Topline: A former executive at embattled e-cigarette firm Juul has alleged in a lawsuit filed on Tuesday that the company knew it had sold 1 million contaminated pods to consumers and retailers but did not inform them.
- Former senior VP of global finance Siddharth Breja claims that he was “inappropriately terminated” after he internally flagged concerns about a shipment of mint e-liquid refills of 1 million Juul pods.
- Breja was made aware of the contamination in a meeting of Juul executives in March, BuzzFeed News reported, and was subsequently asked to fine the supplier of the pods, Alternative Ingredients, to the tune of $7 million.
- But Juul did not set about telling customers and retailers of the contamination, nor did it recall the faulty products. Breja protested this, according to the lawsuit.
- The Juul CFO at the time, Tim Danaher, allegedly questioned Breja’s financial acumen, claiming that a recall would harm Juul’s sales and $38 billion valuation.
- Separately, Breja also raised an alarm when then-Juul Labs CEO Kevin Burns rejected his idea of putting a “best by” date on nearly year-old pods that the firm wanted to resell in February. The lawsuit claims that Burns replied: “Half our customers are drunk and vaping like mo-fos, who the f*** is going to notice the quality of our pods?”
- Breja, who joined Juul from Uber in May 2018, was fired days after he flagged the concerns. He alleged that Juul said he “misrepresented himself” by saying he was chief financial officer at Uber. Breja’s lawyer said in the lawsuit that such a claim was “preposterous,” adding that Breja never claimed to be the ride-hailing firm’s CFO, but rather CFO at a division of the company.
- A spokesperson for Juul told Forbes that Breja’s claims are “baseless” and that he was sacked because he “failed to demonstrate the leadership qualities needed in his role.” The spokesperson added: “The allegations concerning safety issues with Juul products are equally meritless…the company will vigorously defend this lawsuit.”
Key background: Juul Labs has been caught in the middle of two public health scares over vaping. Several states have rushed to introduce bans of e-cigarette products, including flavored vapes popularized by Juul, to tackle the surging use by teenagers and the subsequent nicotine addiction. At the same time, a rising number of deaths from a mysterious lung disease have been linked with vaping THC, the psychoactive substance in cannabis.
Juul’s damage control operations has seen it halt its U.S. advertising and stop selling flavored products apart from tobacco, mint and menthol flavors. Burns stepped down as CEO last month and was replaced by former Altria executive K.C. Crosthwaite, who has set about reshuffling the company’s leadership. This week, the firm announced it would cut 500 jobs by the end of the year, bringing its workforce to 3,600, while four of its executives were ousted.
By: Isabel Togoh – Forbes Staff