30 Octobr 2019
Stephanie M. Lee
“Half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods,” the former CEO allegedly said. Juul says the lawsuit is “baseless.”
SAN FRANCISCO — A former Juul executive is alleging in a lawsuit that the fast-growing startup shipped out 1 million contaminated e-cigarette pods earlier this year — but did not tell customers or issue a recall.
The lawsuit was filed Tuesday by Siddharth Breja, a former senior vice president of global finance who worked at the San Francisco–based company from May 2018 to March 2019. In the lawsuit — filed in US District Court for the Northern District of California on the same day that Juul confirmed its plans to lay off about 500 people — Breja claims he was retaliated against for raising concerns about the contaminated shipment.
In another instance, Breja says he was worried when the company, in February 2019, wanted to resell pods that were at that point almost one year old. He protested their resale and urged the company to at least include an expiration or “best by” date, or a date of manufacture, on the packaging.
The lawsuit claims that then-CEO Kevin Burns shot down that idea, saying, “Half our customers are drunk and vaping like mo-fos, who the fuck is going to notice the quality of our pods.”
Burns denied making that statement. “I never said this, or anything remotely close to this, period,” he said through a representative, adding, “As CEO, I had the company make huge investments in product quality and the facts will show this claim is absolutely false and pure fiction.”
Burns was replaced by Altria executive K.C. Crosthwaite in September.
“Mr. Breja became aware of very concerning actions at the company, and he performed his duty to shareholders and to the board by reporting these issues internally,” Harmeet Dhillon, an attorney for Breja, told BuzzFeed News when reached for comment. “In exchange for doing that, he was inappropriately terminated. This is very concerning, particularly since some of the issues he raised concerned matters of public safety.”
A Juul spokesperson said that the company would “vigorously defend” against Breja’s “baseless” claims, adding that he was terminated “because he failed to demonstrate the leadership qualities needed in his role.”
The representative also said that Breja’s safety concerns were unfounded, while acknowledging that the “manufacturing issue” that he described had taken place.
“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 spokesperson said.
Juul is fighting off a firestorm from government agencies, public health advocates, and clinicians, who blame the e-cigarette giant for addicting millions of teens to nicotine. A nationwide lung injury outbreak, now standing at 1,604 cases and 34 deaths, is being investigated by public health agencies, which have primarily linked the illnesses to vaping black-market THC. But the connection to nicotine-containing devices, such as Juul, has not been fully ruled out, either.
Breja alleges that on March 12, in an executive team meeting, he learned that some batches of mint e-liquid had been found to be contaminated. Approximately 250,000 mint refill kits, the equivalent of one million pods, were manufactured with the contaminated e-liquid, shipped to retailers, and sold to customers. The lawsuit does not specify what the batches were allegedly contaminated with.
Breja was concerned about the public’s safety, the lawsuit alleges, especially in the wake of consumers recently having reported seizures after Juuling.
And he was asked to charge the supplier of the e-liquid, Alternative Ingredients, Inc., for $7 million for the contaminated batches. (That company did not immediately return a request for comment.) Breja was concerned by “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,” according to the lawsuit.
That same day, Breja “protested Juul’s refusal to issue a product recall for the contaminated pods, or at a minimum issue a public health and safety notice to consumers.” Tim Danaher, the chief finance officer at the time, reportedly “questioned his financial acumen,” since these suggestions would lead to billions of dollars in lost sales and hurt Juul’s then–$38 billion valuation, according to the lawsuit.
Danaher, whose departure was announced by the company on Tuesday, allegedly told Breja that he should remember his loyalty to Juul. (Danaher did not immediately respond to a request for comment.)
According to the lawsuit, Breja was terminated on March 21, just over a week after he raised concerns about the contaminated pods. He was told it was because he had misrepresented himself as the chief financial officer at Uber. Breja says that he never made that claim, but had accurately stated that he was the chief financial officer of a division of Uber. Juul’s claim is “preposterous” and “intentionally invented” to hurt Breja’s reputation and employment prospects, the lawsuit alleges.
This story has been updated to include a response from Juul, a link to the lawsuit itself, and a clarification that the lawsuit did not specify which contaminant was allegedly in the pods.
This story has been updated to include a response from former CEO Kevin Burns.