lawsuit Archives - Green Market Report

Debra BorchardtFebruary 4, 2019
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9min51841

MedMen Enterprises Inc. (MMNFF) is facing a new lawsuit from the company’s former Chief Financial Officer James Parker. Parker filed his case on January 29 in the Superior Court of California in the County of Los Angeles claiming wrongful termination for an undetermined amount of damages.

MedMen spokesman Daniel Yi said that the company was unable to respond to the filing because it had not been officially served, but would do so once that happened. “These are baseless claims and we’ll defend ourselves vigorously in court,” said Yi.

Parker resigned from the company in November less than a year after the company began trading on the Canadian Securities Exchange following a reverse take over. It’s highly unusual for a company to experience a change at this level so quickly after becoming a publicly traded company. At the time, Jim Miller, who was the Vice President of accounting was appointed as the interim CFO and then in December MedMen named Michael Kramer as its official CFO. Kramer worked previously in senior jobs for retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.

The Allegations

The allegations are harsh. Parker says that he to “Choose between complying with his fiduciary duty to the company and its shareholders or turning a blind eye and a deaf ear to improper and unlawful behavior, he had been constructively and wrongfully terminated without cause and in violation of public policy.” Parker claims MedMen went behind his back to begin searching for a new CFO and diminished his authority within the company.

He also complained that the company instructed him to make payments that he questioned.

“Plaintiff was ordered to spend several millions of company dollars on such items as 24-hour armed Executive Protection (security) for the CEO, President, and their families, high-tech safe rooms and security systems for their new houses, personal drivers, private jets (often with friends and family along for the ride), luxury hotels, special order pearl white Escalades for the CEO (and another car for his family), a custom $160,000 Tesla SUV demanded by the President, tens of thousands of dollars apiece on multiple extravagant custom conference room tables, and placing CEO Bierman’s personal therapist and marriage counselor on staff fulltime as a “performance improvement expert” at a pay rate in excess of $300,000 a year.”

Parker alleges that Bierman and President Andrew Modlin engaged in inappropriate name-calling.

“Mr. Parker was forced to tolerate being ridiculed by CEO Bierman and President Modlin for the way Plaintiff dressed (not hip enough to satisfy the Founders’ millennial culture); being called “fat and sloppy”; being called a “pussy-bitch;” having his office diminished in size; assigned to a shared a parking space with his executive assistant while less senior VP’s and Administrative Assistants had their own exclusive spots; subjected to hearing CEO Bierman’s racially inappropriate reference to Los Angeles City Councilman Herb Wesson as a “midget negro” and the CEO’s characterizations of cannabis social equity programs as “reparations”; CEO Bierman’s references to a representative of the Drug Policy Alliance as a “fat, black lesbian;” CEO Bierman’s and President Modlin referring to women in conflict with them as “cunts” and those with different ideas or perspectives as being “retarded;”

Parker also made serious securities violation claims saying:

  • “Ordering Plaintiff to wire hundreds of thousands of public dollars to a “consultant” in Canada to “buy up our stock when it is under attack”
  • “Ordering Plaintiff to pay prohibited success fees to unlicensed broker-dealers for various fundraising efforts, under the semblance of “consulting agreements”
  • “The CEO and President not being fully transparent about non-arm’s length deals with numerous related parties (including Pharmacann and Captor Capital)”
  • “The CEO and President failing to publicly disclose all Named Executive Officers and other Material Officer compensation packages (in violation of Canadian National Instrument Form 51-102 F6 which requires that the compensation of the CEO, CFO and next three highest-paid executives be publicly disclosed)”

Parker also claims that Bierman and Modlin have continued to treat the company as if it were still a private company and not one owned publicly by shareholders.

“Plaintiff having to deal with all of the resulting cultural fallout at the company; relegated to using his personal American Express card to fund company purchases ranging from $150,000-$250,000 a week because CEO Bierman and President Modlin, and Defendant could not obtain credit cards with high enough limits since MM Enterprises was in the cannabis industry”

MedMen Claims Performance Issues

Within the case, Parker included emails from Andrew Modlin suggesting the company was unhappy with Parker’s performance leading to his ouster.

