North Carolina Ex Rel. Stein v. Bowen

North Carolina ex rel. Stein v. Bowen, 2022 NCBC 64.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
DURHAM COUNTY 21 CVS 3727

STATE OF NORTH CAROLINA, ex
rel. JOSHUA H. STEIN, Attorney
General,

Plaintiff, ORDER AND OPINION
ON MOTIONS TO DISMISS
v.

ADAM BOWEN; HOYOUNG HUH;
JAMES MONSEES; NICHOLAS
PRITZKER; and RIAZ VALANI,

Defendants.

1. In 2019, the State of North Carolina sued JUUL Labs, Inc. and accused the

company of targeting children through the design, marketing, and sale of its

e-cigarettes. That case resulted in a settlement and consent judgment in which JUUL

agreed to modify its marketing practices.

2. This case is the sequel. The State has sued five of JUUL’s officers and

directors—Defendants Adam Bowen, James Monsees, Hoyoung Huh, Nicholas

Pritzker, and Riaz Valani—for allegedly directing, approving, and failing to stop the

company’s illegal activities. All five Defendants have moved to dismiss the complaint,

contending that the Court lacks personal jurisdiction and that the State has failed to

state a claim for relief. (See ECF Nos. 23, 25, 27.) For the following reasons, the

Court concludes that it lacks personal jurisdiction, GRANTS the motions to dismiss

on that basis, and DENIES all other relief as moot.

North Carolina Department of Justice, by Swain W. Wood, Brian D.
Rabinovitz, Jessica Vance Sutton, Sripriya Narasimhan, and Kevin
Anderson, for Plaintiff State of North Carolina, ex rel. Joshua H. Stein,
Attorney General.
Ellis & Winters LLP, by Dixie T. Wells and Scottie Forbes Lee, and
Boersch & Illovsky, LLP, by Eugene Illovsky and Kevin Calia, for
Defendant Adam Bowen.

Ellis & Winters LLP, by Dixie T. Wells and Scottie Forbes Lee, and
Orrick, Herrington & Sutcliffe, LLP, by James N. Kramer, Lauren
Seaton, Kevin M. Askew, and Sunny Hwang, for Defendant James
Monsees.

Ellis & Winters LLP, by Dixie T. Wells and Scottie Forbes Lee, and
Kellogg, Hansen, Todd, Figel & Frederick, PLLC, by Michael J. Guzman,
Mark Hansen, David L. Schwarz, and Derek Reinbold, for Defendants
Hoyoung Huh, Nicholas Pritzker, and Riaz Valani.

Conrad, Judge.

I.
BACKGROUND

3. The following background describes the allegations of the complaint, the

nature of the State’s claims, and the case’s procedural posture. It is presented for

context and does not contain any findings of fact.

4. An electronic cigarette, or e-cigarette, is just what its name suggests: a

handheld, battery-operated device akin to a cigarette. The device works by heating

and vaporizing a nicotine-infused liquid solution. A user inhales the vapor—this is

known as vaping—through a mouthpiece so that nicotine passes into the lungs and

then into the bloodstream. (See Compl. ¶¶ 26–29.)

5. Vaping, like smoking, has provoked intense public-policy debates. Underage

vaping may be at the top of the list. Data cited in the complaint suggest that vaping

by high-school and middle-school students is rampant. In the State’s words, there is

“a youth e-cigarette epidemic in North Carolina.” (See Compl. 1, ¶¶ 23, 55, 83.)
6. Who is responsible for this epidemic? The State pins the blame on JUUL

and five of its current and former officials. JUUL makes and sells e-cigarettes across

the country. Though not based in North Carolina, it has some 3,000 authorized

retailers here. Bowen, Monsees, Huh, Pritzker, and Valani have all served on JUUL’s

board of directors. Bowen was also Chief Technology Officer, and Monsees was Chief

Executive Officer and Chief Product Officer. These men, the State alleges, directed

JUUL’s efforts to create and market e-cigarettes designed to attract young people.

(See, e.g., Compl. ¶¶ 9, 40–43, 54.)

7. According to the State, the design of JUUL’s e-cigarettes is enticing to

children. They look and taste nothing like traditional cigarettes. Some versions of

the device look like flash drives or similar gadgets; others light up and mimic a

popular video game. Tar and tobacco are out, replaced by more palatable, dessert-like

flavors. And additives boost the users’ nicotine buzz while easing any throat

discomfort they might feel after inhaling. The State alleges that these design

features—developed by Bowen and Monsees—make vaping fun, highly addictive,

easy to hide, and more appealing to first-time users, especially youth. (See Compl.

¶¶ 59–61, 66, 68, 69, 71–77, 79–81.)

8. The State also takes issue with JUUL’s marketing. It alleges that JUUL

targeted underage users through its “Vaporized” ad campaign, which coincided with

the launch of its first product in 2015. The campaign featured bright images, vivid

colors, and youthful models—all allegedly reviewed and approved by JUUL’s board

of directors—using e-cigarettes in various social settings. JUUL’s aim was to portray
vaping as cool and alluring, much the same way that tobacco companies portrayed

smoking in the twentieth century. (See Compl. ¶¶ 87, 90, 91, 93–97.)

