b'Update on Cases Pending Prior to 2020Aphria, Inc.:companies previously owned by its executives. Plaintiffs In re Aphria, Inc. Securities Litigation,further alleged that the acquired assets were primarily Case No. 1:18-cv-11376-GBD (S.D.N.Y.nonoperational and grossly overvalued.Dec. 5, 2018) Defendants moved to dismiss the amended complaint and the court heard oral argument on the motion. Plaintiffs Aphria, Inc. (Aphria) is a Canadian company and one ofalso moved to strike (or convert the motion to dismiss to the largest cannabis producers in the world. In July 2017,a summary judgment motion) Appendix A to defendants Aphria announced it was planning to use its experience inmotion, which included a chart compiling each of Canada to expand into newly legal markets. As part of thisthe challenged statements asserted in the amended plan, Aphria spent approximately C$193 million to acquirecomplaint and noted whether the statement was either a number of Latin American assets located in Jamaica,not false, mere puffery or fell within the PSLRAs safe Argentina, and Colombia. The company subsequentlyharbor provision.sold the assets to Scythian, a company it alsoOn September 30, 2020, the court granted defendants recently acquired. motion to dismiss in part and denied plaintiffs motion to In December 2018, two short-seller activiststrike. The court agreed that plaintiffs lacked personal stockholdersHindenburg Research (Hindenberg) andjurisdiction over two of the companys founders. Quintessential Capital Management (QCM)The court held that plaintiffs theory of liability against the commenced purported investigations into the acquisitionstwo founders, Canadian citizens, based on signing certain and published reports disclosing their findings, whichfinancial statements, were, without more, insufficient included corporate records and photographs of theto establish a basis for general or specific jurisdiction. Latin American sites. The reports each alleged thatHowever, the court also found that plaintiffs allegations the acquired assets had virtually zero worth. Shortlyagainst the remaining defendants were sufficiently pled.thereafter, the companys stock price dropped from $7.90With respect to plaintiffs claims pursuant to Sections to $4.51, which represented a total market capitalization10(b) and 20(a) of the Exchange Act and Rule 10b-5, the loss of more than $220 million. In response to the report,court agreed that defendants statements regarding the Aphrias board formed a special committee to investigateviability of the acquired assets were misleading because the acquisitions and publicly respond to the assertionsthey were aware that the assets were underdeveloped made by Hindenburg and QCM. The special committeeand inoperable. The court further explained that, given completed its review and refuted many of the claims.defendants access to the assets financial statements and However, the special committee did ultimately concludeforecasts, they would have been aware of their viability that certain insiders at the company had interests in theand therefore an inference of scienter was established. acquisition that should have been disclosed. However, the court held that plaintiffs did not establish Investors filed a putative class action against thecontrol person liability pursuant to Section 20(a) against company and its executives alleging violations ofone of the companys co-founders because the claims Sections 10(b) and 20(a) of the Exchange Act and Ruledid not sufficiently establish that he exercised control over 10b-5 promulgated thereunder. Plaintiffs alleged thatthe company. The court further rejected plaintiffs claim defendants made false and misleading statementsthat Scythian, the seller of the assets, was liable under concerning Aphrias acquisition of the Latin AmericanSection 20(a), a theory plaintiffs set forth for the first time assets. According to plaintiffs, the acquisition was a shamin their opposition to defendants motion to dismiss. The and its true purpose was to assist executives in siphoningcourt held that not only did plaintiffs fail to make this claim money from the company by having Aphria purchasein their amended complaint, but also that, even if they 8'