A lawsuit mounted by the former CMO for an Illinois cannabis company purchased by Curaleaf got messier Wednesday, as a Cook County Circuit Court judge denied a motion to dismiss a counterclaim by Curaleaf and the judge directed litigants to prepare their discovery requests.
Lisa Hurwitz, the former Chief Marketing Officer for Chicago-based Grassroots Cannabis, is suing Curaleaf, which purchased Grassroots in July 2020, for breach of contract because she charges she did not receive a promised level of compensation as other executives received when Grassroots was purchased by Curaleaf.
While Hurwitz has presented a written employment agreement promising stock compensation of up to $2,000,000 by then-CEO (now Grassroots board member) Mitch Kahn, a key component of her suit has been a fraud complaint, charging that Kahn purposefully maneuvered her into accepting a less lucrative “phantom stock agreement”, that would lose value in the case of a merger.
Last week, Cook County Judge Otto dismissed that complaint, on grounds that there is no evidence that Kahn plotted to defraud Hurwitz in advance of her signing the agreement. Judge Otto has allowed the case to move forward on the suit’s breach of contract complaint, which is made weaker by the fact that without a fraud claim to back it up, the circumstances of a breach of contract become less clear.
Hitting back, Curaleaf made a counterclaim that Hurwitz breached her non-compete agreement with Curaleaf by taking the president position of Happi, a THC beverage company based in Michigan. Hurwitz’ attorney, Nicholas Economakos, argued in briefings and in court Wednesday that Curaleaf’s website and marketing materials demonstrate that Curaleaf does not do business in Michigan, nor sell THC beverages, and thus Hurwitz did not breach her non-compete, justifying dismissal of Curaleaf’s complaint.
As proof that Hurwitz was not competing with Curaleaf, Economakos’ brief included a signed September 2020 offer from PharmaCann to become that company’s Chief Marketing Officer, an offer Hurwitz alleges she turned down because of her non-compete agreement with Curaleaf.
But Judge Otto didn’t agree that there was enough evidence to dismiss the non-compete countercomplaint.
“I am not aware of any authority that says including a link to a website is sufficient for a judge to consider something through a matter of law,” said Judge Otto in Wednesday’s hearing. “Right now I am not comfortable with not allowing this [motion to dismiss] to continue.”
Hurwitz and Curaleaf’s attorneys now have until Feb. 28 to submit their discovery requests, which are sure to include lots of embarrassing information or documents both parties would otherwise like to keep private. Judge Otto set the case’s next hearing for April 5.