Four executives at electronic cigarette maker Juul Labs cannot be personally sued in Colorado for their company’s allegedly illegal marketing practices, the state Supreme Court ruled Monday.
Juul founders Adam Bowen and James Monsees and board members Nicholas Pritzker and Riaz Valani did not take enough action in Colorado or targeted at Colorado residents to be subject to personal liability in the state’s civil courts, six of the state’s Supreme Court justices ruled Monday. The seventh justice did not participate in the decision.
The ruling comes after Colorado Attorney General Phil Weiser sued Juul Labs in 2020, alleging the company — and in a later amended complaint, the four executives in particular — violated state law by marketing their products to youth and deceiving consumers about product ingredients and health risk.
The four executives had filed a motion to dismiss the lawsuit against them because of a lack of personal jurisdiction. A district court judge denied that motion, which prompted the executives, who are all California residents, to appeal to the Colorado Supreme Court.
Attorneys for the board members argued they could not be personally sued in Colorado because they did not take action targeted toward Colorado, but, rather, were generally aware of the company’s nationwide marketing campaign. Attorneys for the founders argued they couldn’t be personally sued because they have “no alleged connection” to Colorado.
Prosecutors in Weiser’s office argued that the four executives were key players who oversaw, managed and approved of the company’s allegedly illegal marketing campaign, which they said specifically targeted Colorado.
But the Colorado Supreme Court found that the state failed to show that the executives “were primary participants in wrongful conduct that they personally directed at Colorado, or that the injuries alleged in the amended complaint arose out of or related to defendants’ Colorado-directed activities.”
“The state alleges no facts supporting a conclusion that any of the defendants expressly aimed their conduct at Colorado,” Justice Richard Gabriel wrote in the 39-page opinion.
The justices said the opinion should not be construed to mean people cannot be sued in Colorado unless they physically conduct business in the state.
“Nothing in our decision today suggests that non-resident defendants can claim immunity merely because ‘they have not physically set foot’ in Colorado,” Gabriel wrote. “As discussed above, the proper inquiry is whether defendants expressly aimed any conduct here, and this requirement can, in certain circumstances, be satisfied absent any physical presence in this state.”
A spokesperson for Juul Labs did not immediately return requests for comment Monday.
The lawsuit against the company itself will continue, said Lawrence Pacheco, spokesman for the Colorado Attorney General’s Office.
“Our efforts to hold Juul accountable are unaffected by the opinion from the Colorado Supreme Court,” he said. “The Department of Law will continue to press forward with our lawsuit and hold Juul accountable for its deceptive marketing and messaging campaign that targeted youth and downplayed the health risks and addictive nicotine concentrations of its e-cigarettes.”
In a separate matter, Juul Labs agreed earlier this month to pay a $440 million settlement to 33 states after the states conducted a two-year investigation into its marketing practices. Colorado was not included in that settlement.
