Marijuana company's email mistake allows shareholder to forward fraud allegations
A judge has refused to grant a B.C. cannabis company an injunction against a man who used a list of email addresses the company accidentally sent to all shareholders against it.
The man in question is Krishansarup Kallu, who owns shares of Emerald Health Sciences Inc.
In June 2018, a legal assistant for the company's corporate counsel sent an email to all shareholders, including Kallu, that failed to use the "blind carbon copy" function, making every shareholder's email address visible to every other shareholder.
Approximately two hours later, a lawyer for the company sent a follow-up email apologizing for the error, describing the email addresses as "confidential information," and asking recipients to delete the original email.
Kallu did not delete the email, according to a B.C. Supreme Court decision by Justice Ronald A. Skolrood issued in late April and posted online Wednesday.
Instead, Kallu saved the email, and eventually used it to contact every other shareholder on the list in September 2021.
"According to Mr. Kallu, he had learned that on Aug. 5, 2021, the United States Securities and Exchange Commission (the 'SEC') had filed an action in Massachusetts against, amongst others, the then-CEO of EHS, Mr. (Avtar) Dhillon, alleging financial fraud," summarizes Skolrood in his decision.
"Other named defendants in the U.S. action included some shareholders of EHS," the decision continues. "Mr. Kallu says that this raised concerns for him about the management of EHS. He says he raised these concerns in emails sent to the CFO and the Board of EHS, but got no reply. He therefore sent his Sept. 22, 2021 email to the shareholders."
The company sued Kallu, seeking an injunction to prevent him from using the names and email addresses again, and alleging that Kallu's use of the email distribution list had caused harm to the company.
Kolrood rejected the company's petition for an injunction, saying that it had failed to establish that the email addresses were, indeed, confidential, and that it had failed to establish that Kallu had misused the allegedly confidential information in his possession.
The company argued that Kallu's motivation for sending the emails was to increase the value of his own shares, which were the subject of a separate lawsuit brought by Kallu in 2020 against the company and a number of its officers and shareholders.
In that suit, Kallu argued that "he was entitled to a certain number of shares in the company for his contributions and that the company was obligated to purchase those shares from him," according to Skolrood's decision.
That lawsuit remains before the court.
While the company argued that Kallu's email was an attempt to increase the value of those shares, Skolrood found no evidence of this beyond the company's assertion that it was so.
"Mr. Kallu’s email of September 22, 2021, which gave rise to EHS’ concerns about his use of the email distribution list, says nothing about his shares," the judge writes.
"Rather, it identifies a concern about the company CEO in light of the U.S. proceedings and it encourages other shareholders to request financial information from the company. In my view, it cannot be said that raising concerns about the management and financial status of the company with other shareholders is a misuse of the information."
Finally, Skolrood added, the company failed to establish that it would suffer "demonstrable harm" without an injunction preventing Kallu from using the email list again in the future.
"With respect, these are simply bald and speculative allegations of harm not grounded in the evidence," Skolrood writes. "Moreover, the harm alleged results from the statements made by Mr. Kallu in his communications, not from the fact that he used the email distribution list to communicate with other shareholders."
CTVNews.ca Top Stories
NDP calls out Conservatives for effort to squash pharmacare legislation
The federal New Democrats are calling out Conservative Leader Pierre Poilievre and his party for trying to block the bill that could pave the way for millions of Canadians to access birth control and diabetes coverage.
Stamp prices rise for the third time in five years amid financial woes for Canada Post
Canada Post is increasing stamp prices for the third time since 2019, a move the Crown corporation says is a "reality" of its sales-based revenue structure.
Winnipeg man admits to killing four women, argues he's not criminally responsible
Defence lawyers of Jeremy Skibicki have admitted in court the accused killed four Indigenous women, but argues he is not criminally responsible for the deaths by way of mental disorder – this latest development has triggered a judge-alone trial rather than a jury trial.
An El Nino-less summer is coming. Here's what that could mean for Canada
As Canadians brace themselves for summer temperatures, forecasters say a weakening El Nino cycle doesn’t mean relief from the heat.
Mediterranean staple may lower your risk of death from dementia, study finds
A daily spoonful of olive oil could lower your risk of dying from dementia, according to a new study by Harvard scientists.
A subset of Alzheimer's cases may be caused by two copies of a single gene, new research shows
For the first time, researchers have identified a genetic form of late-in-life Alzheimer’s disease — in people who inherit two copies of a worrisome gene.
Ontario MPP asked again to leave Ontario legislature over keffiyeh, Speaker loosens ban
An Ontario MPP was asked again to leave the Ontario legislature on Monday for wearing a keffiyeh, a garment that was banned by the Speaker last month due to its political symbolism.
WATCH Avian flu: Risk to humans grows as outbreaks spread, warns expert
H5N1 or avian flu is decimating wildlife around the world and is now spreading among cattle in the United States, sparking concerns about 'pandemic potential' for humans. Now a health expert is urging Canada to scale up surveillance north of the border.
Trudeau Liberals to unveil new bill Monday aimed at countering foreign interference
Democratic Institutions Minister Dominic LeBlanc will be tabling legislation on Monday aimed at countering foreign interference in Canada. Federal officials have scheduled a technical briefing on the incoming bill for Monday afternoon.