Altria, Juul Ask Appeals Court to Reverse Antitrust Class Certification

According to Tobacco Reporter, citing reporting by Matthew Perlman of Law360, the companies argue that the certified classes improperly combine purchasers with materially different circumstances, making the litigation unsuitable for class treatment. The appeal seeks to reverse a class certification order issued earlier this year by the U.S. District Court for the Northern District of California.

The underlying lawsuit alleges that Altria’s $12.8 billion acquisition of a 35% stake in Juul substantially reduced competition in the U.S. closed-system e-cigarette market. Plaintiffs contend the transaction led Altria to withdraw its competing vaping products, reducing consumer choice and enabling higher prices for Juul products. Altria and Juul have denied those allegations and maintain that their agreement did not violate U.S. antitrust laws.

Appeal focuses on class certification

The appeal does not address the ultimate merits of the antitrust claims. Instead, it centers on whether the case should proceed as certified class actions representing different categories of purchasers.

According to Tobacco Reporter, the companies argue that the certified groups encompass purchasers from different jurisdictions operating under varying legal standards and commercial arrangements, making class-wide adjudication inappropriate. They contend that differences among purchasers require individualized analysis rather than collective treatment.

Class certification is a significant procedural milestone in antitrust litigation because it can determine whether claims involving large numbers of purchasers proceed collectively or as individual lawsuits.

Related: Altria, Juul Seek Pause in Antitrust Case as Class Certification Appeal Moves Forward

Background of the dispute

The litigation stems from Altria’s December 2018 investment in Juul, then the leading U.S. e-cigarette manufacturer. As part of the transaction, Altria discontinued development and marketing of its competing MarkTen e-cigarette products and agreed to restrictions related to competition with Juul.

Plaintiffs argue those actions diminished competition in the market for closed-system vaping products, ultimately harming purchasers through higher prices and fewer product options. The defendants dispute both the competitive impact and the legal basis for the claims.

Earlier this year, U.S. District Judge William H. Orrick certified classes of direct purchasers, indirect purchasers and certain resellers, finding that common issues predominated and that class treatment was appropriate despite the defendants’ objections. Tobacco Reporter, citing Law360, reported that the court rejected arguments that differing contracts and pricing arrangements defeated class certification.

Broader antitrust scrutiny

The lawsuit forms part of broader regulatory and legal scrutiny surrounding the Altria-Juul transaction.

The U.S. Federal Trade Commission previously challenged the investment, alleging it unlawfully eliminated competition between the companies in the U.S. vaping market. Although the FTC later dismissed its administrative complaint after Altria fully unwound its investment in Juul, the private antitrust litigation has continued independently because it seeks damages on behalf of purchasers allegedly affected by the transaction.

Private antitrust cases frequently proceed even after related government enforcement actions conclude, as the legal standards and remedies differ between public enforcement and civil damages litigation.

Source: Tobacco Reporter