9 GUTRIDE SAFIER LLP 1 ADAM J. GUTRIDE (State Bar No. 181446) SETH A. SAFIER (State Bar No. 197427) 2 TODD KENNEDY (State Bar No. 250267) 3 ANTHONY PATEK (State Bar No. 228964) 100 Pine Street, Suite 1250 4 San Francisco, California 94111 Telephone: (415) 639-9090 5 Facsimile: (415) 449-6469 adam@gutridesafier.com 6 seth@gutridesafier.com 7 todd@gutridesafier.com anthony@gutridesafier.com 8 MIGLIACCIO & RATHOD LLP 9 Nicholas Migliaccio, pro hac vice forthcoming 10 Jason Rathod, pro hac vice forthcoming Esfand Nafisi (State Bar No. 320119) 11 412 H Street NE, Suite 302 Washington, D.C. 20002 12 Telephone: (202) 470-3520 enafisi@classlawdc.com 13 14 Attorneys for Plaintiffs Colgate, McKnight 15 UNITED STATES DISTRICT COURT 16 DISTRICT OF NORTHERN CALIFORNIA 17 18 CASE NO. 3:18-cv-2499 19 BRADLEY COLGATE, AN INDIVIDUAL, AND KAYTLIN MCKNIGHT, AN INDIVIDUAL, ON 20 BEHALF OF THEMSELVES, THE GENERAL CLASS ACTION COMPLAINT PUBLIC AND THOSE SIMILARLY SITUATED, 21 JURY TRIAL DEMANDED PLAINTIFFS, 22 23 V. 24 JUUL LABS, INC.; PAX LABS, INC. 25 DEFENDANTS. 26 27 28 -1- Class Action Complaint 9 1 Bradley Colgate and Kaytlin McKnight, by and through their counsel, bring this Class 2 Action Complaint ("Class Action Complaint") against Defendants, on behalf of themselves and 3 those similarly situated, for violation of the consumer protection laws of the 50 states, including 4 sections 17200 et seq. and 17500 et seq. of the California Business and Professions Code and the 5 California Consumers Legal Remedies Act; common law fraud, deceit and/or misrepresentation; 6 and unjust enrichment. The following allegations are based upon information and belief, 7 including the investigation of Plaintiffs' counsel, unless stated otherwise. 8 INTRODUCTION 9 1. This case arises out of Defendants' false and deceptive advertising of JUUL e- 10 cigarettes and JUUL pods, including their unfair, unlawful, and fraudulent practices of marketing 11 those products as safe, candy-like products that are attractive to minors and nonsmokers, when 12 they in fact contain more potent doses of nicotine than cigarettes, making them particularly 13 addictive, and without disclosing any of the myriad problems that are likely to occur from the use 14 of the products, including long-term nicotine addiction; increased risk of heart disease and stroke; 15 changes in brain functionality that lead to increased susceptibility to anxiety, depression and other 16 addictions; decreased functionality of the endocrine system; heightened risk of cancer; and 17 negative effects on fertility. 18 2. Released in 2015, JUUL now dominates the $3 billion e-cigarette market in the 19 United States, beating out established competitors like Philip Morris. The secret to JUUL's 20 success is simple: JUUL e-cigarettes' patented nicotine formulation is more addictive than 21 anything else on the market, including the most potent cigarettes. Instead of disclosing this 22 material fact to consumers, JUUL launched a multi-million dollar marketing campaign targeting 23 children and young adults in an effort to brand the JUUL e-cigarette as a fashion accessory sold in 24 "limited edition" colors and candy-like flavors. Having accomplished its goal of creating a 25 massive user base of addicts—many of whom are children—whose intense nicotine cravings can 26 only be satiated by JUUL's ultra-potent nicotine formulation, JUUL recently rebranded itself. 27 Gone from its website are the youthful colors and images glamorous young models seductively 28 exhaling clouds of vapors. JUUL's website now pictures middle-aged adults in non-glamorous -2- Class Action Complaint 9 1 settings and suggests that JUUL exists solely for the benefit of adult smokers looking for an 2 alternative. Defendants' attempt to distance themselves from their wrongful conduct is superficial 3 and does not undo the damage they have caused or change their fundamentally unscrupulous 4 business model. JUUL's e-cigarettes are still as addictive as they ever were, are still sold in 5 candy-like flavors, and can now be ordered with a subscription service on JUUL's website. JUUL 6 was and is in the business of addicting consumers to its product. 7 3. Defendants advertise JUUL e-cigarettes as "the satisfying alternative to 8 cigarettes." Defendants' web site at juulvapor.com touts the JUUL e-cigarette as "the i-Phone of 9 E-cigs," thereby framing them as a cool, fashionable item to own and use. Defendants advertise 10 and market the JUUL and JUUL pods in a variety of bright, primary colors, with the nicotine 11 pods advertised and marketed in child friendly flavors such as mango, "cool mint," "fruit 12 medley," "crème brulee," and "limited edition classic menthol," and "limited edition cool 13 cucumber." Third parties—licensed by Defendants, to manufacture their patented products—also 14 sell similar youth- and non-smoker-oriented flavors such as "gypsy tantrum" (a combination of 15 watermelon, kiwi, and "strawberry & cream"), "citrus burst," "paladin" (a combination of apple, 16 raspberry, blueberry, and dragonfruit), "high wire" (a combination of watermelon, honeydew, 17 strawberry, and mango), "caffe latte," and "pinkie" (described as "pink frosted yellow cakes"). 18 These colors, flavors, and names are intentionally designed to attract minors and nonsmokers. 19 Defendants paired these traits with a "vaporize" advertising campaign that focused on bright, 20 attractive images of people in their 20's and 30's going out for a night on the town, thereby 21 framing the JUUL e-cigarette as a hip, young activity and product. 22 4. Defendants have continuously omitted, downplayed or misrepresented the nicotine 23 content of JUUL e-cigarettes, the risks of addiction its products pose, and the health risks of 24 nicotine. A recent study of 15 to 24-year-olds found that 65% of the participants who used JUUL 25 e-cigarettes were unaware that the JUUL e-cigarette contained nicotine. A different study found 26 that children who use e-cigarettes are four times more likely to become smokers than children 27 who do not use e-cigarettes. 