A California federal judge indicated on Friday that he will likely certify classes of direct and indirect purchasers accusing e-cigarette makers Juul and ex-rival Altria of violating antitrust laws by conspiring to reduce product variety on the market, although Altria's lawyer urged the judge to reconsider and avoid a "Frankeinstein" for damage calculations.
U.S. District Judge William Orrick provided the parties with a written tentative decision granting class certification, which included some questions, before hearing oral arguments from the parties on Friday over Zoom. The judge did not announce a final ruling from the bench at the hearing's conclusion, saying he would issue a written order.
A lawyer for Altria, James Rosenthal of Wilkinson Stekloff LLP, began by arguing against the court granting the motions for class certification from the indirect purchaser plaintiffs and indirect reseller plaintiffs. He noted that the judge had asked about California's antitrust law, the Cartwright Act and conflicts it faced with other state laws.
Rosenthal said the differences would surface in how the court handles damages based on different state laws.
For example, half of the 31 states covered by the suit do not automatically treble damages as is done under the Cartwright Act, the lawyer said.
Rosenthal then addressed another question from the judge: if differences in damages could be dealt with in a separate phase of the trial, if liability under the Cartwright Act is determined.
"Can you create this Frankenstein's monster of different laws?" Rosenthal said. "I do not think you can do it."
The lawyer for Altria also told the court that he believes it would be a mistake to bifurcate the trial to provide for a second damages phase, saying many of the experts for the defendants would then be expected to testify twice.
"I do not think you should create this Frankenstein's monster with a multiphase damage case," Rosenthal told the court.
Judge Orrick asked Altria's lawyer to confirm that the conflicts do not involve the question of liability and rather that the concern is focused on damages. Rosenthal agreed.
A lawyer for the plaintiffs, Elana Katcher of Kaplan Fox Kilsheimer, told the court that she represents indirect reseller plaintiffs, but for purposes of Friday's hearing would be arguing on behalf of both indirect classes.
The court's challenge is to "ensure that modest variances" in the laws of other states do not stand in the way of the plaintiffs' ability to pursue their antitrust case, Katcher said.
"If you have 31 different class reps and 31 different classes, it's a more difficult, expensive and challenging claim to prosecute," the lawyer told the court. "And they'll be much fewer of such claims."
Further, the claims in the case are strongly connected to California, Katcher said, noting that the Golden State was the "home" of Juul Labs Inc. "during the conspiracy." It's also one of the largest markets for Juul products, she said.
The court should consider how much the state has at stake in trying to stop the conduct at issue, the lawyer for the plaintiffs said.
"Defendants' argument that differences in enhance damages should suffice to derail California from applying its law ... is not cognizable under California law," Katcher said.
A group of Juul buyers first brought their suit in 2020, requesting an injunction to block Altria's $12.8 billion investment in Juul from 2018 on competition grounds.
But in March 2023, Altria sold the entirety of its minority stake in Juul, prompting the Federal Trade Commission to drop its ongoing challenge to the deal.
The buyers assert that even though the 2018 investment was sold, there's nothing to stop the two companies from recombining in the future.
In recent years, some of the claims have been sent to arbitration. In addition, Judge Orrick in early 2024 dismissed a request for an injunction to block Altria's already-unwound investment in the company.
The plaintiffs are represented by Betsy C. Manifold, Kate M. McGuire and Thomas H. Burt of Wolf Haldenstein Adler Freeman and Herz, Fred T. Isquith, Sr. of Isquith Law PLLC, Merle C. Meyers and Michele Thompson of Meyers Law Group PC, Robin F. Zwerling and Justin M. Tarshis of Zwerling Schachter and Zwerling LLP, Andrew Dirksen of Cera LLP, Elana Katcher of Kaplan Fox Kilsheimer, Joseph Saveri, Itak Moradi, Ronnie Seidel Spiegel and David Seidel of the Joseph Saveri Law Firm LLP, John D. Radice of Radice Law Firm PC, and Michael Buchman of Motley Rice LLC.
Juul Labs is represented by David I. Gelfand, Jeremy J. Calsyn and Nowell D. Bamberger of Cleary Gottlieb Steen & Hamilton LLP.
Altria is represented by James M. Rosenthal, Jeremy Scott Barber and Jennifer Pavelec of Wilkinson Stekloff LLP.
The case is In re Juul Labs Inc. Antitrust Litigation, case number 3:20-cv-02345, in the U.S. District Court for the Northern District of California.

Oct 17