PUBLIC
`
`UNITED STATES OF AMERICA
`BEFORE THE FEDERAL TRADE COMMISSION
`OFFICE OF ADMINISTRATIVE LAW JUDGES
`
`Docket No. 9393
`
`In the Matter of
`
`Altria Group, Inc.,
`a corporation,
`
`and
`
`JUUL Labs, Inc.,
`a corporation,
`
`Respondents.
`
`CORRECTED POST-TRIAL PROPOSED FINDINGS OF FACT AND
`CONCLUSIONS OF LAW OF RESPONDENTS ALTRIA GROUP, INC. AND
`JUUL LABS, INC.
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`FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 9/28/2021 | DOCUMENT NO. 602744 | Page 1 of 507 | PUBLIC
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`I.
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`II.
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`III.
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`TABLE OF CONTENTS
`BACKGROUND ON E-VAPOR INDUSTRY .................................................................... 1
`A. Early History Of E-Vapor ............................................................................................. 1
`B. Different Types Of E-Vapor Products ........................................................................... 2
`1. Cig-A-Likes ........................................................................................................... 2
`2. Open-System E-Cigarettes ..................................................................................... 4
`3.
`Pod-Based Devices ................................................................................................ 6
`C. Harm Reduction Potential ............................................................................................. 8
`D. Regulation Of E-Vapor Products ................................................................................ 10
`1.
`FDA’s Authority Under The Tobacco Control Act ............................................. 10
`2. The Deeming Rule Extended FDA’s Regulatory Authority To
`E-Vapor Products ................................................................................................. 13
`3. The PMTA Process Is Onerous............................................................................ 17
`4.
`FDA’s Recognition Of A Continuum Of Risk That Supports Converting
`Cigarette Smokers To E-Vapor Products ............................................................. 27
`5. Evolving PMTA Deadline For E-Vapor Products On The Market As Of
`August 2016 ......................................................................................................... 29
`FDA’s PMTA Review Takes Years .................................................................... 30
`6.
`INDUSTRY PARTICIPANTS ........................................................................................... 31
`A. Parties To The Transaction .......................................................................................... 31
`1. Altria .................................................................................................................... 31
`2.
`Juul Labs, Inc. ...................................................................................................... 44
`B. There Are Numerous Other E-Vapor Competitors ..................................................... 50
`1. Reynolds (Brand: Vuse) ....................................................................................... 51
`2. NJOY (Brand: NJOY).......................................................................................... 53
`3.
`ITG Brands (Brand: blu) ...................................................................................... 55
`4.
`Japan Tobacco International (Brand: Logic) ....................................................... 57
`5. Turning Point Brands (Brand: RipTide) .............................................................. 58
`6. E-Alternative Solutions (Brand: Leap) ................................................................ 59
`7. Many Other E-Vapor Products On Market .......................................................... 59
`ALTRIA BEGAN REASSESSING THE VIABILITY OF ITS E-VAPOR
`PORTFOLIO WELL BEFORE DISCUSSING SPECIFIC TERMS WITH JLI ............... 60
`A.
`In 2017, Altria Was Caught Flat-Footed By Rising Consumer Demand For Pods ..... 60
`1.
`Pods, Led By JUUL, Revived A Stagnant E-Vapor Industry .............................. 60
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`2.
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`6.
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`B.
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`In The Spring Of 2017, Altria Began Searching For A JUUL-Fighter To
`Compete In The Pod Market ................................................................................ 64
`FDA’s Endorsement Of The Continuum Of Risk Raised The Stakes ................. 67
`3.
`4. Altria And JLI Had Initial, Exploratory Discussions In Mid- To Late- 2017 ..... 68
`5.
`In Late 2017, Nu Mark Took What It Could Get, Acquiring Elite And
`Cync, Its Third And Fourth Choices .................................................................... 70
`In November 2017, Altria Highlighted To Its Investors Both FDA’s
`Endorsement Of Reduced-Risk Products And The Shift Towards Pods ............. 71
`7. Meanwhile, Altria And JLI Continued To Explore A Possible Investment
`As JUUL Surged Toward Category Leadership .................................................. 73
`In Late 2017, Altria’s Scientists Identified Technical Problems With
`Nu Mark’s Products ..................................................................................................... 75
`1. MarkTen Cig-A-Like Dry Puffing ....................................................................... 75
`2. Elite Dry Puffing .................................................................................................. 78
`C. Despite Elite’s Limitations, Nu Mark Rushed The Product To Market Because
`It Was Desperate For A Pod-Based Offering .............................................................. 79
`1. Unable To Modify Elite, Nu Mark Aimed To Launch It Within Four Months ... 79
`2.
