Fired exec says Juul didn’t heed safety warnings
A former Juul executive has accused the San Francisco ecigarette company of selling a million contaminated nicotine pods and then firing him after he raised concerns about it, according to a lawsuit filed in U.S. District Court on Tuesday.
Siddharth Breja, who was Juul’s senior vice president for finance from May 2018 to March 2019, filed the complaint in U.S. District Court for the Northern District of California. The suit was first reported in BuzzFeed News.
Breja claims that after Juul stopped selling pods of its mango, fruit, creme and cucumber flavors in brickandmortar stores last year — a response to growing concern among health officials that the sweet flavors were drawing teens to vaping — demand for mintflavored pods increased. Juul, in turn, pressured its suppliers to produce more mint eliquid.
“This compromised the quality control measures, as the focus was on producing and selling mintflavored pods at any cost, even when the product turned out not to be safe,” the suit says.
Analysts estimate that mint is Juul’s most popular flavored product, accounting for 60% of U.S. retail sales.
In March, Breja notified other executives
Juul and “determined investigated the product met all applicable specifications.”
Ted Kwong, Juul spokesman
that a batch of mintflavored eliquid, enough for a million pods, was contaminated and had already been shipped to retailers, the complaint says. Breja protested the company’s decision not to recall the products or issue a safety notice to customers. Later that month, he was terminated.
Juul spokesman Ted Kwong said the claims are baseless, denied the allegations of safety issues with the pods, and said the company will vigorously defend against the charges. He said Breja was terminated because he “failed to demonstrate the leadership qualities needed in his role.”
“We already investigated the underlying manufacturing issue and determined the product met all applicable specifications,” Kwong said in a written statement.
The lawsuit comes at an inopportune time for Juul, which is under investigation by federal regulators, Congress and state attorneys general for its marketing tactics to minors. Its days as the ecigarette industry’s dominant player may be numbered, as Juul faces a May 2020 deadline to apply for a Food and Drug Administration review; if the agency denies the application, Juul may have to stop selling its products, at least in their current form, in the United States.
The company is also being caught in the controversy over vapingrelated deaths and lung illnesses that have stricken more than 1,000 people over the last few months. Even though experts believe many of those cases involve illicit THC vaping products, not nicotine products such as those made by Juul, the health scare has prompted new scrutiny into the mostly unregulated vaping industry. In the last several weeks, Juul replaced its CEO, announced layoffs and the departure of longtime executives, including its chief financial and marketing officers.
Because Breja was at the company for less than one year, he did not receive bonuses or equity that he would have otherwise received had he stayed employed longer. The complaint says that Juul told him one of the reasons for the termination was that he misrepresented his role at a previous employer, Uber, by claiming he was the chief financial officer;
Breja says he never claimed to be chief financial officer of the company, but rather chief financial officer of a division of Uber.
According to the suit, Breja also suggested to other executives that Juul include an expiration date or “best by” date on its products. He says thenJuul CEO Kevin Burns responded by saying, “Half our customers are drunk and vaping like mofo’s, who the f— is going to notice the quality of our pods?”
In a separate matter in San Francisco Superior Court, Juul in July petitioned the court to move a dispute with Breja into arbitration. Juul’s petition claims that after Breja was terminated, he refused to sign a release agreement that the company requires of departing employees to receive severance. Instead, Breja sent Juul a demand letter claiming he was retaliated against and wrongfully terminated, and threatened to file a wrongful termination claim in state court.
“The truth is that Breja was simply disappointed with the offered severance,” Juul attorneys wrote in the petition.