An opinion issued Friday in New Jersey federal court dismissed claims that defendant Aurora Cannabis, Inc. had engaged in securities fraud violations.
Defendant Aurora operates in more than 25 countries and is a manufacturer and producer of cannabis products, court filings say. The plaintiffs alleged in their second amended complaint that Aurora touted the demand for their cannabis products in Canada and correspondingly increased their production and capacity. Based upon this, Aurora allegedly projected that they “would have positive earnings before interest, taxes, depreciation and amortization (EBITDA) for its fourth fiscal quarter of 2019.”
Despite their statements about their earnings in the fourth quarter of 2019, Aurora posted a loss of more than $11 million in the fourth quarter. The second amended complaint asserts that Aurora “engaged in securities fraud by misleading investors on numerous fronts, including profitability and consumer demand. Defendants’ alleged false statements and omissions largely pertain to Aurora’s ability to meet its [fourth quarter of 2019] projection.”
Aurora moved to dismiss the second amended complaint in December 2021. They alleged that the plaintiffs had not sufficiently pled loss causation and therefore had failed to state a claim in the second amended complaint. The Court agreed with the defendants, noting that the plaintiffs failed to plead that Aurora’s stock price had declined, that they had not identified any correctives disclosures in relation to certain allegations, and more.
The plaintiff’s second claim alleged a second violation of the Exchange Act, which was dismissed since it was contingent upon the success of the first claim, which Judge Vazquez had dismissed.
Judge John Michael Vazquez granted the defendant’s motion to dismiss the second amended complaint on Friday. Judge Vazquez also granted the plaintiffs thirty days to file an amended complaint since they have not had opportunity to cure the deficiencies for certain allegations.
The plaintiffs in the suit were represented by the Rosen Law Firm and Carella, Byrne, Cecchi, Brody & Agnello. Aurora was represented by Jenner & Block and Marino, Tortorella & Boyle.