9. Unlike those tobacco companies, though, JUUL had access to modern

methods of viral messaging. Its ads appeared not only in traditional media (such as

Vice magazine and billboards in Times Square) but also on social-media outlets

favored by children (such as Instagram). One aspect of the “Vaporized” campaign

was to “engage New York and Los Angeles up-and-comers to use and promote the

JUUL brand in a series of web-based and event interactions in 2015.” JUUL hosted

parties for social-media influencers and enlisted them to share pictures and

endorsements with followers, many of whom were underage youth. To stoke public

interest even more, JUUL began “seeding” free products and swag to influencers and

celebrities. When Vanity Fair photographed singer Katy Perry using a “seeded”

device, JUUL reposted the celeb’s picture on its own Facebook page and Twitter feed.

(See Compl. ¶¶ 91, 94, 95, 99, 103, 111, 112, 120, 122.)

10. These advertising methods allegedly struck a chord with teens, who began

creating their own JUUL-related, social-media content. Tech-savvy teens posted

pictures and videos of themselves vaping and used JUUL-themed hashtags—#JUUL,

#JUULLife, #JUULNation, etc.—to share the images with peers. Some individuals

within JUUL acknowledged and worried that the company’s popularity with youth

was tied to its social-media presence. A social-media study commissioned by JUUL

in 2018 validated those worries, reporting that “Juul Owns Teens.” Even so, JUUL’s
board of directors allegedly dismissed—or, worse, embraced—the potential that its

marketing appealed to teens. (See Compl. ¶¶ 54, 104–08, 112, 114–18, 142.)

11. JUUL also did little to stop teens from buying e-cigarettes. Its website

lacked effective safeguards at the point of sale. Many teens easily bypassed the

simple measures used to verify age and identity. Those who failed the verification

screening, despite being underage, were placed on JUUL’s e-mail list to receive future

marketing. In addition, JUUL chose not to require an adult’s signature upon

delivery. (See, e.g., Compl. ¶¶ 193–98, 200, 201, 207, 208, 216.)

12. Blowback from regulators led JUUL to revamp its advertising between 2016

and 2018. The State says these efforts were too little, too late. JUUL’s first

makeover—the “Smoking Evolved” campaign—kept the look of the “Vaporized” ads

and used the same social-media outlets. Its second—the “Make the Switch”

campaign—went further and ditched young models in favor of older men and women.

But by then, the State alleges, JUUL’s youth-friendly brand was entrenched on social

media. (See Compl. ¶¶ 131–34, 138, 147–49.)

13. In addition to targeting youth, JUUL allegedly deceived the public about

vaping’s potential harms. Its earliest ads did not say that e-cigarettes contain

nicotine. More recent ads disclosed the nicotine content as a percentage and equated

the amount of nicotine in one e-cigarette pod to the amount in one pack of cigarettes.

The State alleges that describing the nicotine content in that fashion was misleading

and masked the true potency and addictive nature of e-cigarettes. The State also
alleges that JUUL advertised vaping as a way to quit smoking without the FDA’s

approval to do so. (See Compl. ¶¶ 161, 165, 169, 170, 173, 174, 177–81, 184–86.)

14. JUUL enjoyed immediate financial success. In late 2018, a major cigarette

manufacturer acquired a 35% stake in JUUL in exchange for roughly $13 billion.

JUUL paid out nearly all of this money to its employees and investors. Bowen,

Monsees, Huh, Pritzker, and Valani received cash distributions ranging from about

$500 million to about $2.5 billion. (See Compl. ¶¶ 226–28, 231, 233–37.)

15. In 2019, the State sued JUUL based on its allegedly deceptive and

youth-oriented marketing. Two years later, the State and JUUL settled their dispute

through a consent judgment, which required JUUL to make a cash payment and to

modify its marketing practices. Although the State released its claims against JUUL,

it did not release potential claims against the five Defendants in this case. (See

generally Defs.’ Jt. Exs. A, B, ECF Nos. 22.1, 22.2.)

16. A few months after entry of the consent judgment, the State brought this

suit. It claims that “in the course of supervising and directing the marketing of

JUUL’s e-cigarette devices and flavored nicotine inserts,” Bowen, Monsees, Huh,

Pritzker, and Valani “engaged in unfair or deceptive trade practices” under N.C.G.S.

§ 75-1.1. The alleged unfair or deceptive acts include marketing to underage

consumers, deceiving consumers about the nicotine potency of JUUL’s products, and

falsely claiming that JUUL’s products are approved by the FDA as smoking-cessation

devices. (See Compl. 95–96.)
17. Three motions to dismiss are pending: one by Bowen, another by Monsees,

and a third jointly by Huh, Pritzker, and Valani. (See ECF Nos. 23, 25, 27.) Each

Defendant contests personal jurisdiction and contends that the State has failed to

state a claim for relief. The motions are fully briefed, and the Court held a hearing

on 27 June 2022, at which all parties were represented by counsel. The motions are

ripe for determination.