`In Early 2018, Consumer Research Confirmed That Elite Was Ill-Suited
`To Delivering The Nicotine Satisfaction Necessary To Convert
`Cigarette Smokers ................................................................................................ 80
`In February 2018, Nu Mark Informed The Altria Board That Pods
`Were Driving The E-Vapor Industry And Offered A Measured
`Assessment Of Elite ............................................................................................. 84
`D. Altria Heavily Marketed And Promoted Elite In 2018 ............................................... 89
`1. Altria Invested In A Strong Rollout With Wide Initial Distribution And
`Placement In Leading Retailers ........................................................................... 89
`2. Altria Secured Prime Shelf Space For Nu Mark’s Innovative Tobacco
`Products, Including MarkTen Elite ...................................................................... 90
`3. Altria Heavily And Aggressively Discounted Elite ............................................. 93
`E. Elite Nonetheless Stumbled Out Of The Gates ........................................................... 95
`1. Despite Aggressive Promotions And Wide Distribution, Sales Were Dismal .... 95
`2. Excessive Leaking Damaged The Elite Brand With Retailers And
`Consumers.......................................................................................................... 102
`3. Competitors Recognized That Without Salts, Elite Was A “Non-Starter”
`And “Inferior Product” ...................................................................................... 106
`F. By March 2018, Altria’s Scientists Identified Significant Regulatory Hurdles
`For Both MarkTen And Elite .................................................................................... 108
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`3.
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`IV.
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`V.
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`1. The MarkTen Cig-A-Like Required A Redesigned Battery, BVR 2.8,
`And A New PMTA ............................................................................................ 110
`2. Elite Had Significant Design Flaws, Which Compromised Its PMTA
`Prospects ............................................................................................................ 113
`G. FDA’s April And May 2018 Statements Emphasized The Potential Value Of
`E-Vapor To Convert Adult Smokers While Also Highlighting The Downside
`Risk Of Attracting Youth .......................................................................................... 116
`IN EARLY 2018, DISCUSSIONS BETWEEN JLI AND ALTRIA REMAINED
`PRELIMINARY AS THEY DEBATED MAJORITY VERSUS MINORITY
`INVESTMENTS ............................................................................................................... 117
`A. April 5, 2018 Meeting ............................................................................................... 118
`B. April 20, 2018 Letter From JLI ................................................................................. 119
`C. Altria’s May 2018 Responses .................................................................................... 121
`IN THE LATE SPRING OF 2018, ALTRIA BEGAN TO REASSESS ITS
`E-VAPOR STRATEGY ................................................................................................... 123
`A. Presentations For Altria’s May Board Meeting Highlighted The Growing
`Dominance Of Pods ................................................................................................... 123
`In Mid-May, Altria Restructured Its Leadership To Address Innovation Failings ... 127
`B.
`C. Over The Course Of June And July 2018, Altria Leadership Concluded That
`Nu Mark’s Products Were Flawed Fundamentally ................................................... 131
`1. By Summer 2018, Altria’s Scientists and Regulatory Experts Had
`Concluded That Nu Mark’s Products Could Not Obtain FDA Approval .......... 131
`2. The Scientists And Regulatory Experts Informed Leadership Of The
`Nu Mark Products’ Failings And Poor PMTA Prospects .................................. 146
`3. Quigley Identified “Overarching Gaps” In Nu Mark’s E-Vapor Portfolio ........ 152
`4.
`Senior Leadership Confronted These Challenges At A Multi-Day
`Organizational Review....................................................................................... 153
`In Early July 2018, The Regulatory Affairs Team Began Preparing An
`Update For The Board On The Dismal Regulatory Prospects Of
`Nu Mark’s Products ........................................................................................... 158
`6. A Cross-Functional Team Of Scientists And Businesspeople Concluded
`That Nu Mark’s E-Vapor Products Had Low Conversion Potential ................. 162
`D. As Altria Came To Grips With Its Weaknesses, JLI Solidified Its Dim View
`Of The Nu Mark Portfolio ......................................................................................... 169
`1.
`JLI’s View Of MarkTen Elite ............................................................................ 169
`2.
`JLI’s View Of MarkTen Cig-A-Like ................................................................. 170
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`5.
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`VI.
