actions (including the earliest cases) and several tag-along actions were already pending in California's Northern District. This made northern California the logical choice for venue over New Jersey.

The JPML choose to assign the new Juul MDL to Judge William H. Orrick, III. Judge Orrick was selected primarily because he was already the judge presiding over most of the Juul lawsuits already filed and pending in the Northern District of California. The Panel noted that Judge Orrick had already ruled on several motions to dismiss in the California Juul cases and expressed confidence that he would be able to "steer this litigation on a prudent course."

What Does This Mean for Future Juul Lawsuits?

The creation of an MDL for mass tort product cases is typically a good thing for prospective plaintiffs and this should hold true for Juul cases. All future product liability lawsuits against Juul that end up in federal court will be automatically transferred into the Juul MDL in the Northern District of California.

Once transferred into the MDL, individual plaintiffs and their lawyers will fill out a written information form providing key details about the allegations in their case. This information will eventually be used to categorize each individual case into a subgroup or tier (e.g., Tier 1, Tier 2, Tier 3, etc.) What tier a case gets placed in usually depends on the strength of the case and the nature of the plaintiff's alleged injuries. Plaintiffs with strong cases and the most serious injuries get placed in the top tier while those with more minor injuries go in the bottom tiers.

As the Juul MDL moves forward hundreds of new lawsuits against Juul will be transferred into it. Meanwhile, a global discovery process will take place in which Juul produces documents and responds to consolidated discovery requests propounded on behalf of all plaintiffs. At the end of the discovery process, jury trials will be conducted in 2 or 3 carefully selected individual cases. The results of these so-called "bellwether" trials are then used to facilitate settlement discussions.

The vast majority of product liability MDLs end with some type of global settlement agreement. Global settlements in MDLs typically involve the defendant agreeing to set aside some very large amount (e.g., $100 million) to settle all pending cases. This settlement fund is then distributed among the plaintiffs based on what tier their case is placed.

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