II.
PERSONAL JURISDICTION

18. “Personal jurisdiction refers to the Court’s ability to assert judicial power

over the parties and bind them by its adjudication.” In re A.B.D., 173 N.C. App. 77,

83 (2005) (citation and quotation marks omitted). It is a threshold issue that the

Court must decide before considering the merits.

19. A defendant may contest personal jurisdiction by challenging the sufficiency

of jurisdictional allegations in the complaint or by offering evidence to refute those

allegations. Here, all five Defendants have submitted affidavits to show that they

have either no contacts or insubstantial contacts with North Carolina. (See Bowen

Aff., ECF No. 28.2; Monsees Aff., ECF No. 26.2; Huh Aff., ECF No. 24.2; Pritzker Aff.,

ECF No. 24.3; Valani Decl., ECF No. 24.4.) In response, the State has submitted

twenty-five exhibits of its own. (See Pl.’s Exs. 1–25, ECF No. 78–102.)

20. “In this context, when the parties have submitted affidavits and exhibits but

no evidentiary hearing is held, the trial court must determine the weight and

sufficiency of the evidence before it.” Toshiba Global Com. Sols., Inc. v. Smart &

Final Stores LLC, 381 N.C. 692, 2022-NCSC-81, ¶ 5. The State, as the plaintiff, bears
the burden to establish personal jurisdiction by a preponderance of the evidence. See,

e.g., Dow-Rein v. Sarle, 281 N.C. App. 721, 2022-NCCOA-101, ¶ 12; Parker v. Town

of Erwin, 243 N.C. App. 84, 97 (2015); Bauer v. Douglas Aquatics, Inc., 207 N.C. App.

65, 68 (2010).

A. Legal Principles

21. Determining whether personal jurisdiction exists is a “two-step analysis.”

Beem USA LLLP v. Grax Consulting LLC, 373 N.C. 297, 302 (2020). Jurisdiction

must be authorized by North Carolina’s long-arm statute, N.C.G.S. § 1-75.4, and be

consistent with the Due Process Clause of the Fourteenth Amendment to the United

States Constitution. See Beem USA, 373 N.C. at 302. In practice, the analysis often

collapses into one inquiry because the North Carolina Supreme Court has broadly

construed the long-arm statute “to make available to the North Carolina courts the

full jurisdictional powers permissible under federal due process.” Id. (citation and

quotation marks omitted); see also Dillon v. Numismatic Funding Corp., 291 N.C.

674, 676 (1977).

22. Due process requires that a defendant “have certain minimum contacts”

with this forum “such that the maintenance of the suit does not offend ‘traditional

notions of fair play and substantial justice.’ ” Int’l Shoe Co. v. Washington, 326 U.S.

310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Although courts

“have differentiated between general or all-purpose jurisdiction, and specific or

case-linked jurisdiction,” only the latter is at issue. Goodyear Dunlop Tires

Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).
23. Specific jurisdiction exists when “the controversy arises out of the

defendant’s contacts with the forum state.” Tom Togs, Inc. v. Ben Elias Indus. Corp.,

318 N.C. 361, 366 (1986). It “depends on an affiliation between the forum and the

underlying controversy, principally, activity or an occurrence that takes place in the

forum State and is therefore subject to the State’s regulation.” Goodyear Dunlop

Tires Operations, 564 U.S. at 919 (internal citation and quotation marks omitted).

Jurisdiction cannot be based on “a defendant’s ‘random, fortuitous, or attenuated’

contacts with the forum state.” Beem USA, 373 N.C. at 303 (quoting Walden v. Fiore,

571 U.S. 277, 286 (2014)). Rather, there must be “some act by which the defendant

purposefully avails itself of the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its laws.” Toshiba Global,

2022-NCSC-81, ¶ 3 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).

24. Furthermore, a defendant’s status as a corporate officer or director does not,

by itself, subject him to jurisdiction wherever the corporation is subject to suit. See,

e.g., Calder v. Jones, 465 U.S. 783, 790 (1984); Robbins v. Ingham, 179 N.C. App. 764,

771 (2006). But neither does it “somehow insulate [him] from jurisdiction.” Calder,

465 U.S. at 790. The key is that the relationship between the litigation and the forum

“must arise out of contacts that the ‘defendant himself’ creates with the forum

State”—regardless of whether the contacts are made in a personal or official capacity.

Walden, 571 U.S. at 284 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475

(1985)); see also Padron v. Bentley Marine Grp., LLC, 262 N.C. App. 610, 616 (2018);
Saft Am., Inc. v. Plainview Batteries, Inc., 189 N.C. App. 579, 596 (2008) (Arrowood,

J., dissenting), rev’d for reasons stated in dissent, 363 N.C. 5 (per curiam).

25. Calder illustrates this principle. That case involved a libel suit in California

against a national tabloid based in Florida, its president, and one of its reporters.