28 5. Defendants' web site at juullabs.com states "[u]nlike other alternatives on the -3- Class Action Complaint 9 1 market, JUUL accommodates nicotine levels akin to a cigarette's in order to satisfy smokers 2 switching." This is false. JUUL's product delivers 25% more nicotine into the blood than the 3 strongest cigarettes available. The disparity is likely far greater when a JUUL is compared to the 4 "light" cigarettes preferred by the teenagers and young adults that constitute JUUL's core 5 demographic. For smokers seeking an alternative to cigarettes, JUUL's omissions and 6 misrepresentations about the nicotine content of its products muddy the waters when it comes to 7 making an informed decision about smoking cessation options. In fact, the JUUL e-cigarette 8 system delivers a potent dose of a nicotine salt, which is a particularly addictive form of nicotine 9 that is absorbed by the body at a much higher rate than smoking a cigarette or e-cigarettes that use 10 nicotine liquid. 11 6. Further, Defendants specifically offer and advertise "Autoship" as a service that 12 provide "pods at your door and savings in your pocket. 15% off every order. Cancel anytime." 13 This misleads the JUUL consumer into thinking that they can stop purchasing JUUL pods at any 14 time, when the JUUL pods are, in fact, so addictive that most users, particularly adolescent users, 15 cannot stop purchasing them "anytime." 16 7. Although Defendants have made various public statements that their products are 17 designed only for adults who already smoke cigarettes, to provide them a safer alternative to their 18 already dangerous habit, those statements are false, and Defendants know them to be false. 19 Defendants know that the pool of cigarette smokers in California, and throughout the United 20 States, has been substantially declining over the last several decades, due to sustained investment 21 in public health education about the dangers of smoking. If Defendants only focused on the 22 market of existing smokers who want to quit, they would not only have to deal with the 23 demography of a shrinking market, but would also have to compete against entrenched habits, 24 loyalty to existing tobacco brands, and other smoking cessation products such as nicotine gum. 25 Although JUUL claims its JUUL products smoking cessation devices, it has not received FDA 26 approval as an aid in smoking cessation, and has not participated in any FDA approval process. 27 8. Defendants therefore have built their brand and advertising and marketing strategy 28 around creating, and addicting, an entirely new group of customers who are not regular smokers. -4- Class Action Complaint 9 1 Despite their public denials, Defendants intentionally market their products to appeal to these 2 young nonsmokers in the hopes that they will try the products and, because of the products highly 3 addictive nature, become life-long customers. In this regard, Defendants have been wildly 4 successful. 5 9. JUUL has built a commercial empire on fraud, misrepresentations and omissions. 6 Its sleek ad campaigns have turned children and non-smokers into addicts. Defendants have also 7 worsened the plight of smokers who turned to JUUL as a means of ending their addiction to 8 nicotine. This case seeks to put an end to JUUL's unscrupulous practices and provide relief to 9 consumers for the economic losses caused by JUUL's deceptively addictive products. 10 PARTIES 11 10. Bradley Colgate ("Colgate") is, and at all times alleged in this Class Action 12 Complaint was, an individual and a resident of La Jolla, San Diego County, California. 13 11. Kaytlin McKnight ("McKnight") is, and at all times alleged in this Class Action 14 Complaint was, an individual and a resident of Arroyo Grande, San Luis Obispo County, 15 California. 16 12. Defendant PAX Labs, Inc. ("PAX") is, and at all times alleged in this Class Action 17 Complaint was, a Delaware corporation, having its principal place of business in San Francisco, 18 California. 19 13. Defendant Juul Labs, Inc. ("JUUL") is, and at all times alleged in this Class Action 20 Complaint was, a Delaware corporation, having its principal place of business in San Francisco, 21 California. JUUL was originally a part of PAX, but was spun out as a separate company in 2017. 22 A substantial portion of the conduct cited here occurred while JUUL was a part of PAX. 23 14. At all times alleged in this Class Action Complaint, each of the Defendants was an 24 agent, servant, representative, officer, director, partner or employee of the other Defendant and, in 25 doing the things herein alleged, was acting within the scope and course of his/her/its authority as 26 such an agent, servant, representative, officer, director, partner or employee, and with the 27 permission and consent of each Defendant. 28 15. At all times alleged in this Class Action Complaint, Defendants, and each of them, -5- Class Action Complaint 9 1 were members of, and engaged in, a joint venture, partnership and common enterprise, and acted 2 within the course and scope of, and in pursuance of, said joint venture, partnership and common 3 enterprise. 4 16. At all times alleged in this Class Action Complaint, Defendants, and each of them, 5 ratified each and every act or omission complained of herein. 6 17. At all times alleged in this Class Action Complaint, the acts and omissions of 7 Defendants, and each of them, concurred and contributed to the various acts and omissions of 8 each and all of the other Defendants in proximately causing the injuries and damages as herein 9 alleged. 10 JURISDICTION AND VENUE 11 18. This action is brought by Plaintiffs pursuant to, inter alia, the California Business 12 and Professions Code Section 17200, et. seq., and similar state laws of other states. Plaintiff and 13 Defendants are "persons" within