The settlement will lead to a total of $13.7 million being made available to class members after applicable deductions.
Aphria was acquired by New York-based Tilray Brands Inc. in 2021.
In Vecchio Longo v. Aphria Inc., 2025 ONSC 1923, released on March 27, Justice Edward Morgan found that the settlement was in the best interest of the class, after considering the risk that there would be no recovery if the company faced Companies’ Creditors Arrangement Act (CCAA) proceedings.
“As opposed to the risks of trial and of post-trial insolvency proceedings, the settlement of the action provides class members with certainty,” the judge wrote.
In January 2018, the defendant Aphria Inc. entered into an agreement to acquire all the shares of Nuuvera Inc. not already owned by Aphria, valuing it at approximately $826 million.
The plaintiff, Vecchio Longo Consulting Services Inc., alleged that Aphria represented that Nuuvera was a “leading, global cannabis company” when in fact it had annual revenues of $36,756 and a net loss of $37.5 million in its first and only year of operations.
It further alleged that Aphria failed to disclose that Aphria insiders, including the defendants, then-president and CEO Victor Neufeld and then-vice-president Cole Cacciavillani, profited from the transaction as a result of undisclosed financial interests in Nuuvera prior to its acquisition.
Vecchio also alleged that Aphria failed to disclose that the assets acquired in the transaction were worth a small fraction of the consideration being paid by Aphria.
The plaintiff also alleged that Aphira made misrepresentations related to a July 2018 acquisition of certain assets through the issuance of Aphria shares worth approximately $280 million on the date that Aphria announced the transaction.
Vecchio alleged that the assets acquired in this transaction were also of negligible value and that Neufeld had personally profited from the transaction.
The plaintiff submitted that when previously undisclosed information in relation to these transactions became public, the shares of Aphria lost hundreds of millions of dollars in value.
It sought damages of $650 million from the defendants on behalf of all individuals who purchased Aphria’s shares during the relevant period.
The action was certified as a class proceeding in September 2022.
In February 2025, the parties announced they had reached a settlement agreement, under which the defendants would pay $30 million to resolve the class action.
Justice Morgan noted that class counsel had come to understand, after discussions with insolvency counsel, that any substantial judgment would, in a CCAA proceeding, become an unsecured claim and would likely be uncollectible.
The court observed that the defendants had argued that there were no misrepresentations in the public disclosure at issue in the action, and that the “reasonable investigation” or due diligence defence would be effective in precluding liability.
The defendants had filed 13 separate reports by qualified experts on the applicable accounting standards, corporate governance standards, valuation principles and the regulatory regimes in the jurisdictions where the assets at issue were located.
“Class counsel felt compelled to acknowledge that if the court accepted the evidence of these experts, there was a possibility that the defendants would not be found liable for any damages,” the judge wrote.
The judge further noted that the cost of a six-week trial would have been substantial and that an appeal would have been likely given the level of damages being sought.
The court held that the proposed settlement terms were fair and reasonable.
Class counsel sought approval of $9 million in legal fees, $3.9 million in disbursements and $1.2 million in HST. They also sought approval of a $1.5-million levy payable to the Class Proceedings Fund.
Justice Morgan noted that the level of fees being sought by class counsel was within the range routinely approved in class-action litigation in Ontario. He added that the fees reflected the risk taken by class counsel in pursuing the action and the reward achieved in obtaining a substantial settlement for the class.
The court approved the fees sought by class counsel.
Counsel for the plaintiff, Peter Jervis of Rochon Genova LLP, said that final settlement negotiations were informed by disclosure from Aphria that it faced significant insolvency risk shortly before the commencement of the trial.
“Nonetheless, the $30-million settlement is a very substantial recovery for investors in the circumstances and the product of six years of hard-fought litigation and negotiation,” he told Law360 Canada in an email.
Counsel for Aphria, Dana Peebles of McCarthy Tétrault LLP, highlighted that the settlement amount would be paid by or on behalf of the defendants, and that the portion of that sum to be paid by Aphria itself is only approximately $8.3 million, taking into account the contributions of the company’s insurers and the individual defendants.
Bryn Gray of McCarthy Tétrault also acted as counsel for the defendants.
Counsel for the plaintiff were Joel Rochon, Peter Jervis, Douglas Worndl, Rabita Sharfuddin and Aylin Manduric of Rochon Genova LLP.
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