The United States Supreme Court emphasized that the individuals’ connections with

California were “not to be judged according to their employer’s activities” there.

Calder, 465 U.S. at 790. Rather, the Court looked to the individuals’ own activities,

which included intentional actions “expressly aimed at California” with knowledge

“that the brunt of [the] injury would be felt” by a California resident. Id. at 789–90.

Because the individuals were “primary participants in an alleged wrongdoing

intentionally directed at a California resident,” the state courts in California had

jurisdiction. Id. at 790; see Walden, 571 U.S. at 287 (observing that jurisdiction was

proper in Calder because California was the “focal point” of the defendants’ conduct

and the plaintiff’s injury). This has become known as the “effects test.” E.g., Carefirst

of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 398 n.7 (4th Cir. 2003).

B. Discussion

26. In broad strokes, all five Defendants contend that the State’s claims do not

arise out of contacts that they themselves created with North Carolina. By affidavit,

Huh, Pritzker, and Valani deny having any contacts with North Carolina at all.

Bowen and Monsees admit having traveled to North Carolina on a few occasions but

deny any other contacts and argue that no claims arise from those visits. Defendants
contend that the State has impermissibly relied on JUUL’s contacts with North

Carolina to bridge the gap.

27. The State responds that jurisdiction exists because these individuals

participated in JUUL’s wrongful conduct, including marketing that targeted

underage youth in North Carolina and across the country. Each Defendant, according

to the State, had a direct, hands-on role in the design, marketing, and sale of JUUL’s

products. It is irrelevant, the State contends, that these activities took place outside

North Carolina. The State also urges the Court to look past Defendants’ affidavits

on the ground that evidentiary determinations are “reserved for a later stage of the

case.” (E.g., Pl.’s Am. Opp’n to Huh, Pritzker, & Valani Mot. Dismiss 11, ECF No.

114 [“Opp’n (HPV)”].)

28. Three things deserve the spotlight at the start. First, the State

misunderstands the standard of review. Evidentiary determinations are not reserved

for the future. Because each side has offered evidence relating to personal

jurisdiction, the time for “determin[ing] the weight and sufficiency of” that evidence

is now. Toshiba Global, 2022-NCSC-81, ¶ 5.

29. Second, all too often, the State relies on the allegations in its unverified

complaint to establish personal jurisdiction. 1 But when “a defendant submits

1 (See, e.g., Pl.’s Am. Opp’n to Bowen Mot. Dismiss 6, ECF No. 113 [“Opp’n (Bowen)”] (“[T]he

Complaint is replete with allegations that Bowen—personally—maintained minimum
contacts through his work directly managing JUUL and that he purposefully availed himself
of the privilege of selling JUUL products in North Carolina.”); Pl.’s Am. Opp’n to Monsees
Mot. Dismiss 6, ECF No. 112 [“Opp’n (Monsees)”] (“The Complaint contains a surfeit of
allegations that Monsees had numerous, substantive contacts with North Carolina . . . .);
Opp’n (HPV) 9 (“The allegations in the Complaint show that the Directors’ actions in
evidence to counter the allegations in a plaintiff’s complaint, those allegations can no

longer be taken as true and the plaintiff can no longer rest on the allegations.” Lulla

v. Effective Minds, LLC, 184 N.C. App. 274, 278 (2007). Only those allegations that

the defendant hasn’t contradicted “are accepted as true and deemed controlling.”

Inspirational Network, Inc. v. Combs, 131 N.C. App. 231, 235 (1998); see also

Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612, 616 (2000).

30. Third, the State’s exhibits—over 200 pages of testimony, e-mails, and

documents obtained in the earlier lawsuit against JUUL—do not speak for

themselves. Yet the State’s briefs neither describe the contents of the exhibits nor

explain how they support its theory of personal jurisdiction. In fact, its briefs rarely

even refer to the exhibits. Each time they do, the reference is to all twenty-five with

no citation to any individual document, much less a specific passage or page number. 2

This is not just a violation of Business Court Rule 7.5, which requires “a pinpoint

citation to the relevant page of the supporting material whenever possible.” It is also

an abdication of the State’s burden to establish personal jurisdiction by a

preponderance of the evidence. See, e.g., Dow-Rein, 2022-NCCOA-101, ¶ 12; Bauer,

207 N.C. App. at 68.

31. With these observations in mind, the Court concludes that it lacks personal

jurisdiction over Defendants. The State has not carried its burden to show that

designing, marketing, and selling JUUL e-cigarettes in North Carolina in ways that attracted
youth violated North Carolina law.”).)
2 (See Opp’n (Bowen) 6, 9 n.4, 14, 17; Opp’n (Monsees) 7 n.3, 12; Opp’n (HPV) 5 n.2, 8, 10, 11.)
Defendants have sufficient minimum contacts with North Carolina or that they

purposefully availed themselves of the privilege of conducting activities in this forum.

