Executive Summary: Key Legal and Evidentiary Issues

• The central issue was whether Robert Landry qualified as a member of the class he sought to represent, based on his share purchases and sales during the relevant period.

• Aurora challenged Landry’s standing, arguing his trading occurred after partial corrective disclosure and that he realized a capital gain, not a loss.

• The court considered whether the action, initiated by Landry, amounted to an abuse of process if he were not a class member.

• A key evidentiary dispute involved whether Landry’s trading should be interpreted under LIFO or FIFO accounting methods, impacting class membership assessment.

• The court addressed whether adding Mr. Fruchter as a plaintiff was time-barred under the CPA and ASA limitation provisions.

• No new cause of action was introduced by the amendments; they were deemed to particularize details of existing claims without violating limitation periods.

Facts of the case

Aurora Cannabis Inc., along with two of its former officers, faced a class action initiated by Robert Landry, who alleged negligent misrepresentation at common law and statutory secondary market misrepresentation under the Alberta Securities Act (RSA 2000, c S-4). The action stemmed from Aurora’s financial statements released after trading closed on September 11, 2019, which were claimed to contain negligent misrepresentations. Aurora issued a partial correction on November 14, 2019, and a full correction after trading closed on December 20, 2019.

Mr. Landry held 225,000 shares valued at approximately $1.9 million as of September 12, 2019. On November 20, 2019, he sold 75,000 shares, leaving 150,000 shares. He bought and sold 175,000 shares on November 21, 2019, and bought and sold 169,000 shares on November 22, 2019. By December 21, 2019, he retained 150,000 shares worth about $500,000.

Mr. Landry filed the action on August 10, 2020, as a representative plaintiff for two proposed classes: (1) persons who acquired Aurora shares on or after September 11, 2019, and held some or all until after November 14, November 18, November 29, or December 21, 2019 (common law class); and (2) a statutory class with the same description under the ASA. He applied for leave to proceed with the statutory claim on February 1, 2022.

Aurora argued Mr. Landry lacked standing because he did not acquire shares during the period before the November 14, 2019 partial correction, contending he could not have relied on the alleged misrepresentation. They also argued he realized a capital gain from his November trades. Mr. Landry countered that his trading fell within the class period, and the method of accounting for his trades (LIFO vs. FIFO) was not determinative at this stage.

Outcome of the case

The court ruled that Mr. Landry was a class member under both the common law and statutory class definitions. It found that the class definition was not limited to those acquiring shares before November 14, 2019, but included those who acquired on or after September 11, 2019, and held shares past the corrective dates specified. Whether Landry suffered a loss or relied on the misrepresentation was left for trial. The accounting method (LIFO or FIFO) did not affect class membership at this stage.

Since Landry was a valid class member, the court rejected the argument that the action constituted an abuse of process. His common law negligent misrepresentation claim was also allowed to proceed, as it was not plain and obvious that it disclosed no reasonable cause of action.

The court further found that adding Mr. Fruchter as a plaintiff was not time-barred. It accepted that the filing of the original claim tolled the limitation period for common law claims under the CPA, and that the filing of the leave application tolled the statutory limitation period under the ASA. The amendments did not create new causes of action but particularized existing allegations, and thus did not breach limitation periods.

Costs were reserved for later determination if not agreed upon. No monetary award, damages, or costs were granted or ordered in this decision.