A proposed securities class action against a cannabis company and a couple of former executives — alleging that investors were harmed by their misrepresentations — has been allowed to continue by an Alberta court, which rejected the defendants’ arguments seeking to have the case dismissed.
The Court of Appeal of Alberta rejected an appeal from Aurora Cannabis Inc., and a couple of former executives — Terry Booth and Glenn Ibbott — who are facing a proposed class action suit for alleged secondary market misrepresentation.
According to the court’s decision, in August 2020, an investor (Robert Landry) filed a proposed class action, asserting a claim for alleged negligent misrepresentation, and a claim under the Securities Act, alleging liability for misleading secondary market disclosure.
Among other things, the lawsuit alleged that they made misrepresentations about the company’s growth in September 2019, which were corrected in November and December of that year. However, investors suffered damages in the period between the alleged misstatements, which boosted the company’s share price, and the corrections, which triggered a drop in the company’s stock, the lawsuit alleged.
The allegations have not been proven, and the case has not been certified as a class action.
In 2024, Aurora filed an application, seeking to have the claim dismissed, arguing that the original plaintiff, Landry, was not an appropriate plaintiff to represent the class of investors. It also sought to disallow the addition of a second proposed plaintiff, Gill Fruchter.
The Alberta Court of King’s Bench rejected that application in a 2025 decision — which the company appealed, seeking to strike the amended statement of claim filed by Landry and Fruchter, and appealing the decision to allow the addition of Fruchter as a proposed representative plaintiff.
Among other things, it argued that Landry isn’t a suitable plaintiff because there’s no evidence that he bought the company’s shares based on the alleged false statements. However, the court declined to dismiss the case on that basis, noting that the case is at an early stage, and the timing of trades and the company’s statements doesn’t have to be conclusively established at this point.
“[T]he conclusion of the case management judge should be granted deference in determining that Mr. Landry is a member of the class, during the class period,” the appeal court said. “There is no basis to interfere with her conclusion that the action is not an abuse of process, a claim with little merit.”
Additionally, it declined to dismiss the negligent misrepresentation claim, saying that the validity of the claim and potential damages should “be left for the certification or trial stages of this litigation.”
Finally, the court also found that it was not too late to add a second proposed plaintiff to case, or to refine the allegations.
Aurora argued that the move to add Fruchter came in 2024, after the expiry of the three-year limitation period, and should be disallowed.
“Aurora says the tolling provision in the Securities Act only protects the person who served the application for permission to proceed, Mr. Landry, and not any other potential class members, including Mr. Fruchter,” the court noted.
However, the lower court disagreed, finding that the tolling of the limitation period applies to all potential class members — and the appeal court agreed.
“The limitation period in respect of Mr. Fruchter’s common law misrepresentation claim was tolled under [the class action legislation] when the common law action was commenced,” it said. “[A]nd the limitation period in respect of Mr. Fruchter’s statutory claim was tolled by virtue of the Alberta Class Proceedings Act and Securities Act when the permission to proceed application was brought.”
It also found that amending the claim to add new allegations was allowed, since they are covered by the same tolling of the limitation period.
“The case management judge held that the amendments related to the same sequence of events and the same relationship between the prospective claimants and would not constitute added claims, as they merely particularized details raised in the original pleadings,” the appeal court noted — adding that it agreed with this conclusion too.
Ultimately, the court dismissed the appeal.