Sparks Are Still Flying: An Update on Tobacco Cessation Litigation
- Boutwell Fay LLP
- 24 hours ago
- 3 min read
Tobacco cessation program litigation is a hot topic with more than a dozen cases currently pending in federal courts. To date, the total settlements reached in tobacco program cessation cases exceed $10 million. As this area of law continues to develop and to avoid costly litigation, it’s worth reviewing your plan’s surcharges related to tobacco use and its related tobacco cessation programs.
Sherrie Boutwell and Allison Martinez’s article, Does Your Wellness Program Need a Tobacco “Check-Up”?, was published in the Autumn 2025 issue of the Journal of Pension Benefits. Since Does Your Wellness Program Need a Tobacco “Check-Up”? was submitted for publication in early September 2025, some cases have cooled down while others have heated up. Many cases are still awaiting decisions on motions to dismiss—a stage where the employer recently secured a key victory in Williams v. Bally’s Management Group, LLC, No. 1:25-cv-00147 (D.R.I.) (“Bally’s”) in November 2025.
In Bally’s, the plaintiff alleged the plan’s tobacco surcharge violated ERISA because: (1) participants who completed the tobacco cessation program did not receive the “full reward” because participants did not receive retroactive reimbursement of the plan’s tobacco surcharge; and (2) plan materials didn’t provide participants sufficient notice of a reasonable alternative standard to obtain the full reward. Siding with Bally’s Management Group, the court agreed Auer deference was not required and declined to read a retroactive reimbursement requirement into the term “full reward” as it is used in ERISA’s conditions for a compliant tobacco cessation program. Williams also alleged Bally’s Management Group breached its ERISA fiduciary duties because the participants’ tobacco surcharges were used to offset its contributions to the plan. Unlike the courts in Mehlberg and Bokma, the Bally’s court determined Williams failed to “properly allege any concrete, nonspeculative, and redressable injury” to the plan and dismissed the breach of fiduciary duty claims. On December 2, 2025, Williams appealed the court’s decision, and the case is currently before the United States Court of Appeals for the First Circuit.
Not all employers have fared as well as Bally’s Management Group. On January 20, 2026, the court entered an order denying the defendants’ motion to dismiss in Wilson et al. v. Whole Foods Market Inc. et al., No. 1:25-cv-00085 (W.D. Tex.) (“Whole Foods”). As in Bally’s, the plaintiff in Whole Foods alleged the plan’s tobacco cessation program violated ERISA because: (1) participants did not receive the full reward because no retroactive reimbursements were provided; and (2) participants were not given proper notice of the cessation program. Wilson also alleged Whole Foods breached its fiduciary duties by imposing and collecting the tobacco surcharge.
At the outset, the Whole Foods court determined the plaintiffs had standing to bring the foregoing clams—specifically declining to follow the Bally’s court because it appeared to “conflate the merits of a fiduciary breach claim, which does require loss or harm to the Plan, with the standing inquiry.” The Whole Foods court found “that to make available the ‘full reward’ to ‘all similarly situated individuals,’ a wellness program must provide retroactive reimbursements of all tobacco surcharges paid that Plan year.” The also court found the allegations related to the breach of fiduciary duties in the complaint sufficient to withstand the motion to dismiss.
Since September 2025, the parties in other cases have reached settlements. Notably, in Bokma v. Performance Food Group, Inc., No. 3:24-cv-00686 (E.D. Va.), on December 4, 2025, the court entered an order preliminarily approving a $4.7 million settlement which will be paid to nearly 18,500 class members. The court’s final approval hearing is currently scheduled for April 22, 2026. The parties in Buescher v. North American Lighting, Inc., No. 2:24-cv-02076 et al. (C.D. Ill.), indicated they were also moving in a similar direction on December 17, 2025, when they filed a joint motion to stay litigation to allow time for them to draft a settlement agreement.
We will continue to monitor these cases and related developments. If you have any questions regarding your plan’s tobacco cessation or other wellness/health and welfare benefit program, please do not hesitate to contact your Boutwell Fay attorney.
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