Preview
FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018
NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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CRESCO LABS NEW YORK, LLC, a New :
York limited liability company, and CRESCO : Index No. 652343/2018
LABS, LLC, an Illinois limited liability :
company, : Hon. Andrew Borrok
:
Plaintiffs/Counterclaim Defendants, :
: AFFIRMATION OF STEPHEN L.
v. : ASCHER IN SUPPORT OF
: PLAINTIFFS’ MOTION FOR
FIORELLO PHARMACEUTICALS, INC., a : LEAVE TO AMEND
New York corporation, :
:
Defendant/Counterclaimant, :
:
and :
:
JOHN DOES 1–10, :
:
Defendants. :
----------------------------------------------------------- X
I, Stephen L. Ascher, being duly sworn, depose and say the following statements to be true:
1. I am an attorney and partner at the law firm Jenner & Block, LLP and represent
Cresco Labs New York, LLC and Cresco Labs, LLC (collectively, “Cresco” or “Plaintiffs”), in
this proceeding against Fiorello Pharmaceuticals, Inc. (“Fiorello”) and John Does 1-10.
2. Unless specifically stated, I have personal knowledge of each of the matters set
forth below and, if called as a witness, could and would testify competently thereto under oath.
3. A copy of Plaintiffs’ proposed Second Amended Complaint is attached hereto as
Exhibit A. A copy of Plaintiffs’ proposed Second Amended Complaint which clearly shows the
changes to be made to the Amended Complaint, is attached hereto as Exhibit B. Plaintiffs seek
to amend their complaint to include allegations based on events that occurred and information
Plaintiffs learned after Plaintiffs filed the Amended Complaint on November 20, 2018. The
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proposed Second Amended Complaint includes an unjust enrichment claim against Eric Sirota
(“Sirota”) and Susan Yoss (“Yoss”).
4. On June 26, 2018, Plaintiff Cresco Labs New York, LLC filed the Complaint
against Fiorello, Sirota, Yoss, and John Does 1-10.
5. On November 20, 2018, Plaintiffs filed the Amended Complaint against Fiorello,
Sirota, Yoss, and John Does 1-10.
6. On May 29, 2019, Izower Feldman, LLP served a single set of discovery requests
on behalf of Fiorello, Sirota, and Yoss.
7. On August 26, 2019, Green Thumb Industries, Inc. (“GTI”), a cannabis company
operating in multiple states, issued a press release announcing that it had closed a transaction to
acquire Fiorello. A copy of that press release is attached hereto as Exhibit C. On August 29,
2019, Cannabis Business Times reported that the New York Department of Health had approved
GTI’s acquisition. A copy of that article is attached hereto as Exhibit D.
8. On October 8, 2019, Cresco’s merger transaction with another New York
company also closed. Cresco paid approximately $ more in cash to acquire a New
York-licensed company comparable to Fiorello than it would have paid to acquire Fiorello. In
addition to cash, Cresco paid the sellers of the replacement company with equity of Cresco Labs
Inc. worth in excess of $ at the time of closing.
9. In the summer and fall of 2019, Plaintiffs received document productions that
included emails, calendar events, and phone logs which established that Sirota and Yoss engaged
in repeated discussions with potential purchasers during the term of the No-Shop Provision.
10. For example, Fiorello produced emails demonstrating that, on the same day
Fiorello entered into the Agreement containing the No-Shop Provision, Yoss emailed Sirota to
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ask if it was too late to contact a potential purchaser. Fiorello also produced emails and calendar
entries demonstrating that later, Sirota and Yoss had an in-person meeting with another potential
acquirer, who submitted an offer for Fiorello days later for exactly $ more than the
$ consideration reflected in the Agreement with Cresco.
11. Fiorello also produced phone logs demonstrating that, two weeks later, Sirota
called another potential purchaser, GTI, and then Sirota and Yoss had a flurry of conversations
with each other, key shareholders, and Fiorello’s outside director. Emails produced by Fiorello
and GTI demonstrate that within hours of those calls, GTI had submitted an offer to Fiorello that
was exactly $ more than the Cresco price.