Modlin wrote, “You have engaged in other serious neglect in the performance of your duties and you have willfully and repeatedly failed and refused to perform your duties. We will be providing you with a more detailed description of your performance deficiencies shortly as well as a plan for curing those deficiencies.”

In another email stated in the case, Modlin wrote, “We are taking the time to thoughtfully memorialize the myriad well-documented deficiencies in your performance so that both you and MedMen can understand what is expected of you in your very well compensated position. Given the amount of your base salary, the annual bonus available to you, and the value of the equity grants given to you, MedMen has every right to expect you to perform your job duties
admirably. ”

Damages

Parker was being paid $750,000 a year and if he was terminated without cause he would receive $2.2 million. In addition to other lump sum payments and unvested stock options. However, the filing states that damages would be determined in court.

Other Lawsuits

MedMen is facing another lawsuit. Brent Cox and Omar Mangalji founders of The Inception Companies founders (through an affiliated entity – MMMG-MC, Inc. – that holds a significant stake in MedMen’s management company MMMG, LLC) filed a complaint against Adam Bierman; Andrew Modlin and various MedMen Enterprises (OTC: MMNFF) entities for alleged breaches of fiduciary duty. A Los Angeles Superior Court though denied a request from the plaintiffs for a temporary restraining order and a preliminary injunction and giving the company a slight early victory.

However, similar to Parkers claims that Bierman and Modlin are self-dealing when it comes to the company, Cox and Mangali also stated, “MedMen veneer is a complex web of interconnected subsidiary entities, virtually all of which are directly managed, directed, controlled, and owned by BIERMAN and MODLIN, and all of which always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity. It is that perverse interconnectedness and rampant, brazen self -dealing that renders the actions of BIERMAN and MODLIN, and of the Entity Defendants, unlawful.”

 


Anne-Marie FischerAugust 8, 2018
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11min45140

There’s something rotten, it seems, in the state of CBD Naturals and its CBD-related claims.

When Jared Berry’s brand CBD Naturals was recently selected as the exclusive distributor of a premier hops/humulus CBD isolate in the United States, he may or may not have expected that he would soon be served with a lawsuit.

The lawsuit comes off the heels of a contentious debate about the origin and trademark rights to extracting CBD from hops (the process trademarked humulus kriya), for which credit is to go to Peak Health Center. The process proves to be promising for CBD medicine as it as a derivative of a legal substance, promising consumers access to CBD in states that have laws against hemp or cannabis CBD.  

Peak Health Center is loudly disputing the claims by Berry and CBD Naturals, which the filed complaint cites as a Vancouver-based business under the publicly traded Isodiol International Inc. (OTC: “ISOLF”), that a signed agreement has allowed him to exclusively sell hops-derived CBD products, with Peak Health Center citing no such agreement in existence.

When contacted for comment, Isodiol International denies any relationship with Jared Berry or CBD Naturals. “Jared Berry is not an officer, director, or fiduciary of Isodiol, Iso LLC, or any of the Isodiol Companies,” says Mike Parmar of Isodiol Investor Relations.  “Therefore, we presently do not have a role in the aforementioned lawsuit or any disputes between those parties.” 

It does seem that Berry was a shareholder at one time according to a press release that stated he sold his shares. In addition to that, he appears in a video with CFN Media in which he identifies himself as the President of Isodiol. Peak Health also provided a Bloomberg company profile snapshot that listed Berry as being on the board of Isodiol. So, Isodiol seems to be distancing itself from Berry and Peak did not include Isodiol on the lawsuit, but there is still a well-documented connection.

Federal and State Offenses

The lawsuit of Peak Health Center vs. CBD Naturals includes several claims, including the federal offenses of trademark infringement, unfair competition, false designation of origin, false representation, false advertising, and violations of California Business & Professional Code and Unfair Competition Law.