32. Personal jurisdiction is an individualized inquiry, requiring a showing that

each Defendant has the necessary contacts with the forum. Yet a considerable

number of the State’s allegations refer to “Defendants” as a group rather than to any

individual. The State broadly alleges that “Defendants were actively and personally

involved in the day-to-day operations and decision-making at JUUL” and are

therefore responsible for “all decisions, actions, and omissions stated” in the

complaint. (Compl. ¶ 42.) Later, it alleges that, “by mid-2015, all Defendants were

intimately involved in the planning and execution of JUUL’s marketing activities

that promoted JUUL products in ways Defendants knew would stoke their popularity

among young people and teens.” (Compl. ¶ 84.) Dozens of similarly generalized

allegations appear throughout the complaint. (See, e.g., Compl. ¶¶ 85, 92, 93, 95, 97,

111, 114, 117, 119, 130, 132, 147, 151, 154–56, 161, 162, 165, 170, 173, 177, 184, 185,

190, 198, 200, 202, 211–15, 221.)

33. In fact, three pillars of the State’s claim—ineffective website safeguards,

deceptive statements about nicotine potency, and false statements about FDA

approval for smoking cessation—lack any allegations referring to individual conduct

by any Defendant. Consider the claim that JUUL failed to use adequate

age-verification measures for sales through its website. The complaint alleges

generally that “Defendants created a youth-friendly method for distributing JUUL’s

products: internet sales, with age-verification techniques that Defendants knew to be
ineffective.” (Compl. ¶ 190.) Thirty-two paragraphs describe the ineffectiveness of

JUUL’s website safeguards. Not one refers to any individual Defendant by name,

much less alleges personal involvement with the company website, internet sales, or

implementation of age-verification measures. (See Compl. ¶¶ 190–221.)

34. The same is true for the claim that JUUL misrepresented the nicotine

potency of its e-cigarettes. According to the State, “Defendants deceived JUUL’s

consumers about the strength of the nicotine in JUUL’s products” and “actively

participated in company discussions regarding the amount of nicotine in JUUL

products and approved the deceptive representations . . . .” (Compl. ¶¶ 161, 162.)

Twenty-three paragraphs describe the alleged omissions and half-truths about

nicotine potency in JUUL’s marketing materials. Again, not one refers to any

individual Defendant by name or alleges personal involvement in the marketing at

issue. (See Compl. ¶¶ 161–83.)

35. As to the misrepresentations regarding smoking cessation, the complaint

alleges that “Defendants reviewed, approved, and went forward with marketing plans

that portrayed JUUL as a cessation device” without FDA approval. (Compl. ¶ 185.)

At no point does the complaint allege personal conduct related to these marketing

plans. Oddly, the State points to Congressional testimony by Monsees regarding

smoking cessation and cites an article entitled “Juul ‘Specifically and on Purpose Not

a Cessation Product’ Co-Founder Says to Congress.” (Compl. ¶ 186 & n.63.) There

are no references by name to Bowen, Huh, Pritzker, or Valani at all. (See Compl.

¶¶ 184–89.)
36. These generalized allegations are facially deficient. They do not specify

forum-related conduct by any individual Defendant and are little more than an

attempt to attribute JUUL’s business activities to its corporate officers and directors.

Because due process does not allow a court to exercise jurisdiction over a nonresident

defendant based on someone else’s contacts, the United States Supreme Court has

cautioned against “considering the ‘defending parties’ together and aggregating their

forum contacts in determining whether” jurisdiction exists. Rush v. Savchuk, 444

U.S. 320, 331 (1980). The minimum-contacts requirement “must be met as to each

defendant over whom a state court exercises jurisdiction.” Id. at 332. And

“jurisdiction over the individual officers [and directors] of a corporation cannot be

predicated merely upon jurisdiction over the corporation.” Balance Dynamics Corp.

v. Schmitt Indus., 204 F.3d 683, 698 (6th Cir. 2000) (citation and quotation marks

omitted). 3

3 Federal courts routinely hold that similarly generalized allegations against corporate
officials are insufficient to confer specific jurisdiction. See, e.g., Gen. Retail Servs. v. Wireless
Toyz Franchise, L.L.C., 255 Fed. App’x 775, 793–94 (5th Cir. 2007) (unpublished) (“Contrary
to General Retail’s argument, it is not enough to simply rest on the use of the collective term,
‘Defendants,’ in the allegations.”); Leroy-Garcia v. Brave Arts Licensing, 2013 U.S. Dist.
LEXIS 109872, at *32–33 (N.D. Cal. Aug. 5, 2013) (“Numerous courts have found specific
personal jurisdiction lacking where a plaintiff’s allegations about individual defendants are
so limited.” (collecting cases)); Johnson v. Diamond Shine, Inc., 890 F. Supp. 2d 763, 772–73
(W.D. Ky. 2012) (“Plaintiff has not alleged that [corporate official] personally took any action
connected to Kentucky.”); Flagstar Bank FSB v. Centerpointe Fin., Inc., 2011 U.S. Dist.
LEXIS 56257, at *11–13 (E.D. Mich. May 26, 2011) (“Plaintiff’s claims only implicate
Centerpointe as a corporation, and are entirely silent as to any personal involvement on
Defendants’ part.”); Farmer v. DirectSat USA, LLC, 2010 U.S. Dist. LEXIS 7156, at *26 (N.D.
Ill. Jan. 28, 2010) (“Again, Plaintiffs’ generalized allegations referring to the Defendants
collectively are insufficient to confer specific jurisdiction over each of the proposed individual
defendants.”); Gagne v. State Farm Fire & Cas. Co., 2006 U.S. Dist. LEXIS 83822, at *8–9
(S.D. Miss. Nov. 16, 2006) (“Plaintiff’s generalized allegations [concerning State Farm’s
corporate officers and board members] are nothing more than claims against State Farm.”).
37. Moreover, even when the State points to individual conduct, it fails to show

