Tilray Brands Inc (TLRY)

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Canadian Pot Co. Investors Win Class Cert. In Acquisition Suit (Aphria / Tilray)

Paywall: [Canadian Pot Co. Investors Win Class Cert. In Acquisition Suit](https://www.law360.com/securities/articles/1526082/canadian-pot-co-investors-win-class-cert-in-acquisition-suit)

By Emilie Ruscoe

Law360 (August 31, 2022, 7:16 PM EDT) -- A Manhattan federal judge has certified for the second time a class of investors in Canadian cannabis company Aphria Inc. in a suit alleging company insiders orchestrated a CA$193 million ($147 million) acquisition deal "for the purpose of stealing money" from the company.

In a Tuesday [**order**](https://assets.law360news.com/1526000/1526082/https-ecf-nysd-uscourts-gov-doc1-127131867169.pdf), U.S. District Judge George B. Daniels granted plaintiff Shawn P. Cunix's request for class certification, designating Cunix class representative and his Levi & Korsinsky LLP attorneys class counsel.

The proposed class includes those who purchased Aphria shares "on domestic exchanges or in domestic transactions" in the U.S. between July 17, 2018, when the company announced the proposed acquisition, and April 12, 2019, the last trading day before the company filed documents with the U.S. Securities and Exchange Commission that described "significant issues" with the acquisition plan, according to the investors.

Unusually, this is the second time Judge Daniels granted certification to the class. The first order certifying the class was filed in May, but Judge Daniels vacated that order without comment days later after the company filed a letter motion contending that the judge had jumped the gun with the order since the defendants' deadline for responding to the certification bid was still weeks away and they had depositions relating to the class certification lined up.

The company opposed the class certification bid in early June, telling Judge Daniels that the investors hadn't shown that their Aphria stock purchases were domestic transactions, among other things.

On Tuesday, Judge Daniels found that Elizabeth Alexander, an investor who sought to serve as class representative alongside Cunix, hadn't shown how she had engaged in a domestic transaction with her Aphria stock purchase and determined she couldn't represent the certified class.

In the latest version of the investors' suit, from May 2019, they claim the company's intended acquisition was a plan "hatched by several Aphria insiders for the purpose of stealing money from Aphria in order to enrich themselves at the expense of ordinary shareholders."

According to the investors, the businesses Aphria planned to purchase as part of the deal from SOL Global Investments Corp., a company "closely related" to Aphria, had once belonged to Aphria co-founder Andrew DeFrancesco before he sold them off to SOL "for an extreme profit."

"In turn, DeFrancesco caused Aphria to purchase them from Scythian for even more money with the assistance of [Aphria CEO Vic Neufeld] and other Aphria insiders," the investors said in their suit, adding that the company insiders took pains to hide that they were involved in the deals.

The investors claim they were hurt after short-sellers reported that the planned acquisition targets were "barely operational" and, in some cases, unlicensed.

Representatives for the parties did not immediately respond to requests for comment Wednesday.

The class is represented by Alexander A. Krot III, Nicholas I. Porritt, Adam M. Apton and Max E. Weiss of Levi & Korsinsky LLP.

Aphria, Neufeld and Merton are represented by Alex Spiro, Julia M. Beskin and Jacob J. Waldman of Quinn Emanuel Urquhart & Sullivan LLP.

The case is In Re Aphria Inc Securities Litigation, case number 1:18-cv-11376, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Katryna Perera and Sarah Jarvis. Editing by Ellen Johnson.

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Also see class action news from August in Ontario:

- Press release: [Aphria Inc. Securities Class Action: Rochon Genova LLP Announces Notice of Certification and Opt-out Deadline](https://www.businesswire.com/news/home/20220826005037/en/)

- Court Document: [Vecchio Longo Consulting Services Inc. v. Aphria Inc., 2022 ONSC 4753 \(CanLII\)](https://www.canlii.org/en/on/onsc/doc/2022/2022onsc4753/2022onsc4753.html)