A former executive contends in a new lawsuit that Juul released 1 million tainted vaping pods onto the market, then failed to warn retailers and consumers.
Siddharth Breja, who had been the vice president of global finance, claims in a lawsuit filed Tuesday that he was “inappropriately terminated” in March, days after raising concerns about a shipment of mint-flavored refill kits and for protesting the company’s refusal to alert the public. The suit also alleges that Juul breached several California business regulations.
“Mr. Breja became aware of very concerning actions within the company that could be jeopardizing the health of millions of Juul users. He performed his duty to shareholders, the board, and the public by reporting these issues internally, expecting that Juul’s senior management would do the right thing,” his attorney, Harmeet Dhillon, said in an emailed statement to The Washington Post. “Instead, Juul fired him under concocted, false pretenses, and then sought to smear him to justify its misconduct.”
Juul is already facing scores of lawsuits and federal scrutiny stemming from allegations it created a youth vaping epidemic. Meanwhile, medical officials are scrambling to unravel a rash of lung illnesses tied to vaping devices that have sickened more than 1,600 users and caused 34 deaths, according to the national Centers for Disease Control and Prevention. Although many of the cases have been linked to black market THC products, public health officials have not ruled out nicotine-based e-cigarettes as a culprit. The panic has caused seven states and several cities, including San Francisco, where Juul is headquartered, to restrict e-cigarettes to various degrees.
The new lawsuit, first reported by Buzzfeed, comes as Juul announced the layoffs of 500 employees, among them a handful of executives, including chief financial officer Tim Danaher. In a statement to the Post, the company said Breja’s lawsuit and allegations about the contaminated pods were “baseless.”
“He was terminated in March 2019 because he failed to demonstrate the leadership qualities needed in his role,” Juul said in the statement. “The allegations concerning safety issues with Juul products are equally meritless, and we already investigated the underlying manufacturing issue and determined the product met all applicable specifications. The company will vigorously defend this lawsuit.”
Breja, who had been at Uber before joining Juul in May 2018, learned about the contaminated pods during an executive meeting on March 12. Breja was asked to recover $7 million from the supplier, Alternative Ingredients, for the bad pods, court documents show.
“This hypocritical approach of not informing the customers about the contamination on one hand (claiming it was not a serious issue) and charging the supplier for it on the other hand, further concerned Mr. Breja,” the complaint said.
When Breja protested, the suit alleged, his supervisor, Danaher, warned that either option would cost the company billions in sales, lead to a “significant reduction” in Juul’s $38 billion valuation t the time and damage the brand’s reputation, according to the complaint.
Ten days after the meeting, the suit said, Breja was fired. He was told he was terminated because he had misrepresented himself as having been CFO at Uber, rather than of a division of the ride-sharing company. Breja denies this, and said he was not permitted to take notes during the termination conversation, according to the complaint.
Breja said he also had pressed the company over its refusal to include a “best by” or manufacturing date on its products. The complaint said that stemmed from Juul’s plan to resell older inventory that had been returned by distributors. Juul’s advertising says that pods lose flavor after about a year.
But then-chief executive Kevin Burns allegedly dismissed Breja’s concerns. “Half our customers are drunk and vaping …” Burns said, according to the complaint. “Who … is going to notice the quality of our pods?”
Burns stepped down as CEO in September, and has since been replaced by K.C. Crosthwaite, a former executive with Altria. The tobacco giant acquired Juul in December 2018.