Justia Mergers & Acquisitions Opinion Summaries

The plaintiff, Shayne Lynn, was the founder and majority owner of High Fidelity, Inc., a Vermont cannabis business. In late 2020, defendants Peter Miller and Christopher Driessen, who controlled Slang Worldwide, Inc., proposed a merger between High Fidelity and Slang. They assured Lynn that Slang was financially sound and promised an $18 million investment into High Fidelity. Based on these representations, Lynn agreed to the merger in June 2021. However, Lynn later discovered that Slang was financially unstable and needed to borrow $18 million to survive. Lynn was subsequently terminated from his position.The Superior Court, Chittenden Unit, Civil Division, dismissed Lynn's complaint for failure to state a claim. The court held that Lynn did not allege any actionable misrepresentations to support a fraud claim and failed to allege justifiable reliance or the existence of a duty to support a negligent misrepresentation claim. Lynn appealed the decision.The Vermont Supreme Court reviewed the case de novo. The court held that the statements made by Miller and Driessen about Slang's financial health were opinions and not actionable misrepresentations of fact. The promise of an $18 million investment was a future promise, not a misrepresentation of existing fact, and Lynn did not allege that Miller and Driessen intended to renege on the promise when it was made. The court also found that Lynn's claim of misleading financial data was not pled with particularity as required by Rule 9(b).Regarding the negligent misrepresentation claim, the court held that Lynn did not adequately allege justifiable reliance, as he did not claim that the truth about Slang's financial status was unavailable to him. The court affirmed the dismissal of Lynn's complaint. View "Lynn v. Slang Worldwide, Inc." on Justia Law