Juul Sued by Former Executive Employee
When Juul, the e-cigarette giant, pulled mango and creme flavors from the market last year, Adam Bowen, co-founder, publicly declared that the manufacturer would “do the right thing and prevent underage use” and willingly suffer the loss of sales. However, it appears that conversations at the company’s San Francisco headquarters were quite different.
According to Siddharth Breja, formerly the senior vice president of finance at Juul, Kevin Burns was telling employees at the same time, “You need to have an IQ of 5 to know that when customers don’t find mango, they buy mint.” Burns was CEO when he voiced this. The revelation by Breja is included in a lawsuit he recently filed against Juul for wrongful termination.
Former VP of Finance Provides Insight Into Juul’s Operations
Breja alleges that McKinsey & Co. had provided research to Juul showing customers would instead purchase mint if the other sweet flavors were not available. This proved to be true, per Breja, who was terminated in March. After the removal of sweet flavors from stores, mint pod sales surged and accounted for about 66 percent of all pod sales in February. This was an increase of about 33 percent from the previous September, according to the lawsuit.
Breja reveals a culture of intimidation at Juul, a company that had skyrocketed to become a market leader after bursting onto the scene in 2015. Of this year’s entire industry market share, Juul sales account for a whopping 50 percent. Breja says he sounded alarms at the company over concerns he had, then was fired in retaliation. According to Breja, Juul sold a million mint-flavored pods that were contaminated, but would not recall them.
Breja paints a “win-at-all-costs” picture of Burns’ approach to running the company, and reports that employees who challenged Burns were told there could “only be one king at Juul,” and the “king” was him. In addition, Burns reportedly told executives that included Breja to “tell that motherf—– that I’ll take him out of the room and shoot him with a shotgun if he challenges my decisions.”
Selling Contaminated Mint Flavored Juul Pods
In an attempt for the company to meet mint pod demands, Juul’s leadership pressured suppliers like Alternative Ingredients, Inc., as well as the internal supply chain team at Juul, according to Breja. He discovered during a March executive team meeting that a million contaminated mint pods were being sold to consumers.
A Juul spokesperson, Ted Kwong, has denied Breja’s claims, calls them “baseless,” and says the company will “vigorously defend this lawsuit.” He continues, “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.”
According to Breja’s lawsuit, the company would not notify users nor issue any sort of recall, to which he protested. He advised Juul to include an expiration date or date of manufacture to help warn customers about using any pods more than one-year-old. Breja says his suggestion was met with the following response from Burns, “Half our customers are drunk and vaping like mo-fo’s. Who the f— is going to notice the quality of our pods?”
However, Burns vehemently denies saying it “or anything remotely close to this. 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.”
Changes in Leadership
The chief financial officer at the time, Tim Danaher, was angered by Breja’s suggestions, per the lawsuit. Danaher was skeptical of Breja’s “financial acumen” because the suggestions could lead to “billions of dollars in lost sales, a tarnished company image, damage to Juul’s brand reputation, a significant reduction in Juul’s valuation” and might jeopardize the company’s Food and Drug Administration regulatory approval process.
In the meantime, Danaher has “asked to transition out of the company” and was replaced with Guy Cartwright. In addition, Burns was recently replaced as CEO by K.C. Crosthwaite.
When Breja was fired in March, Juul claims he had given false information about his former position at Uber as being a chief financial officer. Breja says he rightly told Juul he was the CFO of one of Uber’s divisions. Kwong says, “He was terminated in March 2019, because he failed to demonstrate the leadership qualities needed in his role.”
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Angelica LaVito. “Former Juul executive sues over retaliation, claims company knowingly sold tainted nicotine pods”, CNBC, https://www.cnbc.com/2019/10/30/former-juul-executive-sues-over-retaliation-claims-company-knowingly-sold-tainted-pods.html. Accessed November 1, 2019.