Peak Health Center, holder of the trademark for “ImmunAG™”, filed the claims following a press release from CBD Naturals announcing its exclusive distribution rights of hops/humulus CBD isolate.

“We are honored to be selected as the exclusive U.S. distributor and look forward to enhancing our growing product line,” said Jared Berry, who identifies as a member of the board of CBD Naturals, in the June press release that kicked off the lawsuit.

Considered a medical breakthrough for the cannabis industry, CBD Naturals claims their developments have led to products that are the first fully legal CBD products, and prides themselves on being the first company to trademark “CBD”.

According to the complaint documents, the dispute challenges an agreement that was signed between Isodiol and Peak Health Center to distribute ImmunAG™, which did not include any exclusivity rights. Following this agreement, Jared Berry was quoted in press releases saying that Isodiol scientists had developed the kriya product. This was contrary to any agreement signed by Peak Health Center as to the origins of the hops-derived CBD trademark, and the exclusivity of the distribution rights to Isodiol.

“We are not aware of any intellectual properties in which Peak Health claims an interest being unlawfully used or relied upon by Jared Berry or the unknown entity referred to as CBD Naturals,” said Isodiol’s Parmar.

Peak Health Center, in their filing, calls Berry’s words “false and misleading to trade and consumers”.

Medical Marijuana, Inc. is now the company’s only US distributors. According to this article on Seeking Alpha, Medical Marijuana lost several employees to Isodiol so there seems to be quite a bit of bad blood between these two companies.

A Strange Saga Unfolds

Following the press release, Dr. Bomi Joseph, one of the defendants in the lawsuit later filed against Berry and CBD Naturals, reportedly tried to connect with Berry to discuss the use of the kriya trademark. “I thought ‘this must be an understanding, maybe the press got it wrong,” says Dr. Bomi of Peak Health Center. “My friend then sent me Isodiol’s press release with these claims and I tried to get in touch with the company but they went dark. This is what caused me to terminate my contract with them,” he describes of the time after the press release came out.  

“Months later I received the CBD Naturals press release claiming that they were selling ‘CBD from Hops.’ We don’t use the terminology “Hops derived CBD” but it is clearly meant to refer to our product. We also have the trademark for “Kriya” and that trademark was violated by Jared Berry and CBD Naturals. I sent [Jared Berry] a “cease and desist” via email but never heard back. My lawyers tried to contact him several times but to no avail.”

Peak Health Center noted in a press release that “only press releases issued, jointly or singly, by Peak Health should be considered an authentic press release on Hops/Humulus derived CBD.”

“Peak Health has to protect both its trademarks and intellectual property – we hope that both CBD Naturals and Isodiol understands that,” says Bomi, “At this moment we do not have any new extracts planned for trademark but we hope to continue to do plant-based research and find other CBD solutions in the future.”

Isodiol is clear that they are not affiliated with CBD Naturals or Jared Berry: “To the extent, Peak Health has made fact allegations that reference Isodiol, Iso LLC, or any of the Isodiol Companies, there are many factual inaccuracies contained in the complaint.”

“While Isodiol continues to believe there are interesting opportunities concerning hops-derived cannabinoids and other medicinal compounds, such as beta-caryophyllene,” says Parmar, “Isodiol chose to shift its focus away from hops sources because the company believes there are less costly and more readily available opportunities with industrial hemp and cannabis, which are being bolstered by new positive legal developments on a regular basis.”

Where Is Jared Berry?

Recent reports from Peak Health is that Jared Berry remains somewhat enigmatic after being served. One source said he is apparently “hiding out” in an RV outside the CBD Naturals Building. While he will not respond to Peak Health Center, he is reportedly taking meetings and phone calls.

This strange lawsuit saga seems to be a game of “he said, he said, he said”, as the origin of the trademark for kriya is determined and exactly who is involved in the claimed trademark infringement.


