Please ensure Javascript is enabled for purposes of website accessibility

Atria and Juul Labs Must Face RICO Lawsuits Over Teen Vaping

By Rich Duprey - Updated Apr 14, 2021 at 1:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The plaintiffs claim that there was a scheme to get teenagers addicted to vaping.

A federal judge ruled electronic cigarette leader Juul Labs and tobacco giant Altria Group (MO -1.25%) must face racketeering charges over teen vaping claims brought by consumers, local governments, and school districts.

Originally created as a means of going after organized crime, the Racketeer Influenced and Corrupt Organizations (RICO) law has been continuously expanded and is now routinely wielded against Wall Street. Among the risks the defendants face is liability for treble damages.

U.S. Judge William Orrick for the Northern District of California ruled that Juul's executives and directors and Altria could be individually pursued for their "racketeering" activities in the cases.

Gavel on $100 bills

Image source: Getty Images.

The judge ruled last October that the plaintiffs' allegations didn't rise to the level of RICO Act violations and dismissed them, though he also held the door open for the plaintiffs to file amended complaints.

The plaintiffs contend that Juul's co-founders and directors -- as well as Altria, which had taken a 35% stake in the company -- schemed to get teens addicted to vaping and that Juul was simply their vehicle for achieving that goal.

By using false and misleading statements in their advertisements, the plaintiffs claim, and only highlighting certain aspects of the device's capabilities while ignoring others, they were able to deceptively increase vaping among teens.

The judge held that the new suits adequately allege the defendants' goals were to "advance their self-interests, and not necessarily or primarily to advance Juul Labs Inc.'s interests."

With their cases allowed to proceed, the plaintiffs now have a powerful tool to get Juul and Altria to negotiate a settlement instead of going to trial because of the steep liability attached to a RICO case.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Altria Group, Inc. Stock Quote
Altria Group, Inc.
$41.72 (-1.25%) $0.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.