US judge approves $7M settlement in suit over Canadian cannabis company’s IPO

By Anne Bucher | October 12, 2022

Category: Stocks & Securities Class Action Lawsuits

A bay of mature cannabis plants ready for harvest in a greenhouse. — (Photo Credit: scottshoots/Shutterstock)

Sundial Growers class action settlement overview:

Who: A New York federal judge granted final approval to a class action settlement.
Why: The settlement will resolve consolidated class action lawsuits alleging Canadian cannabis company Sundial Growers Inc. concealed product quality issues prior to its IPO.
Where: The Sundial Growers class action lawsuit was filed in New York federal court.

A New York federal judge has granted final approval to a $7 million class action settlement over allegations Canadian cannabis company Sundial Growers Inc. concealed issues about product quality prior to its 2019 initial public offering.

Plaintiff David Draiman of the heavy metal band Disturbed sued Sundial Growers, claiming he lost more than $100,000 in connection with the company’s IPO.

Draiman filed the Sundial Growers class action lawsuit seeking to represent himself and other consumers who suffered a loss after purchasing common stock for the IPO. Court documents indicate that 11 million shares were sold at $13, Law360 reports.

Sundial Growers reportedly raised $143 million in the IPO. Media reports subsequently revealed that a customer purportedly returned a large shipment of Sundial Growers cannabis products that contained “visible mold, parts of rubber gloves, and other non-cannabis material,” court records say.

After the news of contaminated cannabis became public, Sundial Growers’ stock reportedly plummeted 40%.

Judge finds Sundial Growers settlement to be ‘fair, reasonable and adequate

Draiman’s Sundial Growers lawsuit was consolidated with another class action lawsuit in 2019, Draiman and 0998735 BC LTD were appointed as lead plaintiffs.

On Oct. 5, U.S. District Judge Andrew L. Carter signed off on the Sundial Growers class action settlement and certified a class of “all persons who purchased or acquired Sundial common stock in or pursuant and/or traceable to the offering documents issued in connection with Sundial’s IPO.”

In the final approval order, Judge Carter notes that the Sundial Growers settlement terms are “fair, reasonable, and adequate,” and that the deal was reached following good faith, arm’s length negotiations.

More information about the Sundial Growers settlement was not immediately available.

What do you think about the Sundial Growers IPO class action settlement? Join the discussion in the comments!

Draiman and 0998735 BC LTD are represented by Jacob Goldberg and Leah Heifetz-Li of the Rosen Law Firm PA and Elizabeth K. Tripodi, Nicholas I. Porritt, and Adam M. Apton of Levi & Korinsky LLP.

The Sundial Growers Class Action Lawsuit is In re: Sundial Growers Inc. Securities Litigation, Case No. 1:19-cv-08913, in the U.S. District Court for the Southern District of New York.