Juul Labs

On January 7, 2020, Bottini & Bottini filed a shareholder class action against Juul Labs and its Board of Directors in San Francisco Superior Court.

The complaint alleges that the Company’s officers and directors abused their control of the Company to benefit themselves personally to the detriment of the Company’s minority shareholders and have engaged in self-dealing and treated the minority shareholders disparately. At the same time, the Defendants have breached their fiduciary duties and violated California law by failing to provide financial information, annual reports, and other basic information to the minority shareholders, thus inhibiting their ability to discover the true worth of their stock.

After negotiating a $12.8 billion investment in the Company by Altria, Defendants paid themselves a special dividend/bonus, thus taking substantial liquidity out of the Company that could have been used for corporate purposes, but did not pay a dividend/bonus to all shareholders and usurped for themselves a disproportionate amount of the dividend/bonus. Additionally, the Defendants have treated the minority shareholders unfairly by imposing restrictions on their sale of Company stock – restrictions which do not apply to the Defendants or which they are free to waive due to their control of the Company.

Moreover, both before and after disbursement of the special dividend/bonus, the Defendants engaged in substantial wrongdoing, mismanagement, and breaches of fiduciary duty that resulted in an enormous decrease in the valuation of the Company, from $38 billion a year ago to just $19 billion or less now. Indeed, Defendants’ breaches of fiduciary duty were so severe that Altria was forced to write-down the value of its $12.8 billion investment by $4.5 billion in less than a year.

Plaintiffs seek damages and equitable relief. A copy of the complaint can be viewed below.