a sufficient connection between the conduct and North Carolina. The State alleges,

for example, that Bowen and Monsees were responsible for developing the features of

JUUL’s e-cigarettes that make them attractive to youth, including a stylish,

easy-to-conceal design, sweet flavors, and additives that reduce discomfort from

inhaling. (See, e.g., Compl. ¶¶ 59, 62, 71, 74, 75.) But the State does not allege or

argue that any of this design work occurred in North Carolina. And the evidence

shows that Bowen and Monsees worked primarily in California, where JUUL was

based. (See Bowen Aff. ¶ 3; Monsees Aff. ¶¶ 2, 5.)

38. Likewise, much of the complaint centers on JUUL’s national advertising and

marketing practices: a party in New York City, a billboard in Times Square, ads in

Vice magazine, retaining influencers as brand ambassadors, seeding products to

celebrities, and viral messaging through social media. The State alleges that JUUL’s

board, including Defendants, reviewed and approved objectionable advertising and

that Huh, Pritzker, and Valani formed an Executive Committee that directly

managed JUUL and oversaw national marketing activity. (See, e.g., Compl. ¶¶ 41,

42, 45–52, 92, 104–07, 136.) There are also scattered allegations that Monsees

participated in the Times Square photo shoot, (see Compl. ¶ 99); that Bowen followed

Instagram posts by “some rich east coast boarding school kids,” (Compl. ¶ 118); and

that Bowen, Monsees, and Valani tried to publicize an image of a famous pop star

using a JUUL device, (see Compl. ¶ 122.)
39. Conspicuously absent are allegations of the kind of case-related contacts

with North Carolina that are indispensable to personal jurisdiction. The disputed

marketing did not target North Carolina—it occurred elsewhere (New York) or

everywhere (social media). Nor is there any tie between JUUL’s corporate

decision-making and North Carolina. The State does not allege or argue that any

board meetings took place in North Carolina, and the evidence confirms that none

did. (See Monsees Aff. ¶ 7(b).) Similarly, the State does not allege or argue that the

Executive Committee met in North Carolina or made decisions targeting this forum.

In any event, the allegation that Huh, Pritzker, and Valani directly managed JUUL

cannot be taken as true because all three deny having served in a management

capacity. (See Huh Aff. ¶¶ 5, 10; Pritzker Aff. ¶¶ 4, 9; Valani Decl. ¶¶ 5, 10.)

40. The few allegations involving conduct within or related to North Carolina

are not individualized, have been rebutted by affidavit, or are too attenuated to

establish jurisdiction. Paragraph 8 of the complaint is a good example. The State

alleges that “Defendants approved marketing and sales plans that specifically

targeted North Carolina as part of JUUL’s go-to-market strategy.” (Compl. ¶ 8.) It

is unclear what these North Carolina-centric marketing plans were, and nothing in

the complaint goes on to explain how each Defendant contributed to them.

Regardless, the allegation cannot be taken as true. All five Defendants deny having

approved any JUUL marketing campaigns that specifically targeted North Carolina.

(See Bowen Aff. ¶ 7; Monsees Aff. ¶ 7(f); Huh Aff. ¶ 16; Pritzker Aff. ¶ 15; Valani Decl.

¶ 16.)
41. Paragraph 10 is similar. The State alleges that JUUL, “at the direction of

Defendants,” targeted certain North Carolina cities for “in-store trainings,”

“billboards,” “marketing with samples,” and “a children’s charity event.” (Compl.

¶ 10.) There is no mention of personal involvement by any Defendant. And again,

Defendants deny involvement with these North Carolina-based activities. (See

Bowen Aff. ¶¶ 5, 7; Monsees Aff. ¶ 7(f); Huh Aff. ¶¶ 8, 16; Pritzker Aff. ¶¶ 7, 15;

Valani Decl. ¶¶ 8, 16.)

42. Paragraph 11 is as close as the State comes to alleging case-linked contact

between any Defendant and North Carolina. As alleged, JUUL, “at the direction of

Defendants,” established relationships with “North Carolina-based vendors and

business partners” for pod filling and e-liquid development. In addition, Bowen

“made numerous visits to North Carolina in connection with” these relationships, and

“Bowen and Monsees engaged in discussions regarding JUUL’s North Carolina

operations.” (Compl. ¶ 11.)

