Shearman & Sterling secured a litigation victory for its client Sundial Growers Inc. by securing a unanimous affirmance of the dismissal of a putative securities class action in the Appellate Division of New York State Supreme Court.
Sundial, which is based and operates in Canada and trades on the NASDAQ, launched its initial public offering (IPO) on August 1, 2019 and experienced stock price declines after the IPO. The litigation alleged, among other things, that the offering materials failed to disclose a purported product return and allegedly deficient quality control processes. On May 15, 2020, Justice Barry R. Ostrager granted our clients' motion to dismiss, concluding that the offering documents themselves "utterly refute" plaintiffs' claims. On February 16, 2021, the Appellate Division unanimously affirmed the dismissal finding that the “risk disclosures in the offering materials expressly and repeatedly warned of the risk to the company’s quality control” and, therefore, “the disclosures were not misleading.” The court also found that the statements challenged by plaintiffs were the kinds of expressions of corporate optimism that are generally not actionable under the securities laws.
The Shearman & Sterling litigation team included partners Adam S. Hakki (who argued the appeal) and Jeffrey D. Hoschander, as well as associates Dan Kahn and Liz Robinson (all New York-Litigation), in addition to legal assistant Sam Leander.