12. Emails produced by Fiorello, GTI, and another potential purchaser reflect
attempts to cover up Sirota and Yoss’s breaching conduct with respect to GTI and the other
potential acquirer who submitted an offer.
13. On January 23, 2020, Yoss testified at her deposition that she received
approximately $ from Fiorello’s transaction with GTI. This was the first time
Plaintiffs learned that Yoss had actually received funds from the transaction.
14. Sirota has not yet been deposed, but he owned a similar amount of Fiorello stock
as Yoss.
15. On January 29, 2020, Ben Kovler, then-chairman of GTI, testified that GTI did
not know about the No-Shop Provision when he talked with Sirota and Yoss and submitted an
offer to acquire Fiorello during the exclusivity period with Cresco.
16. On February 4, 2020, Plaintiffs informed counsel for Fiorello, Sirota, and Yoss
about the proposed amendment. On February 12, 2020, Plaintiffs sent the draft SAC to counsel
for Fiorello, Sirota, and Yoss.
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NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020
17. I affirm that the foregoing is true under penalty of perjury.
New York, New York
February 28, 2020 /s Stephen L. Ascher _
Stephen L. Ascher, Esq.
Jenner & Block LLP
Counsel for Plaintiffs
Cresco Labs New York, LLC and
Cresco Labs, LLC
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NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020
CERTIFICATION OF COMPLIANCE WITH WORD COUNT LIMIT
I hereby certify pursuant to Rule 17 of the Rules of Practice for the Commercial Division
that the total number of words in this affirmation, exclusive of the caption and signature block, is
739.
Dated: February 28, 2020
New York, New York /s Stephen L. Ascher
Stephen L. Ascher
919 Third Avenue
New York, New York 10022
212-891-1670
sascher@jenner.com
Counsel for Plaintiffs
Cresco Labs New York, LLC and
Cresco Labs, LLC
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Preview
FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ----------------------------------------------------------- X CRESCO LABS NEW YORK, LLC, a New : York limited liability company, and CRESCO : Index No. 652343/2018 LABS, LLC, an Illinois limited liability : company, : Hon. Andrew Borrok : Plaintiffs/Counterclaim Defendants, : : AFFIRMATION OF STEPHEN L. v. : ASCHER IN SUPPORT OF : PLAINTIFFS’ MOTION FOR FIORELLO PHARMACEUTICALS, INC., a : LEAVE TO AMEND New York corporation, : : Defendant/Counterclaimant, : : and : : JOHN DOES 1–10, : : Defendants. : ----------------------------------------------------------- X I, Stephen L. Ascher, being duly sworn, depose and say the following statements to be true: 1. I am an attorney and partner at the law firm Jenner & Block, LLP and represent Cresco Labs New York, LLC and Cresco Labs, LLC (collectively, “Cresco” or “Plaintiffs”), in this proceeding against Fiorello Pharmaceuticals, Inc. (“Fiorello”) and John Does 1-10. 2. Unless specifically stated, I have personal knowledge of each of the matters set forth below and, if called as a witness, could and would testify competently thereto under oath. 3. A copy of Plaintiffs’ proposed Second Amended Complaint is attached hereto as Exhibit A. A copy of Plaintiffs’ proposed Second Amended Complaint which clearly shows the changes to be made to the Amended Complaint, is attached hereto as Exhibit B. Plaintiffs seek to amend their complaint to include allegations based on events that occurred and information Plaintiffs learned after Plaintiffs filed the Amended Complaint on November 20, 2018. The 1 1 of 5 FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020 proposed Second Amended Complaint includes an unjust enrichment claim against Eric Sirota (“Sirota”) and Susan Yoss (“Yoss”). 4. On June 26, 2018, Plaintiff Cresco Labs New York, LLC filed the Complaint against Fiorello, Sirota, Yoss, and John Does 1-10. 5. On November 20, 2018, Plaintiffs filed the Amended Complaint against Fiorello, Sirota, Yoss, and John Does 1-10. 