Q&A – South Florida Schools And Juul

Today’s entry - How the hell can a school district sue a vaping company for kids vaping in school? Can you sue for kids using cell phones, cigarettes, video games and anything else you don’t want in school? It seems freaking nuts!

Bottom Line: On back of Palm Beach County’s decision to retain two firms to inquire about potential legal action against Juul, many questions have cropped up. Here’s an important point. Palm Beach County isn’t currently suing Juul. There’s been extensive false reporting by South Florida media outlets on this one. The county has opened a legal inquiry that may or may not result in legal action being taken. I hear the spirit of what you’re saying so I’m happy to wade into the conversation a bit deeper. 

To the question of being able to sue. Just about anyone can sue for just about anything, with sovereign immunity for government agencies being the exception. Most lawsuits are intended to pressure a settlement situation. 95% of cases never reach a courtroom and in terms of success, approximately 55% of lawsuits result in outcomes that exceed legal expenses. What the Palm Beach County School District has decided to do is essentially a no-risk proposition. The two law firms retained for the legal inquiry are doing so on contingency, so they’ll only be paid out of any proceeds that would be gained by the District. 

To your question about validity, the landmark $250 billion in 1998 legal settlement reached by the tobacco companies and the states explicitly banned any advertising targeting minors. This included outright bans on advertising of any sort in mediums commonly consumed by children. That’s the road map for taking legal action against Juul. You must be at least 18 in order to purchase any vaping products in Florida, and anywhere in the country. A few states have raised the age to 21. The question becomes whether Juul deliberately advertised to those who weren’t of age. For any lawsuits brought by school districts against Juul or any vape/e-cig companies, this will be their key argument, though there are questions as to if they also misled adults that are being litigated as well. The question might be if there be anything to sue?

Juul is privately held, so real-time financials are hard/near impossible to come by, but I completed an estimated financial analysis based on private market value yesterday. It pegs the entire company at $17.1 billion in total value. That’s nearly $21 billion less than entering 2019. Also, that’s estimated enterprise value, not actual money available to pay out to settle claims. With school districts and states all across the country focusing on Juul, if it’s determined they’re liable, I’m not sure there would be much of anything of value left. If anything, we’d likely be looking at a similar structure to the 1998 tobacco settlement in which money would be paid out over decades. To get anything in return Juul would have to remain viable as a company over the long run and I think its future is very much in doubt.

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Email: brianmudd@iheartmedia.com

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Photo by: Getty Images North America

 

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