A motion to dismiss has been briefed in the federal action, though a decision has not yet been issued. Like much of the Securities Act litigation following the Cyan decision, Sundial Growers faced parallel suits in federal and state courts.

See Cornerstone Research, Securities Class Action Filings 2019 Year in Review (2020) Cornerstone Research, Securities Class Action Filings 2020 Midyear Assessment (2020). New York, in particular, has experienced a high volume of Securities Act filings in its state courts. See Dropbox Becomes Third California Superior Court Decision To Enforce Delaware Corporations’ Federal Forum Provision For Securities Act Lawsuits (Dec. Beaver County Employees Retirement Fund, which held that state courts have jurisdiction over claims brought under the Securities Act (and prohibited removal of these claims to federal court). The complaint follows the trend of increased state filings of Securities Act claims as a result of the Supreme Court’s 2018 decision in Cyan Inc. The complaint at issue was filed in New York State court in September 2019, shortly after the IPO. The company went public via an Initial Public Offering in August 2019.Īs is common following an IPO, plaintiff, on behalf of a putative class of investors, brought a claim under the Securities Act of 1933 (the “Securities Act”) alleging material misstatements and omissions in the IPO’s registration statement that had been filed with the Securities and Exchange Commission. Sundial Growers is a Canadian company which commenced cannabis production in December 2018, following legalization of adult-use cannabis in Canada. 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 Forum Provisions (“FFPs”) to avoid this problem. Securities Litigation, companies operating in the relatively new, but rapidly growing, frontier of legal cannabis must be thorough and careful when issuing public disclosures.

As highlighted in the recent New York State Appellate Court decision In The Matter of Sundial Growers, Inc. For any company, going public is fraught with securities litigation risks.

Dropbox inc. securities litigation