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`IN JULY AND AUGUST 2018, ALTRIA AND JLI CONTINUED DISCUSSING
`A POSSIBLE INVESTMENT, THIS TIME WITH GREATER SPECIFICITY ............ 172
`A.
`July 2018 Negotiations .............................................................................................. 172
`B.
`July 30, 2018 Term Sheet .......................................................................................... 173
`1.
`Summary ............................................................................................................ 173
`2.
`“Antitrust Clearance Matters”............................................................................ 174
`3. Noncompete And Carve-Out ............................................................................. 176
`C. August 1, 2018 Meeting ............................................................................................ 177
`D. August 4, 2018 Term Sheet ....................................................................................... 179
`E. August 9, 2018 Term Sheet ....................................................................................... 180
`F. August 15, 2018 JLI Issues List ................................................................................ 181
`G. August 18, 2018 Meeting .......................................................................................... 183
`H. August 19, 2018 Term Sheet ..................................................................................... 184
`I. August 22, 2018 Joint Issues List .............................................................................. 187
`VII. WHILE NEGOTIATIONS WERE ONGOING, ALTRIA, RECOGNIZING THAT
`IT COULD NOT COMPETE WITH ITS CURRENT PORTFOLIO, BEGAN
`REORIENTING ITS E-VAPOR STRATEGY AROUND FUTURE PRODUCTS ........ 188
`A. August 2, 2018: Quigley Concluded That Altria Should Shift Its Focus To
`Having A New Portfolio Of Products By 2025 ......................................................... 188
`B. August 23, 2018: Garnick Presented The Regulatory Assessment To The Board
`And The Board Directed Leadership To Try To Resolve Disputes With JLI ........... 193
`VIII. DESPITE THE PARTIES REACHING A CONSENSUS ON THE TREATMENT
`OF ALTRIA’S EXISTING E-VAPOR BUSINESS IN THE EVENT OF AN
`INVESTMENT, NEGOTIATIONS ULTIMATELY BROKE DOWN OVER
`OTHER ISSUES ............................................................................................................... 197
`HAVING CONCLUDED ITS EXISTING PRODUCTS WOULD NOT
`SUCCEED, NU MARK SHIFTED ITS FOCUS TO NEW OPPORTUNITIES ............. 202
`A.
`In Early September 2018, Altria—Setting Its Sights On 2025—Began Planning
`For The Growth Teams ............................................................................................. 202
`B. Days Later, FDA Sent A Letter Calling For “Bold Action” On Youth Vaping,
`Which Induced Altria To Discontinue Elite And Non-Traditional Flavors .............. 207
`1.
`FDA Letter ......................................................................................................... 207
`2.
`September 26 Decision ...................................................................................... 212
`3. October 1 Work On Communications Plan ....................................................... 217
`4. October 4, 2018 Board Meeting......................................................................... 218
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`IX.
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`D.
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`C. From October Through December, Altria Pursued Two Alternative Strategies—
`Growth Teams And A JLI Investment ...................................................................... 219
`1. Altria Launched Growth Teams In October ...................................................... 219
`2. Altria Simultaneously Renewed Negotiations With JLI .................................... 222
`In Late October, Following A Meeting With FDA, Altria Announced Its
`Decision To Withdraw Pod Products And Non-Traditional Cig-A-Like Flavors ..... 227
`1. Altria Previewed Its Planned Response To The September 12 Letter At
`The FDA Meeting On October 18 ..................................................................... 227
`2. On October 25, In Conjunction With Its Third Quarter Earnings Call,
`Altria Announced That It Was Discontinuing Its Pod Products And
`Non-Traditional Cig-A-Like Flavors In Response To FDA’s Letter ................ 228
`3. Altria Thought JLI Would Be Displeased By The Letter And, As Predicted,
`JLI Viewed It As A Hostile Act, Not The Fulfillment Of An Agreement......... 229
`4. Retailers Were Not Sad To See Elite Go And Applauded Altria’s
`Stance On Flavors .............................................................................................. 232
`5. After Altria’s Announcement, FDA Reaffirmed Its Support For E-Vapor
`Products That Could Convert Adult Smokers ................................................... 233
`In Response To FDA’s Letter, JLI Also Pulled Non-Traditional Flavors
`From Retail Stores ............................................................................................. 234
`E. The Parties Continued Negotiations And Exchanged A Final Term Sheet
`On October 30, 2018 ................................................................................................. 236
`1. October 28 and October 30 Term Sheets ........................................................... 236
`2.