William SumnerMay 18, 2018
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7min36024

The cannabis technology company Eaze finds itself in legal jeopardy as a class action lawsuit has been filed alleging that the company violated the Telephone Consumer Protection Act (TCPA) of 1991 by sending out unsolicited marketing text messages en masse various individuals across the country.

Under the TCPA, companies are prohibited from sending unsolicited adverting messages and from making a call or text using automated telephone equipment to contact individuals through any service for which the recipient is charged.

The lawsuit was filed by Farrah Williams and reported in MJ Biz Daily, who alleges that between September 2017 through the present she received dozens of unsolicited texts messages from Eaze. Williams, who works nights at a nursing home, claims that the continuous messages sent by Eaze throughout the day would wake her up and prevent her from going back to sleep; causing her to become irritable and distracted.

Williams’ suit claims that Eaze contacted her through the use of an autodialer and that the same had happened to countless others. To bolster this claim, Williams provided text messages from Eaze as well as social media posts made by individuals making the same allegations.

“@Eaze_Team @Handstack received an unsolicited text message from you guys. how do you have my number???” reads one tweet posted on June 17, 2017.

“What company is idiotic enough to use unsolicited SMS as a marketing scheme? @Eaze_Team is going to get sued out of existence,” reads another.

Although it is possible to opt-out of receiving text messages from Eaze by replying with the word “Stop,” Williams claims that she was not made aware of this option in the message.

The case goes into great detail about the money that Eaze has raised and suggests that the money was raised off the tremendous growth that Eaze was experiencing, but that the success was achieved through “growth hacking.” The suit claims, “The reality is that Defendant “growth hacked” its way to the top of the pot delivery business – specifically, by relentlessly bombarding existing and prospective customers with text messages and other digital spam, day after day, en masse, without anyone’s permission, precisely as experienced by Plaintiff here.” The case claims the growth hacking was at the expense of people’s privacy.

It went on to state, “The inconvenient truth, however, is that Defendant’s exponential growth is not attributable to the quality of the product it delivers or the convenience of the service it provides – after all, the product is not even grown by Defendant, and Defendant is hardly the first drug dealer to deliver.”

Bitesize

The case also mentions the technology provided by (among other agents or affiliates) a company called Bitesize, which was founded
and is operated by an individual named Jessica Lee. Bitesize’s text messaging technology “helps companies,” including Defendant, “drive sales with interactive text message[s],” which Bitesize sends on the companies’ behalf in “bulk.”  The case goes on to say, “The
founder and CEO of Bitesize, Jessica Lee, personally responded to the complaint by assuring the individual that Defendant’s text message program is “completely CAN-SPAM compliant.”

The lawsuit says that the text messages at issue, in this case, were sent by Bitesize on behalf of Defendant with the wrong regulatory scheme in mind.

Restitution

As restitution Williams is seeking an injunction prohibiting Eaze from committing any further violation of the TCPA, $2000 for herself and each member of the lawsuit for each and every text message that violated the TCPA, and payment of attorneys’ fees and costs.

If found guilty of violating the TCPA, and if more join the class action lawsuit, the cost of paying Williams and the other plaintiffs could potential bankrupt Eaze.

As outlined by the lawsuit, the outcome of the case will hinge on five important questions:

  • Did Eaze or its agents transmit marketing/advertising messages to the plaintiffs?
  • Was Eaze using an automatic dialer to transmit the messages?
  • Can Eaze demonstrate that it had expressed written consent to send the messages?
  • Was Eaze’s conduct knowing or willful?
  • Should Eaze be prevented from performing such actions again?

So far Eaze has not made any public comment on the case and has proffered no rebuttal to any of the claims the suit makes. As the lawsuit is still in its infancy, it could be months or even years before the case reaches a definitive conclusion.

One cannabis industry expert that preferred to not be identified said the suit didn’t pass the smell test for them. “It’s either a class-action grab by the lawyer or someone out to get Eaze,” they said. “It just seemed odd. You can’t text stop, but you can file a lawsuit?”


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