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Juul and Altria Investor Class Action Lawsuit Overview:
- Who: Juul and Altria are facing a class action lawsuit from an investor who alleges Securities Exchange Act violations.
- What: The investor claims the companies misled her and others about Juul’s marketing to youth.
- Where: The class action is nationwide in the U.S.
Tobacco company Altria and e-cigarette market leader Juul have called on the courts to toss out a class action lawsuit that alleges the two companies misled investors about Juul’s marketing tactics targeting youth.
Both companies filed separate memorandums in response to the investors’ calls for class certification, saying the Class did not have standing in the case. Altria’s motion states the investors’ claims “barely skim the surface of the requirements” of class action certification.
The investors allege that when Altria acquired a 35 percent stake in Juul they were assured the company would stop marketing to youth smokers, however that did not happen, the class action alleges.
According to the lawsuit, investors claim they were harmed by false and misleading statements made by Altria Group Inc and Juul Labs Inc regarding marketing to underage consumers, their commitment to preventing youth usage of their products, and the health and safety of Juul’s products.
The misrepresentations caused the stock price of the companies to fall a number of times after investigations into Juul’s marketing were started by the government, the class action states.
E-Cig Co, Altria Dispute Standing in Juul Lawsuit
But both Juul and Altria argue the class action lawsuit is void due to the investors not having standing.
In its memorandum, Altria said the investors “casual approach to a motion for class certification is insufficient under Supreme Court and Fourth Circuit precedent,” which requires the district court to engage in a “rigorous analysis” of the certification requirements before certifying a class.
“Plaintiffs have failed to meet their burden on multiple requirements for class certification. The proposed class cannot be certified because plaintiffs are inadequate and atypical class representatives,” Altria and Juul argue.
The company further said the counsel for the investors “knew next to nothing about the essential facts of the case and acknowledged they can’t perform even their most basic duties as Class representatives.”
In its motion, Juul said the investors had no relationship with the company, as they were investors in Altria Group, “a separate, publicly traded company that acquired a 35% minority stake in JLI in December 2018.”
The company said the crux of the investors’ claim is that Altria and Juul misled Altria investors about Altria’s investment in Juul by misstating whether Juul intentionally designed and marketed its products to underage users.
But it added that investors were now relying on the court to apply certification’s “stringent predominance requirement” by doing something it appears no federal court has ever done before: simply presuming that every investor in one publicly traded company detrimentally “relied upon” the alleged misstatements made by a separate, privately held company about itself.
“On the law and on the facts, the Court should reject such a presumption and deny certification as to the JLI Defendants,” Altria’s memorandum reads.
In addition to the investors, federal regulators have alleged that the Altria Juul investment was meant to eliminate competition in the e-cigarette market by creating a collaboration between the top tobacco company and the top e-cigarette maker.
Did you invest in Altria? What do you think of the Juul lawsuit claims? Let us know your thoughts in the comments section!
The plaintiff is represented by Steven J. Toll, Daniel S. Sommers and S. Douglas Bunch of Cohen Milstein Sellers & Toll PLLC, Jeremy A. Lieberman and Michael J. Wernke of Pomerantz LLP, Samuel H. Rudman, David A. Rosenfeld, Erin W. Boardman, Douglas R. Britton, Kevin A. Lavelle, Matthew J. Balotta and Philip T. Merenda of Robbins Geller Rudman & Dowd LLP and Brian Schall of The Schall Law Firm.
The Juul, Altria Investor Class Action Lawsuit is Klein v. Altria Group Inc. et al., Case No. 3:20-cv-00075, in the U.S. District Court for the Eastern District of Virginia.
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