Cyan decision, Sundial Growers faced parallel suits in federal and state courts.
See
In re Sundial Growers Inc. Securities Litigation, 19-cv-08913-ALC (S.D.N.Y.). A motion to dismiss has been briefed in the federal action, though a decision has not yet been issued. To avoid duplicative state and federal litigation, we advise corporations to adopt federal forum selection provisions in their bylaws.
See Seyfarth Shaw LLP,
Sundial Growers issued a defense friendly decision which was affirmed by the Appellate Division.
Dismissal of New York State Complaint
The complaint filed in New York state court alleges that the company misled investors by stating it was a producer of “high-quality” and “premium” cannabis when, allegedly, there were issues with cannabis quality, including an alleged incident in 2018 where a large order was returned.
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For any company, going public is fraught with securities
litigation risks. As highlighted in the recent New York State
Appellate Court decision
In The Matter of Sundial Growers, Inc.
Securities Litigation, companies operating in the
relatively new, but rapidly growing, frontier of legal cannabis
must be thorough and careful when issuing public disclosures.
Companies must also be aware of venue issues: in particular, the
potential for simultaneous federal and state proceedings related to
IPO filings following the United States Supreme Court s 2018
Cyan decision, and should consider the adoption of Federal
The Sciabacucchi effect: Delaware ruling on forum provisions is 'stabilizing' D&O insurance market reuters.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from reuters.com Daily Mail and Mail on Sunday newspapers.
Below are high-level takeaways on each topic.
Securities Filings Remain Elevated Despite the Pandemic
Despite unprecedented disruptions to the court system from the COVID-19 pandemic, plaintiffs continued to bring securities class actions at elevated levels in 2020 a sign that filings will remain high in the year ahead. Based on data from Cornerstone Research through September 30, 2020, plaintiffs were on pace to file approximately 375 federal and state securities class actions through the end of the year. Although lower than the more than 400 actions filed in each of the previous three years, this figure substantially exceeds the 261 cases brought, on average, between 2010 and 2019.
In re Nine West LBO Sec. Litig., No. 20 MD. 2941 (S.D.N.Y. Dec. 4, 2020)
Summary
In 2014, Sycamore Partners Management LP (Sycamore) acquired The Jones Group (Jones) in a leveraged buyout. The merger provided for five different components: (1) Jones would merge with a Sycamore affiliate and become “Nine West Holdings” (Nine West); (2) Sycamore would contribute at least US$395 million in equity to Nine West; (3) Nine West would increase its debt from US$1 billion to US$1.2 billion; (4) Jones shareholders would receive US$15 per share; and (5) two high-end brands, along with another business unit, would be sold to other Sycamore affiliates for less than fair market value.