43. These alleged contacts fall short. For one thing, nothing in paragraph 11

suggests involvement by Huh, Pritzker, and Valani, all of whom have offered

unrebutted evidence to contradict the allegations. Their affidavits state that they did

not negotiate or conduct business with any North Carolina-based vendor, select or

interact with suppliers in North Carolina, oversee relationships with any distributors

or retailers in North Carolina, or travel to North Carolina to conduct JUUL’s

business. (See Huh Aff. ¶¶ 8, 9, 14, 15; Pritzker Aff. ¶¶ 7, 8, 13, 14; Valani Decl. ¶¶ 8,

9, 14, 15.)
44. As to Bowen and Monsees, mere discussions about North Carolina hardly

count as jurisdictional contacts. Physical entry into North Carolina, on the other

hand, “is certainly a relevant contact.” Walden, 571 U.S. at 285. Bowen admits that

he came to North Carolina about half a dozen times between 2013 and 2017, including

two visits to meet with e-liquid vendors. (See Bowen Aff. ¶ 9.) Monsees also admits—

though it is not alleged in the complaint—that he came to North Carolina more than

once to address manufacturing issues. (See Monsees Aff. ¶ 7(e).) But there is no

apparent connection between these visits and the State’s claim. As Bowen and

Monsees testify, their visits to North Carolina primarily involved manufacturing

issues and did not concern or relate to the marketing practices challenged by the

State. (See Bowen Aff. ¶ 9; Monsees Aff. ¶ 7(e).)

45. If there is any evidence tending to contradict the affidavits, the State hasn’t

pointed to it. The State cites no evidence to show that Huh, Pritzker, and Valani

have had any direct contact with North Carolina at all. Nor does it cite any evidence

to show that the visits to North Carolina by Bowen and Monsees are related to the

allegations of unlawful marketing that form the basis for its claim.

46. Instead, the State argues that the trips by Bowen and Monsees support

jurisdiction because all contacts with a forum count, “even ones that are not related

to the claim raised.” (Opp’n (Bowen) 11.) Binding precedent from the United States

Supreme Court says otherwise. Courts may not relax the required connection

between the forum and the asserted claims “if the defendant has extensive forum

contacts that are unrelated to those claims.” Bristol-Myers Squibb Co. v. Superior
Court, 137 S. Ct. 1773, 1781 (2017). That would amount to “a loose and spurious form

of general jurisdiction. For specific jurisdiction, a defendant’s general connections

with the forum are not enough.” Id. In other words, it would violate due process to

exercise jurisdiction over Bowen and Monsees based on trips to North Carolina—even

those made on JUUL’s behalf—that are unrelated to the asserted claim. See, e.g.,

Am. Inst. of Intradermal Cosmetics, Inc. v. Soc’y of Permanent Cosmetic Profs., 2013

U.S. Dist. LEXIS 58138, at *33–34 (C.D. Cal. Apr. 16, 2013) (concluding that

directors’ travel to forum on company’s behalf was insufficiently related to asserted

claim to support exercise of jurisdiction).

47. The State also argues that it does not have to show that Defendants targeted

North Carolina. It contends that Defendants purposefully availed themselves of the

privilege of conducting activities in North Carolina by reviewing and approving

nationwide advertising with knowledge that the ads would appear in this forum just

as they would across the country. In support, the State cites cases in which courts

exercised jurisdiction over corporations—not their officers or directors—based on

nationwide sales and marketing that also exploited the forum market. (See Opp’n

(HPV) 14 (citing, e.g., Keeton v. Hustler Mag., Inc., 465 U.S. 770, 781 (1984)).)

48. The Colorado Supreme Court recently rejected an identical argument in a

suit by the State of Colorado against these very individuals (excluding Huh). See

State ex rel. Weiser v. JUUL Lab, Inc., 2022 CO 46 (2022). There, the Colorado

Attorney General asserted claims for deceptive trade practices based on allegations

of wrongdoing that largely mirror the allegations here. See id. at ¶¶ 5–20. After the
trial court denied motions to dismiss for lack of personal jurisdiction, the Colorado

Supreme Court reversed. It reasoned, first, that Keeton’s market-exploitation test is

a poor fit for corporate directors: “Although courts can readily attribute factors such

as sales volume, a customer base, and revenues to corporate entities, these factors

are not readily attributable to individual directors.” Id. at ¶ 43. And it was unable

to find “a published decision in which a court subjected a corporate director, rather

than the corporation itself, to jurisdiction under the market exploitation framework.”

Id.

49. The more apt framework, according to the Colorado Supreme Court, is

Calder’s effects test, which it summarized as requiring (1) intentional action

(2) expressly aimed at the forum (3) with knowledge that the brunt of the injury

would be felt there. See JUUL Lab, 2022 CO 46, ¶ 47 (citing Eighteen Seventy, LP v.