`In October, The Parties Addressed Potential Restrictions Imposed By
`Altria’s Contractual Relationship With PMI By Delaying The HSR
`Clearance Timeline ............................................................................................ 238
`3. Contrary To Complaint Counsel’s Theory, There Is No Evidence That JLI
`Insisted That Marketing Services Commence Immediately Upon Signing ....... 240
`In Early December, Altria, Seeking Cost Savings For New Opportunities,
`Discontinued Its Remaining Nu Mark Products ........................................................ 243
`1. Nu Mark Had Been Losing Money For Years And Had No Path
`To Profitability ................................................................................................... 244
`2. New Problems Continued To Emerge With Nu Mark’s Remaining
`Cig-A-Like Products .......................................................................................... 246
`3. Altria Withdrew Nu Mark’s Remaining Products On December 7, 2018 ......... 247
`4. Retailers Were Not Disappointed By The Withdrawal Of Nu Mark’s
`Remaining Products ........................................................................................... 250
`JLI’s Principal Negotiators Did Not Even Notice Altria’s Announcement ....... 251
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`6.
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`5.
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`F.
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`X.
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`XI.
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`IN DECEMBER 2018, THE PARTIES EXECUTED THE TRANSACTION ............... 251
`A. The Transaction Remained Uncertain Throughout November And December
`As The Parties Conducted Due Diligence And Addressed A Series Of
`Late-Breaking Disputes ............................................................................................. 251
`B. On December 20, 2018, The Parties Executed The Transaction ............................... 256
`C. The Parties Amended The Agreements In January 2020 .......................................... 258
`D. HSR Review Process ................................................................................................. 259
`E. Altria Has Written Down The Value Of Its Investment In JLI ................................. 260
`F. Key Negotiation Themes ........................................................................................... 263
`1. Every Single Witness Involved In The Deal Negotiations Testified That
`There Was No Agreement To Pull Altria’s E-Vapor Products.......................... 263
`2. Altria And JLI Were Assisted By Outside Counsel Throughout
`Negotiations ....................................................................................................... 267
`3. Core Disputes Centered On Money And Control Rights, Not The State
`Of Altria’s E-Vapor Products ............................................................................ 268
`4. The Purpose Of The Noncompete Was To Protect JLI’s Proprietary
`Information From Potential Misuse By Altria ................................................... 271
`5. The Noncompete Did Not Apply To Existing Products Prior To
`HSR Clearance ................................................................................................... 274
`FOLLOWING THE INVESTMENT, ALTRIA PROVIDED CRITICAL
`REGULATORY SERVICES TO JLI ............................................................................... 281
`A. From The Beginning Of The Investment, Altria And JLI Contemplated That
`Altria Could Provide Services Assisting JLI In Its Regulatory Applications ........... 281
`B. Altria Provided Substantial Regulatory Services To JLI, Which Required
`Access To Confidential Information ......................................................................... 285
`C. Altria’s Services Enabled JLI To File A Timely PMTA And Substantially
`Increased The Quality Of That PMTA ...................................................................... 290
`D. Altria Continues To Assist JLI With Its PMTA Work .............................................. 294
`E. There Were No Less-Restrictive Alternatives ........................................................... 295
`1.
`Firewalls Are Not Feasible ................................................................................ 295
`2. NDAs Provide Inadequate Safeguards............................................................... 296
`3.
`JLI Hiring Away Altria’s Top Employees Was No Substitute For
`Altria’s Full Suite Of Regulatory Services ........................................................ 297
`4. Third-Party Contractors Lack The Necessary Expertise And Resources .......... 298
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`XII.
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`FOLLOWING THE INVESTMENT, COMPETITION IN THE E-VAPOR
`MARKETPLACE FLOURISHED ................................................................................... 299
`A. Two New Entrants—NJOY Ace And Vuse Alto—Used Steep Discounting
`To Drive Trial And Steal Market Share Away From JUUL ..................................... 299
`1. NJOY Launched A 99-Cent Promotion ............................................................. 300
`2. Vuse Matched NJOY’s Promotion .................................................................... 303
`3.
