The Nicotine Product Liability Wave: What Happens When the Courts, Not the FDA, Decide What's Safe

The Master Settlement Agreement of 1998—the largest civil settlement in US history, in which the major cigarette companies agreed to pay $206 billion over 25 years to 46 states—was not the product of regulation. It was the product of litigation. State attorneys general, armed with a novel legal theory (that the cigarette companies had conspired to deceive the public about the health risks of smoking, and that the states were entitled to recover the Medicaid costs of treating smoking-related disease), sued the industry and won a settlement that transformed the tobacco control landscape—imposing marketing restrictions, funding public health programs, and establishing a precedent for holding the industry financially accountable for the health consequences of its products. The MSA was not designed by public health experts. It was designed by lawyers—and its legacy is complex, including the creation of a revenue stream (the MSA payments) that has made state governments financially dependent on the continued profitability of the cigarette industry. The MSA model is now being deployed against the vaping industry—with state attorneys general, class-action law firms, and individual plaintiffs pursuing claims against Juul, other vaping companies, and the retailers who sold their products. The litigation wave will shape the vaping industry as much as FDA regulation—and its outcomes are unpredictable in ways that FDA regulation is not.

The legal theories underlying the vaping litigation are adapted from the tobacco litigation playbook but applied to a different set of facts. The claims against Juul, the primary target of the litigation, include: that Juul marketed its products to youth (through social media influencers, flavored products, and youth-oriented advertising), that Juul misrepresented the addictiveness and health risks of its products (by failing to disclose the high nicotine content of Juul pods and by presenting vaping as safer than smoking without adequate evidence), and that Juul's products were defectively designed (because the high nicotine concentration and the nicotine-salt formulation made the products unreasonably addictive). The claims track the legal theories that succeeded against the cigarette companies in the 1990s—deceptive marketing, failure to warn, defective design—but applied to a product (vaping) whose health risks are fundamentally different from cigarettes. The legal system's binary framework—a product is either 'safe' or 'defective'—is poorly suited to the nicotine landscape, where products exist on a continuum of risk and the appropriate legal standard depends on the comparator.

The Juul litigation has already produced substantial settlements. In 2022, Juul agreed to pay $438.5 million to 33 states to resolve claims that it marketed its products to youth. In 2023, Juul agreed to pay $1.7 billion to resolve approximately 5,000 individual and class-action lawsuits, including claims from school districts, local governments, and individual plaintiffs. The settlements, while large in absolute terms, are smaller than the $12.8 billion that Altria paid for its stake in Juul in 2018—and Altria has since written down that investment to near zero. The Juul litigation is a cautionary tale for the vaping industry: the legal exposure from marketing a product that appeals to youth and that delivers nicotine at high concentrations is substantial, and the litigation costs can exceed the regulatory costs by orders of magnitude. The litigation wave is, in effect, a second regulatory system—one that operates alongside the FDA's PMTA process, with different standards, different timelines, and different consequences—and the vaping industry is learning to navigate both.

The product-liability dimension of the litigation is the most consequential for the industry's future. The claim that Juul's products were defectively designed because they delivered too much nicotine too efficiently—the same claim that could be brought against any vaping product that uses nicotine salts at high concentrations—challenges the fundamental design logic of the vaping industry. The industry's value proposition to smokers is that vaping can deliver nicotine with cigarette-like satisfaction without cigarette-like harm. The satisfaction depends on efficient nicotine delivery—the nicotine-salt formulation, the optimized device design, the sensory experience that makes vaping an effective substitute for smoking. If the legal system determines that the very features that make vaping effective as a harm reduction tool—high nicotine delivery, efficient absorption, satisfying sensory experience—render the product 'defectively designed' because they also make it addictive, the legal framework is in direct conflict with the public health framework. The public health framework says: make vaping effective enough to compete with cigarettes, and smokers will switch. The legal framework, as applied in the Juul litigation, says: making vaping too effective, and thereby too addictive, exposes the manufacturer to liability. The tension is unresolved—and the resolution will determine whether the vaping industry can produce products that are both legally defensible and effective as smoking cessation tools.

The broader implications of the product-liability wave for the nicotine industry are significant. The litigation model is being extended beyond Juul to other vaping companies, to the manufacturers of disposable vapes, and potentially to the nicotine pouch and heated-tobacco industries. The legal theories that succeeded against Juul—deceptive marketing, failure to warn, defective design—are generalizable to any nicotine product that is marketed in ways that appeal to youth, that delivers nicotine efficiently, and that presents harm reduction claims without adequate substantiation. The litigation risk creates an incentive for the industry to be more conservative in its product design and marketing—an incentive that may reduce youth initiation (a public health benefit) but may also reduce the effectiveness of the products for adult smokers (a public health cost). The balance between these effects will depend on the specifics of the litigation and the industry's response, but the direction is clear: the courts, not just the regulators, are shaping the future of the nicotine market.

The product-liability wave also raises questions about the appropriate role of litigation in public health governance. Litigation is an adversarial, retrospective, and compensatory mechanism—it determines liability for past harm, not optimal policy for future health. The MSA, for all its public health benefits, was not designed to optimize public health—it was designed to compensate states for past costs, and its structural features (the revenue-sharing that makes states dependent on cigarette sales) have created perverse incentives that persist decades later. The Juul litigation, similarly, is not designed to optimize the public health impact of vaping—it is designed to compensate plaintiffs and punish the defendant, and its effects on the availability of harm reduction products for adult smokers are incidental to its legal logic. The regulatory system—the FDA's PMTA process, the FCTC's policy framework, the UK's Medicines and Healthcare products Regulatory Agency's licensing of vaping products as medicines—is designed (imperfectly) to optimize public health. The litigation system is designed (imperfectly) to deliver justice between parties. The overlap between these systems—the fact that the litigation system is increasingly functioning as a de facto regulatory system—is a symptom of the regulatory system's inadequacy, not a feature of optimal governance.

Shareable insight: The same legal strategy that produced the $206 billion Master Settlement Agreement against the cigarette industry in 1998 is now being deployed against vaping companies. Juul has already paid over $2 billion in settlements. The litigation wave is shaping the industry as much as FDA regulation—but litigation is adversarial, retrospective, and compensatory, not designed to optimize public health. The result may be a vaping industry that is more legally cautious and less effective as a harm reduction tool.