6. On May 29, 2019, Izower Feldman, LLP served a single set of discovery requests on behalf of Fiorello, Sirota, and Yoss. 7. On August 26, 2019, Green Thumb Industries, Inc. (“GTI”), a cannabis company operating in multiple states, issued a press release announcing that it had closed a transaction to acquire Fiorello. A copy of that press release is attached hereto as Exhibit C. On August 29, 2019, Cannabis Business Times reported that the New York Department of Health had approved GTI’s acquisition. A copy of that article is attached hereto as Exhibit D. 8. On October 8, 2019, Cresco’s merger transaction with another New York company also closed. Cresco paid approximately $ more in cash to acquire a New York-licensed company comparable to Fiorello than it would have paid to acquire Fiorello. In addition to cash, Cresco paid the sellers of the replacement company with equity of Cresco Labs Inc. worth in excess of $ at the time of closing. 9. In the summer and fall of 2019, Plaintiffs received document productions that included emails, calendar events, and phone logs which established that Sirota and Yoss engaged in repeated discussions with potential purchasers during the term of the No-Shop Provision. 10. For example, Fiorello produced emails demonstrating that, on the same day Fiorello entered into the Agreement containing the No-Shop Provision, Yoss emailed Sirota to 2 2 of 5 FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020 ask if it was too late to contact a potential purchaser. Fiorello also produced emails and calendar entries demonstrating that later, Sirota and Yoss had an in-person meeting with another potential acquirer, who submitted an offer for Fiorello days later for exactly $ more than the $ consideration reflected in the Agreement with Cresco. 11. Fiorello also produced phone logs demonstrating that, two weeks later, Sirota called another potential purchaser, GTI, and then Sirota and Yoss had a flurry of conversations with each other, key shareholders, and Fiorello’s outside director. Emails produced by Fiorello and GTI demonstrate that within hours of those calls, GTI had submitted an offer to Fiorello that was exactly $ more than the Cresco price. 12. Emails produced by Fiorello, GTI, and another potential purchaser reflect attempts to cover up Sirota and Yoss’s breaching conduct with respect to GTI and the other potential acquirer who submitted an offer. 13. On January 23, 2020, Yoss testified at her deposition that she received approximately $ from Fiorello’s transaction with GTI. This was the first time Plaintiffs learned that Yoss had actually received funds from the transaction. 14. Sirota has not yet been deposed, but he owned a similar amount of Fiorello stock as Yoss. 15. On January 29, 2020, Ben Kovler, then-chairman of GTI, testified that GTI did not know about the No-Shop Provision when he talked with Sirota and Yoss and submitted an offer to acquire Fiorello during the exclusivity period with Cresco. 16. On February 4, 2020, Plaintiffs informed counsel for Fiorello, Sirota, and Yoss about the proposed amendment. On February 12, 2020, Plaintiffs sent the draft SAC to counsel for Fiorello, Sirota, and Yoss. 3 3 of 5 FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020 17. I affirm that the foregoing is true under penalty of perjury. New York, New York February 28, 2020 /s Stephen L. Ascher _ Stephen L. Ascher, Esq. Jenner & Block LLP Counsel for Plaintiffs Cresco Labs New York, LLC and Cresco Labs, LLC 4 4 of 5 FILED: NEW YORK COUNTY CLERK 02/28/2020 04:26 PM INDEX NO. 652343/2018 NYSCEF DOC. NO. 148 RECEIVED NYSCEF: 02/28/2020 CERTIFICATION OF COMPLIANCE WITH WORD COUNT LIMIT I hereby certify pursuant to Rule 17 of the Rules of Practice for the Commercial Division that the total number of words in this affirmation, exclusive of the caption and signature block, is 739. Dated: February 28, 2020 New York, New York /s Stephen L. Ascher Stephen L. Ascher 919 Third Avenue New York, New York 10022 212-891-1670 sascher@jenner.com Counsel for Plaintiffs Cresco Labs New York, LLC and Cresco Labs, LLC 5 5 of 5