Up in Smoke: Lawsuits Pose Serious Threat to Vaping and Cannabis Industries
This fall, an outbreak of lung illnesses allegedly related to vaping ignited public hysteria and legislative reactions in many states. The vaping and cannabis industries are already paying, and will continue to pay, high reputational and policy costs associated with these events, and the industries should also be aware that the widespread nature of reported injuries could lead to a substantial amount of costly mass tort litigation. Manufacturers of e-cigarette devices and vaping liquids are certain to be targeted, but because many of those manufacturers, and even governmental agencies such as the CDC and FDA, allege that THC-containing products are to blame, the cannabis industry can expect to be the target of a rash of lawsuits as well. Manufacturers of vaping products and the entire commercial cannabis industry need to be well prepared to defend against this coming wave of products liability litigation.
According to the CDC, as of October 29, 2019, more than 1,888 cases of “e-cigarette, or vaping, [or] product use associated lung injury,” and 37 deaths, have been linked to vaping. In early September the U.S. Food and Drug Administration issued a MedWatch Safety Alert to consumers warning against the continued used of THC-containing vaping products. Although the FDA noted that more information is needed to understand the relationship between specific products and the reported illnesses, the FDA urged consumers to “avoid buying vaping products on the street” and “to refrain from using THC oil or modifying/adding any substances to product purchased in stores.” In its October 25 consumer update, the FDA further explained that, “No one substance has been identified in all of the samples tested. Importantly, identifying any compounds that are present in the samples will be one piece of the puzzle but will not necessarily answer questions about what is causing these illnesses.” However, the FDA also continued to highlight the apparent link between patient illnesses and THC-containing products.
Despite the FDA’s acknowledgement that more information is still needed, the potential consequences for manufacturers are only worsened by a rise in vaping among teenagers, which has simultaneously increased political scrutiny of vaping. The combination of these recent negative events has led to proposed and enacted legislative action at both the federal and state levels. In September, President Trump announced a plan to ban the sale of e-cigarettes in flavors other than tobacco in a more aggressive effort to curtail the rise in vaping by teenagers. Sens. Jeff Markley (D-Ore.) and Mitt Romney (R-Utah) responded to the president’s announcement by introducing legislation to the same effect this week. Additionally, the bill would also require design standards for the manufacture of e-cigarettes and would impose existing tobacco taxes on e-cigarettes. At the state level, Massachusetts recently implemented a four-month ban on the sale of vaping products, and other states, including New York, Michigan, Rhode Island, and Washington. have taken their own steps to restrict the sale of some vaping products. Although some of these legislative efforts have been challenged in court, we expect to see additional legislative responses to public concerns about vaping.
From a litigation standpoint, the intersection of vaping and THC-containing products makes recent events particularly appealing for critics and troublesome for the industry. Because vaping and state-legalized marijuana use are relatively recent developments, the medical community does not have sufficient reliable data regarding the long-term effects of vaping and THC ingestion on the body. Just as it took decades for medicine to fully understand the detrimental effects of traditional smoking, it will likely take years before medical science can sufficiently evaluate allegations of injuries caused by vaping.
Unfortunately, a lag in supporting science has seldom, if ever, prevented mass tort litigation, which can be very effective on public opinion alone if not properly managed by experienced defense litigators. One need look no further than the explosion of plaintiffs claiming that the use of talc-containing products lead to cancer. While talc-containing products are still used daily by thousands of consumers worldwide and have been recognized as safe and effective by the scientific community, that has not prevented plaintiffs from naming manufacturers in widespread litigation across the country.
We anticipate an increase in cases involving a variety of products liability claims against manufacturers throughout the supply chain. Plaintiffs will allege that manufacturers at multiple tiers failed to adequately warn consumers about the risks associated with the use of e-cigarettes, vaping liquids, and other after-market or homemade products. It is also likely that plaintiffs will assert claims alleging that defendants’ manufacturing processes are flawed, or that their products are designed in a way that caused the plaintiffs’ injuries. Moreover, as would be expected in all mass tort litigation, credentialed experts will not be in short supply to opine on various manufacturing and design defects related to either the e-cigarette devices or the liquid formulations that deliver the inhalable substance.
While couched as traditional product liability causes of action, potential cases likely to arise from these illnesses are unique because of the intersection of the relatively modern e-cigarette technology and the use of THC-containing products. To minimize the significant exposure presented by these cases, executives should act soon to evaluate potential exposure to claims from vaping-related illnesses. To start, these companies should engage skilled mass tort litigators with knowledge of cannabis products and experience in the fast-developing cannabis industry. All parties along the supply chain need to think carefully and critically about methods of shifting risk exposure. These companies should consider liability-shifting provisions such as indemnities and appropriate disclaimers related to alterations of a product. In doing so, companies should be mindful that plaintiffs are nearly certain to allege any alteration of the products was not only a foreseeable use of the product but perhaps an intended use.
Consumer advocates support legislative action aimed at preventing harm to consumers, and there is certainly no long-term benefit to be gained from publicly denying there are risks associated with vaping. However, cannabis executives need to take additional steps to not only protect their companies from the loss of political capital but also from the potential loss associated with costly and uncertain litigation in this new arena of products liability, a cost that extends far beyond litigation costs and court judgments and includes insurance, financing, and other indirect costs that can result in significant capital outflows for a company. The extent of these vaping-related injuries continues to develop rapidly, and there is a lot of uncertainty about where government investigations are likely to lead. What we do know is that individuals and families who have been affected by these illnesses and deaths will likely seek compensation regardless of the outcomes of those inquiries. The cannabis industry, and each company within it, must prepare now to manage all facets of this complicated issue to ensure that they are positioned to successfully correct course where necessary and weather the coming storm of litigation on the horizon.
The original article, "Up in Smoke: Lawsuits Pose Serious Threat to Vaping and Cannabis Industries," first appeared in Cannabis Business Executive on November 6, 2019.
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