Hexo Corp. said it won the dismissal of a securities class action lawsuit that had been pending before the Quebec Superior Court against the Canadian cannabis producer and a former CEO.
In the suit, filed in Quebec on Nov. 19, 2019, certain primary market and secondary market purchasers of the company’s stock had alleged that Hexo misled investors regarding a wholesale purchase agreement with the province-owned wholesaler Société québécoise du cannabis.
The court disagreed with the plaintiff’s argument.
The suit also delved into disclosure obligations and Hexo’s purchase of competing producer Newstrike on May 24, 2019.
Sebastien St. Louis, a former Hexo chief executive officer, was the former CEO named in the suit.
“We’re very satisfied with the Court’s detailed opinion, which dismissed the Plaintiff’s claims and supports HEXO’s position,” current CEO Charlie Bowman said in a statement.
“This favourable ruling is important for our company as we continue to build investor confidence and look to position HEXO for long-term financial success.”
Hexo said in a news release Friday the Superior Court of Québec dismissed the plaintiff’s amended motion, with costs, in an opinion dated Jan. 23, 2023.
The plaintiff has a right to appeal, according to the Hexo release.
“The court agreed with the defendants that there was ’no reasonable possibility’ that the secondary market claim filed under the Québec Securities Act had a reasonable chance of success, or that the plaintiff had demonstrated an arguable case for a primary market class action or a civil liability class action “for misrepresentation under the general principles of fault in the civil law,” the release stated.
The victory in the Quebec court comes two years after Hexo won complete dismissal of a suit in the United States involving related events.
In March 2021, Hexo said it had won a full dismissal of a pending class action in the U.S. States District Court for the Southern District of New York.
In that case, Hexo and some of its current and former officers and directors were named in shareholder class action lawsuits filed in the Southern District of New York, the New York State Supreme Court for the County of New York as well as in Quebec.
In an opinion dated March 8, 2021, the Southern District of New York granted Hexo’s motion to dismiss the case in its entirety.
The court rejected allegations that Hexo had engaged in fraudulent or reckless conduct with respect to disclosures.
“We are gratified by the Court’s thorough opinion dismissing the plaintiffs’ claims and emphatically rejecting their arguments that HEXO made any material misstatements,” the Quebec company’s general counsel, Roch Vaillancourt, said at the time.
“This ruling should help reduce the litigation burdens facing our company as we continue to build our global brand.”
The company’s shares are traded as HEXO on the Nasdaq and Toronto Stock Exchange.