Altria Settles Majority of JUUL-Related Cases
What This Means for Shareholders and the Industry
Altria Group Inc. has recently reached an agreement to settle at least 6,000 state and federal JUUL-related cases for a total of $235 million. We believe it’s important to dive deep into this settlement, explore its implications, and consider what this means for Altria’s shareholders and the tobacco industry as a whole.
Altria Believes the Settlement is in the Best Interest of Shareholders
Murray Garnick, Altria’s executive vice president and general counsel, stated that while they continue to believe the claims against them are meritless, the settlement is in the best interest of shareholders. The settlement avoids a protracted legal process and brings closure to the majority of pending JUUL-related litigation.
Details on the Coordinated JUUL-Related Cases
In October 2019, the U.S. Judicial Panel on Multidistrict Litigation ordered the coordination or consolidation of federal individual and class action lawsuits related to JUUL. The cases were moved to the U.S. District Court for the Northern District of California for pretrial purposes. The cases include approximately:
- 50 economic class actions
- 4,500 personal injury actions
- 1,500 government entity actions (including around 1,400 school district cases)
The agreement covers these cases as well as 750 related state court consolidated proceedings.
Cases Excluded from the Settlement
This settlement does not apply to:
- 3 cases brought by attorneys general
- 35 cases brought by Native American tribes
- 17 antitrust cases
- 3 Canadian cases
Settlement Subject to Final Agreements and Court Approval
The settlement is contingent on the parties entering into one or more final settlement agreements and obtaining approval from the relevant courts.
Altria’s Financial Implications: Pre-Tax Charge of $235 Million
Altria expects to record a pre-tax charge of $235 million in the second quarter of 2023. They intend to treat this amount as a special item and exclude it from their adjusted diluted earnings per share.
Altria’s Wholly Owned Subsidiaries and Business Interests
Altria’s subsidiaries include manufacturers of both combustible and smoke-free products. In combustibles, they own Philip Morris USA Inc. and John Middleton Co. Their smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Co. LLC and Helix Innovations LLC.
Additional Business Ventures: Horizon Innovations LLC and IQOS Tobacco Heating System
Altria has a majority-owned joint venture, Horizon Innovations LLC, for the U.S. marketing and commercialization of heated tobacco stick products. Through a separate agreement, they have exclusive U.S. commercialization rights to the IQOS Tobacco Heating System and Marlboro HeatSticks until April 2024.
Conclusion: The Impact of the Settlement on Altria and the Tobacco Industry
This settlement marks a significant step for Altria Group Inc. as they resolve the majority of JUUL-related cases. The agreement allows the company to avoid a lengthy legal process and focus on its core business operations. Moving forward, it remains to be seen how this settlement will affect the tobacco industry and Altria’s future endeavors.
Frequently Asked Questions
1. What is the total amount of the settlement?
Altria has agreed to settle at least 6,000 JUUL-related cases for a total of $235 million.
2. Why has Altria chosen to settle the cases?
Altria has chosen to settle the cases to avoid the uncertainty and expense of a protracted legal process. They believe that the settlement is in the best interest of their shareholders.
3. Which cases are included in the settlement?
The settlement includes around 50 economic class actions, approximately 4,500 personal injury actions, and about 1,500 government entity actions (including roughly 1,400 school district cases), as well as 750 related state court consolidated proceedings.
4. Are there any cases excluded from the settlement?
Yes, the settlement does not apply to 3 cases brought by attorneys general, 35 cases brought by Native American tribes, 17 antitrust cases, and 3 Canadian cases.
5. How will the settlement impact Altria’s financials?
Altria expects to record a pre-tax charge of $235 million in the second quarter of 2023 and intends to treat this amount as a special item, excluding it from their adjusted diluted earnings per share.