Jayson, 32 F.4th 956, 967 (10th Cir. 2022)). 4 The Court agreed with the defendants

that involvement in JUUL’s national business activities was insufficient: “Any

actions that defendants took in relation to JUUL’s nationwide marketing campaign

4 Most courts have construed Calder—just as the Colorado Supreme Court did—to require

conduct expressly aimed at the forum. See, e.g., Charles Schwab Corp. v. Bank of Am. Corp.,
883 F.3d 68, 87 (2d Cir. 2018) (“Exercise of jurisdiction in such circumstances ‘may be
constitutionally permissible if the defendant expressly aimed its conduct at the forum.’ ”);
IMO Indus. v. Kiekert AG, 155 F.3d 254, 265 (3d Cir. 1998) (concluding that “the Calder
‘effects test’ can only be satisfied if the plaintiff can point to contacts which demonstrate that
the defendant expressly aimed its tortious conduct at the forum”); Hawkins v. i-TV Digitalis
Tavkozlesi zrt., 935 F.3d 211, 230 (4th Cir. 2019) (“Put differently, the forum must be the
‘focal point’ of the conduct.”); McFadin v. Gerber, 587 F.3d 753, 760 (5th Cir. 2009)
(foreseeable injury in the state is not enough absent the direction of specific acts toward the
forum); Eighteen Seventy, 32 F.4th at 967 (holding that failure to establish any element of
effects test, including conduct expressly aimed at forum, “will doom [the] showing of
purposeful direction”).
were not ‘expressly aimed’ at Colorado.” Id. at ¶ 60. As a result, the Court concluded

that the complaint’s allegations did not establish a prima facie case of jurisdiction.

50. This decision, though not binding, is highly compelling. For the reasons

stated by the Colorado Supreme Court, it would make little sense to apply Keeton’s

market-exploitation test here. JUUL may well have the kind of regular, continuous

sales activity in North Carolina that renders it subject to jurisdiction. But any

contacts that Defendants have with North Carolina “must be assessed individually,”

and “their contacts . . . are not to be judged according to [JUUL’s] activities” in the

forum. Calder, 465 U.S. at 790. Due process requires nothing less. If it were

otherwise, “directors of a corporation that does business nationwide would potentially

be subject to personal jurisdiction in every state, regardless of their lack of connection

to a particular forum.” JUUL Lab, 2022 CO 46, ¶ 67.

51. Calder’s effects test is far more suited to this case’s facts. Yet the State does

not cite Calder, much less attempt to show that Defendants expressly aimed conduct

at North Carolina or that North Carolina is the focal point of their activities. Indeed,

the evidence is one-sided in Defendants’ favor. Huh, Pritzker, and Valani had no

advertising, sales, or other marketing contact with North Carolina at all. Likewise,

Bowen and Monsees had no advertising and sales activity targeting North Carolina,

and their travel to North Carolina on JUUL’s behalf did not involve the marketing

practices that form the basis of the State’s claim. The State has not cited any contrary

evidence. Thus, the Court concludes that the evidence is insufficient to satisfy
Calder’s effects test and its requirement to show conduct expressly aimed at North

Carolina.

52. In sum, the State has failed to carry its burden to show that Defendants

have sufficient minimum contacts with North Carolina and that they purposefully

availed themselves of the privilege of conducting activities in this forum. The Court

therefore concludes that it may not exercise personal jurisdiction over them.

C. Jurisdictional Discovery

53. In each of its opposition briefs, the State tacks on a footnote requesting

jurisdictional discovery. Whether to grant jurisdictional discovery is within the

Court’s discretion. See, e.g., Azure Dolphin, LLC v. Barton, 2017 NCBC LEXIS 90, at

*12 (N.C. Super. Ct. Oct. 2, 2017).

54. In its discretion, the Court denies the State’s barebones request. Its

footnotes contain a single sentence, lacking any citation to legal authority or any

explanation of what discovery the State would seek if allowed. (See Opp’n (Bowen)

17 n.6; Opp’n (Monsees) 16 n.6; Opp’n (HPV) 15 n.6.) Defendants have specifically

denied the State’s jurisdictional allegations, the State has made no effort to cite or

explain the evidence currently in the record, and the State offers no forecast of what

it believes discovery would show. Moreover, the State has already obtained a

significant amount of discovery during its earlier lawsuit against JUUL and is

therefore in a better position to assess jurisdictional facts than many plaintiffs. There

is no basis to allow jurisdictional discovery. See, e.g., Carefirst of Md., 334 F.3d at
403 (affirming denial of jurisdictional discovery when plaintiff made no “concrete

proffer” and gave no reason to believe discovery would “alter” the analysis).

IV.
CONCLUSION

55. For all these reasons, the Court GRANTS Defendants’ motions to dismiss

for lack of personal jurisdiction. The complaint is DISMISSED without prejudice in

its entirety, and the Court DENIES all other relief as moot.

SO ORDERED, this the 27th day of October, 2022.

/s/ Adam M. Conrad
Adam M. Conrad
Special Superior Court Judge
for Complex Business Cases