`JLI Was Forced To Drop Price .......................................................................... 304
`4. Aggressive Promotions Have Continued ........................................................... 306
`B. Meanwhile, The Cig-A-Like Market Continued To Decline .................................... 307
`C. The Current Market Leaders All Contain Salts In Their E-Liquid Formulas ........... 310
`XIII. ACTUAL EVIDENCE SHOWS THAT THE E-CIGARETTE MARKETPLACE
`IS INTENSELY COMPETITIVE .................................................................................... 312
`A. Prices Decreased, Driven By Aggressive Third-Party Discounting .......................... 314
`B. Output Increased, Thanks To Entry And Expansion ................................................. 317
`C. Market Concentration Decreased As JUUL Lost Share To Rivals ........................... 320
`D. This Post-Transaction Evidence Is Highly Relevant To Assessing Market
`Competition ............................................................................................................... 323
`XIV. COMPLAINT COUNSEL FAILS TO CARRY ITS BURDEN OF
`DEMONSTRATING THE MARKET IS ALL CLOSED-SYSTEM PRODUCTS......... 324
`A. Practical Indicia Show That Pod-Based Products And Cig-A-Likes Are
`Distinct Markets ........................................................................................................ 325
`1.
`Pod-Based Products And Cig-A-Likes Have Peculiar Characteristics .............. 325
`2.
`Pod-Based Products And Cig-A-Likes Have Distinct Customers ..................... 328
`3.
`Pod-Based Products And Cig-A-Likes Are Priced Separately .......................... 329
`4. Market Participants Distinguish Between Pod-Based Products
`And Cig-A-Likes ............................................................................................... 331
`B. Dr. Rothman’s Application Of The Hypothetical Monopolist Test Does Not
`Support His Conclusion That The Market Is All Closed-Systems Products ............. 333
`XV. COMPLAINT COUNSEL CANNOT CARRY ITS BURDEN USING A
`PRESUMPTION BASED ON MARKET CONCENTRATION ..................................... 336
`A. Complaint Counsel’s HHI Calculation Is Methodologically Flawed And
`Cannot Form The Basis Of A Presumption Of Anticompetitive Harm .................... 337
`1. Dr. Rothman’s Market Definition Is Unsubstantiated For The Reasons
`Explained Above ................................................................................................ 337
`2. Dr. Rothman’s Pre-Transaction Market Share Calculation Improperly
`Disregards The Dramatic Decline Of Cig-A-Likes ........................................... 338
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`3. Dr. Rothman’s Post-Transaction HHI Is Based On A Faulty And Disproven
`Assumption That The Remaining Competitors’ Post-Transaction Shares
`Increased In Proportion To Their Pre-Transaction Shares ................................ 340
`B. Even If The Court Credits Dr. Rothman’s HHI Calculations, In The Context
`Of This Case, HHI Is Not A Reliable Indicator Of Anticompetitive Effects ............ 343
`1. Altria’s Pre-Transaction Market Share Overstates Its Competitive
`Significance........................................................................................................ 344
`2. Market Volatility Further Undermines The Reliability Of Dr. Rothman’s
`HHI Calculation ................................................................................................. 348
`XVI. COMPLAINT COUNSEL CANNOT DEMONSTRATE ANTICOMPETITIVE
`EFFECTS BY SHOWING THAT ALTRIA WOULD HAVE BEEN A
`SIGNIFICANT COMPETITOR ....................................................................................... 349
`A. Dr. Rothman’s Opinion That Altria Would Have Been A Significant
`Competitor Lacks A Reliable Methodology And Is Devoid Of Meaningful
`Analysis Of The But-For World ................................................................................ 349
`1. Dr. Rothman Has No Scientific Methodology And Concedes That His
`Analysis Is Not Replicable................................................................................. 350
`2. Dr. Rothman Cannot Say What Would Happen In The But-For World
`And Improperly Assumes, Without Explanation, That Altria Would
`Have Been A Significant Competitor ................................................................ 351
`B. Altria’s Existing Products Were Weak Competitors With No Chance Of
`PMTA Approval ........................................................................................................ 354
`1. MarkTen Cig-A-Like ......................................................................................... 354
`2. Elite .................................................................................................................... 356
`3. Apex ................................................................................................................... 357
`4. Cync ................................................................................................................... 358
`5. VIM .................................................................................................................... 359
`C. With Respect To Products That Altria Had Not Yet Developed Or Put On
