Proposed Cannabis Class Action Goes Up In Smoke

In Badesha v. Cronos Group, 2021 ONSC 4346, the court refused to certify an action alleging securities misrepresentation because there was no reasonable possibility that the alleged misrepresentations caused any loss. The plaintiff argued that thousands of alleged misrepresentations in the defendant's financial statements should be treated as separate misrepresentations, but failed to establish—or even plead—that anyone relied on any one of them.

Many securities misrepresentation certification decisions focus on the predominance of individual issues (see our recent post on 0116064 B.C. Ltd. v. Alio Gold Inc., 2021 BCSC 540). Cronos Group is a reminder that a misrepresentation is not enough to clear the hurdle of a reasonable cause of action required for certification: someone must have allegedly relied on the misrepresentation. Negligence in the air is not enough to certify a class action.