Juul knowingly sold tainted nicotine pods, former executive says

Sheila Kaplan and Jan Hoffman, The New York Times

Posted at Oct 31 2019 09:19 AM

Juul knowingly sold tainted nicotine pods, former executive says 1
Juul products on display at a store in New York on Aug. 1, 2019. A former top executive of Juul is alleging that the e-cigarette giant sold at least one million contaminated mint-flavored nicotine pods -- and refused to recall them when told about the problem in March 2019. Brittainy Newman/The New York Times

A former top executive of Juul is alleging that the electronic cigarette giant sold at least 1 million contaminated mint-flavored nicotine pods — and refused to recall them when told about the problem in March.

In a lawsuit filed in the U.S. District Court for the Northern District of California on Tuesday, Siddharth Breja, who was senior vice president for global finance, claims he was fired March 21 in retaliation for whistleblowing and objecting to the shipment of the contaminated and expired pods and other illegal and unsafe conduct that “has jeopardized and continues to jeopardize public health and safety and the lives of millions of consumers, many of them children and teens.”

Breja detailed a culture of indifference to safety and quality-control issues among top executives at the company and quoted the then-Chief Executive Kevin Burns saying at a meeting in February: “Half our customers are drunk and vaping” and wouldn’t “notice the quality of our pods.”

Burns, who left the company in September, issued a statement Wednesday afternoon strongly disputing the quote. “I never said this, or anything remotely close to this, period,” the statement said. “As CEO, I had the company make huge investments in product quality, and the facts will show this claim is absolutely false and pure fiction.”

The lawsuit was first reported by BuzzFeed News.

Ted Kwong, a Juul spokesman, dismissed Breja’s claims as baseless.

“He was terminated in March 2019 because he failed to demonstrate the leadership qualities needed in his role,” Kwong said. “The allegations concerning safety issues with Juul products are equally meritless, and we already investigated the underlying manufacturing issue and determined the product met all applicable specifications.”

This lawsuit is only the latest in a growing series of cases against Juul being filed around the country by school districts and individuals. Earlier this month a federal judicial panel gathered together the far-flung cases before Judge William H. Orrick in the Northern District of California in San Francisco, who will oversee them. The claims typically focus on personal injury for vaping-related illnesses or false marketing. The panel estimated that there are about 50 lawsuits so far.

Breja’s lawsuit did not specify what the contaminant in the nicotine pods was. The allegations detail that the shipment of tainted mint-flavored pods resulted from a series of decisions by Juul that created a huge demand for that flavor.

In November 2018, Juul, under scrutiny by the Food and Drug Administration, announced it would no longer sell its teen-friendly flavored pods in retail stores, making them available only online. But while Juul moved its dessert flavors off the shelves, it continues to sell menthol and mint in retail stores. Breja alleged that with popular flavors like mango and creme no longer readily accessible, customers began embracing menthol and mint with fervor, so much so that demand outstripped supply.

Breja said in the legal complaint that Burns, whom he characterized as behaving like an autocratic “king,” pressured suppliers to hurriedly come up with more mint-flavored product. Burns, he said, also exhorted employees, saying, “You need to have an IQ of 5 to know that when customers don’t find mango they buy mint.”

In March, Breja said he learned that batches of pods flavored with mint-flavored liquid and nicotine had been contaminated and that 250,000 “Mint Refill Kits,” the equivalent of 1 million pods, had been shipped and were being sold by retailers.

Juul did not recall the pods, Breja said, yet he was told to charge the supplier, Alternative Liquids Inc., $7 million so that Juul could recover from the contaminated batches. The supplier was not reachable for comment.

Breja said he urged Juul’s chief financial officer to issue either a recall or put out product safety warnings. A week later, the complaint says, Breja was fired.

Erika A. Kelton, a lawyer at Phillips and Cohen, a Washington-based firm that represents whistleblowers but is not representing Breja, said that although the allegations are cast as a wrongful termination case, they are likely to get the attention of regulators.

“These contamination allegations are headline-grabbing, and I’d expect both federal and state regulators will investigate because they are of such grave public concern,” she said.

Juul is already under investigation by numerous government offices, among them the Food and Drug Administration, the Federal Trade Commission, five state attorneys general and several congressional committees.

They have ordered Juul to turn over reams of internal documents, and the FDA, among others, has complained that the records do not appear complete. Breja’s case may offer a clue to their frustration.

He also claims that after the FDA raided Juul headquarters in October 2018, seeking internal documents, Burns instructed Breja and other executives not to put anything relating to regulatory or safety issues in writing, so that the FDA could not get them in the future.