`The Market, Complaint Counsel Cannot Satisfy The “Actual Potential
`Competition” Doctrine .............................................................................................. 360
`1. Complaint Counsel Failed To Demonstrate “Clear Proof” Of Future
`Entry In Light Of The Rigorous PMTA Approval Requirement ....................... 361
`2. Complaint Counsel Failed To Demonstrate “Clear Proof” That Altria
`Could Have Launched A Prospective Product In The “Near Future” ............... 363
`3. Altria Lacked The Capabilities To Innovate And None Of Its Pipeline
`Projects Were Close To Design Lock ................................................................ 364
`4. Complaint Counsel Failed To Demonstrate “Clear Proof” That Altria
`Could Have Partnered With PMI To Introduce A Competitive Product
`In The “Near Future” ......................................................................................... 376
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`5. Dr. Rothman Makes No Attempt To Predict The Conditions Of The
`Market Into Which A New Product Might Enter Several Years Hence,
`Nor Could He ..................................................................................................... 380
`XVII. COMPLAINT COUNSEL ALSO CANNOT DEMONSTRATE ANY
`ANTICOMPETITIVE EFFECTS WITH RESPECT TO PRICE, INNOVATION,
`OR SHELF SPACE .......................................................................................................... 381
`A. The Record Shows That Altria’s Products Did Not Constrain Price ........................ 381
`B. There Is No Evidence That Innovation Competition Has Decreased
`Following Altria’s Exit .............................................................................................. 383
`C. Competition For Shelf Space Increased After The MarkTen Products
`Were Pulled From The Market .................................................................................. 384
`XVIII. COMPLAINT COUNSEL CANNOT ESTABLISH ANTICOMPETITIVE EFFECTS
`USING DR. ROTHMAN’S QUANTIFICATION OF CONSUMER HARM ................. 389
`A. Dr. Rothman’s Model Supposedly Quantifying The Harm Is Flawed ...................... 390
`1. Dr. Rothman’s Economic Model—Logit Demand—Manufactures Harm
`By Assuming Consumers Were Unhappy With Their Alternatives To
`MarkTen And Elite, The So-Called Red Bus/Blue Bus Problem ...................... 390
`2. Dr. Rothman’s Chosen Model Also Requires An Assumption Of
`Proportional Diversion, Which Is Inconsistent With The Actual Patterns
`Of Substitution In The E-Vapor Marketplace .................................................... 392
`3. Dr. Rothman’s Model Rests On Unrealistic Market Share Inputs .................... 393
`4. Applying The Correct Market Definition—Pods—Reduces
`Dr. Rothman’s Predicted Harm By Nearly 90 Percent ...................................... 395
`5. Dr. Rothman Further Inflates The Alleged Harm By Positing An
`Unrealistic “Hypothetical” Profit Margin .......................................................... 396
`B. Expansion By Competitor Firms Was More Than Sufficient To Offset
`Dr. Rothman’s Predicted Harm ................................................................................. 398
`C. The Harm Predicted By Dr. Rothman’s Model Is Offset By The Increased
`Probability That JLI’s Products Will Receive Regulatory Approval As A
`Result Of Altria’s Services ........................................................................................ 400
`XIX. GLOSSARY FOR PROPOSED FINDINGS OF FACT .................................................. 402
`
`Respondents’ Proposed Conclusions of Law
`Respondents’ Witness Index
`Respondents’ Exhibit Index
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`RESPONDENTS’ PROPOSED FINDINGS OF FACT
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`I.
`
`BACKGROUND ON E-VAPOR INDUSTRY
`
`1. Electronic cigarettes, also known as “e-cigarette” or “e-vapor” products, are “electronic
`
`device[s] that heat[] a liquid that contains flavoring and nicotine (called an e-liquid), resulting
`
`in a vapor that is inhaled by the user.” (PX8011 Eldridge (ITG Brands) Decl. at 004 ¶ 18; see
`
`also PX9027 (FDA) at 009 (defining “e-cigarette” as “an electronic device that delivers e-
`
`liquid in aerosol form into the mouth and lungs when inhaled”); Huckabee (Reynolds) Tr. 382
`
`(explaining that an e-vapor product consists of “tobacco fluid and . . . a battery device that
`
`with various technology vaporizes the nicotine solution and produces an aerosol that
`
`consumers inhale”)).
`
`A.
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`Early History Of E-Vapor
`
`2. E-cigarettes generally work as follows: When a consumer puffs on the device, the air flow
`
`passes over a puff sensor, “which tells the sensor to communicate with the battery to release a
`
`charge. Upon releasing that charge, that charge goes through the coil, heats the coil, the coil
`
`is saturated in e-liquid, and it vaporizes, atomizes the e-liquid, and the adult consumer
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`proceeds to inhale.” (Schwartz (Altria) Tr. 1852-53).
`
`3. Following the introduction of e-vapor products in the United States in the late 2000s,
`
`(Schwartz (Altria) Tr. 1859; PX2531 (JLI) at 034), “[t]he category grew