A high-profile cannabis industry trial is set to begin Tuesday in a California state court, with a buttoned-down corporate executive suing multistate operator MedMen Enterprises and the company’s co-founders, Adam Bierman and Andrew Modlin.
The civil jury trial – scheduled for Los Angeles County Superior Court – has been more than 2½ years in the making. The process began in January 2019 when MedMen’s former chief financial officer, James Parker, filed suit against the L.A.-based company for breach of contract and wrongful termination.
In his lawsuit, Parker alleges that Bierman and Modlin forced him to resign and that they treated MedMen as “their personal piggy bank.”
Bierman was MedMen’s CEO and Modlin was president before both were ousted from the publicly traded company in early 2020.
The lawsuit claims “profligate spending” occurred during Parker’s tenure at MedMen on luxury items such as:
- “Special order pearl white Escalades for (Bierman).”
- “A custom $160,000 Tesla SUV demanded by (Modlin).”
- 24-hour armed security for Bierman, Modlin and their families.
In addition, Parker alleges the two created a work environment that was “replete with racial, homophobic and misogynistic epithets and slurs,” used cocaine and alcohol while on the job and repeatedly insulted Parker by calling him “fat and sloppy” and “a p****” for refusing to break the law.
Parker further alleges that Bierman and Modlin engaged in stock manipulation, forced him to use his personal credit card for company purchases and employed company resources to carry out personal vendettas.
The former CFO – who today is the co-founder and president of a California aerospace company – is requesting an unspecified amount of damages.
When Parker first sued in 2019, a MedMen spokesperson called the lawsuit “wild allegations that have no basis in fact.”
In subsequent court filings, the company has denied all wrongdoing.
And in a cross-complaint, MedMen accuses Parker of stealing proprietary company information before resigning in November 2018 – “all done to inflict harm on the Company for his own personal gain.”
Bierman’s legal team has leveled similar allegations, accusing Parker of the theft of sensitive information.
The trial is expected to last about three weeks, and potentially tens of millions of dollars are at stake for all the parties involved, estimated San Diego marijuana attorney Jessica McElfresh.
McElfresh said the trial is likely to be a precedent-setter in one way or another.
“The outcome of this, and how the jury reacts, will inevitably affect how other (marijuana industry) lawyers and plaintiffs feel about their odds of success, what they want to bring forward, the pros and cons of airing this much dirty laundry,” McElfresh said of the case, which contains a raft of salacious allegations involving Bierman and Modlin specifically.
“This is a lot of dirty laundry to air in public. By the time we’re done, nobody is going to look great here.”
A spokesperson for MedMen – which trades on the Canadian Securities Exchange (CSE) as MMEN and on the U.S. over-the-counter markets as MMNFF – declined to comment for this story.
An attorney for Bierman and Modlin – who remain in the cannabis industry – did not return multiple calls seeking comment. Parker’s attorneys declined to comment for this story.
The lawsuit
The most recent version of Parker’s lawsuit – which was updated in December 2019 – expanded the list of defendants from MedMen alone to 15 defendants, including 12 company subsidiaries.
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The suit also added Bierman and Modlin as individual defendants, meaning they could be held personally liable for damages if Parker ultimately wins at trial.
The wide range of allegations outlined by Parker in the suit vary from small and trite, McElfresh said, to potentially serious wrongdoing.
At the heart of the trial, however, is Parker’s contention that Bierman and Modlin used him as a tool to take MedMen public on the CSE in May 2018 and that they never intended to make good on an employment agreement they signed with him that same month.
The lawsuit claims that Bierman and Modlin specifically engaged in “illegal conduct” before, during and after the company went public and that Parker, as CFO, held his fiduciary duties higher than the expensive tastes of MedMen executives.
“Bierman and Modlin understood that they absolutely needed Parker to successfully take MedMen public in late-May 2018, but had no intent of performing under the (Parker employment) agreement after that critical and high-profile goal had been achieved,” the lawsuit claims.
“MM Enterprises’ parent going public was an enormous boon to CEO Bierman and President Modlin (to the tune of hundreds of millions of dollars in direct and indirect equity value),” the suit claims, before adding that “neither CEO Bierman, nor President Modlin, was willing to accept the accompanying responsibilities. They continued to conduct themselves as if it was their personal Company.”
The case has been progressing through the court system since it was filed, and a judge ruled earlier this year that MedMen must pay Parker’s legal fees, regardless of the trial outcome, since that was part of his contract with the company.
The response
In its answer to Parker’s initial lawsuit, attorneys for MedMen say in court filings that “MM USA expressly denies that Bierman or Modlin breached their respective duties to the Company and its shareholders. MM USA further expressly denies that Parker was prevented or otherwise discouraged from satisfying his own duties to the Company and its shareholders.”
Later in 2019, according to a court filing by Bierman, the then-CEO accused Parker of stealing confidential company information.
“After Parker’s resignation, MME USA discovered that Parker had emailed a significant number of sensitive, confidential, and proprietary MME USA files, containing a significant amount of information, to his personal email account in the month leading up to his resignation,” Bierman’s filing states.
The filing goes on to assert that, over the course of a month before his resignation in late 2018, Parker sent more than 200 emails to himself with proprietary information and downloaded 200 gigabytes of company intel onto an external hard drive.
That information, Bierman’s legal team asserts, could be valuable to MedMen’s competitors.
“There is a significant threat that Parker will put the confidential information that he stole to use on behalf of an MME USA competitor by targeting MME USA’s customers, investors, and employees,” Bierman’s filing states.
How it could play out
“Get your popcorn,” Katy Young, the president of the board of directors of the International Cannabis Bar Association, said about trial. “This is going to be wild.”
Parker, Bierman and Modlin are listed as witnesses for the upcoming trial, as are several other former MedMen executives.
Many outcomes are possible because the case is a civil jury trial, Young and McElfresh agreed.
Because Parker is requesting an unspecified amount of damages, the outcome will hinge on many factors that are impossible to foresee, the attorneys said, including how MedMen, Bierman and Modlin portray each other to the jury.
“There’s a million outcomes that are possible here,” McElfresh said. “A jury could side with (Parker) and award him damages of $1. A jury could side with him and award him compensation damages and not go for punitive (damages). There’s a lot of options.
“MedMen today may say, ‘Well, this is all because (Bierman and Modlin) were insane, so we were basically screwed over too,'” she added. “If they start taking shots at each other, the different defendants, it could go from there.”
McElfresh and Young added that a settlement remains on the table, and it’s surprising the case hasn’t already settled – which is typically what happens with lawsuits such as this.
“My educated guess on why this hasn’t settled is, first, there’s enough money at stake, and second, the reputational harm inflicted by the allegations must be so aggravating to the MedMen guys that they must feel it’s necessary to fight this tooth and nail,” Young said.
Young added that she believes there’s a “high likelihood” that Parker will prevail at least on his claim of retaliation by MedMen, Bierman and Modlin, since California is generally considered an “employee-friendly” jurisdiction by attorneys.
John Schroyer can be reached at john.schroyer@mjbizdaily.com.
