In re Cronos Group Inc. Securities Litigation

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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IN RE CRONOS GROUP INC.
SECURITIES LITIGATION
ORDER
20-cv-1310 (ENV) (JMW)
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Carol Cecilia Villegas
Christine M. Fox
Francis P. McConville
Nicole M. Zeiss
Jake Bissell-Linsk
Labaton Sucharow LLP
140 Broadway
New York, NY 10005
Counsel for Lead Plaintiff Keith D. Norman
David Maxwell James Rein
Sharon L. Nelles
Nikko Price
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attorneys for Defendants
Benjamin Frederick Heidlage
Gregory Dubinsky
Jack Millman
Aaron Mattis
Holwell Shuster & Goldberg LLP
425 Lexington Ave., 14th Floor
New York, NY 10017
Attorneys for Objector James Jeffcoat
WICKS, Magistrate Judge:
This action was commenced on March 11, 2020 alleging federal securities violations
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15
U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-
1/26/2026
FILED
CLERK
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
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5, on behalf of a class of all persons and entities who purchased or otherwise acquired securities
by Defendant Cronos Group Inc. (“Cronos”) against Cronos and two of its senior executives,
CEO Michael Gorenstein and CFP Jerry F. Barbato (collectively, “Defendants”). The
Consolidated Amended Class Action Complaint alleges that from May 9, 2019, through March
30, 2020, the price of Cronos securities was artificially inflated as a result of Defendants’
allegedly false and misleading statements and omissions. (See generally ECF No. 66.)
On May 19, 2025, the parties engaged in private mediation with Robert Meyer of JAMS
which resulted in an agreement in principle to settle the action. (See ECF No. 67; see also No.
78-1 at p. 13.) On December 2, 2025, the parties filed their motion for preliminary approval of
the class action settlement. (ECF No. 78.) Shortly thereafter, the Hon. Eric N. Vitaliano referred
the motion for approval of the proposed class action settlement to the undersigned for a Report
and Recommendation. (See Electronic Order dated December 8, 2025.)
The parties are now before the Court on whether objections by a putative class members
to preliminary approval of the proposed class action settlement are “procedurally proper.” On
December 15, 2025, James Jeffcoat (“Jeffcoat”), a putative class member in this case and a
court-appointed representative plaintiff in Harpreet Badesha v. Cronos Group Inc. et al.,1
expressed his intention to “object to preliminary approval of the proposed settlement in” this
action. (ECF No. 82, Jeffcoat Decl. at ¶¶ 2-3; see ECF No. 83, Garth Decl. at ¶¶ 4-5.)
Specifically, Jeffcoat wishes to object before the scheduled hearing because the proposed
settlement “purports to release all ‘claims asserted in the Ontario Action . . . that arise out of or
1 The Badesha action is a securities fraud class action pending in the Ontario Superior Court (No. CV-20-
00641990-00CP) (Ontario Sup. Ct. Justice) that involves claims under the Ontario Securities Act arising
from substantially the same events at issue in this action. (See ECF No. 78-1 at pp. 11-13); Compare
(ECF No. 66 at ¶¶ 12-17, ¶¶ 83-101), with Badesha Amended Statement of Claim (ECF No. 83-1 at ¶¶
50, 52-90).
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are based on the purchase acquisition, or sale of Cronos publicly traded common stock on the
NASDAQ, or any other public U.S. market for trading stocks, during the Class Period.’” (ECF
No. 81 (citing ECF No. 78-3 (Settlement Agreement) at p. 20, § 1(yy)(iv)). Jeffcoat also
“intend[s] to object to the proposed notice.” (ECF No. 82, Jeffcoat Decl. at ¶ 3.) Jeffcoat avers
that “Defendant is attempting to use the flailing U.S. lawsuit” as a “vehicle to settle the more
valuable Canadian securities claims in the Ontario Action.” ECF No. 81 at p. 2; see ECF No. 83,
Garth Decl. at ¶¶ 7, 9, 11 (explaining the value of the Ontario lawsuit). Consequently, Jeffcoat
requests that the Court enter a briefing schedule on his planned objections because he has not
obtained the consent from the other parties who contend that “objections to preliminary approval
are ‘not procedurally proper.’” (ECF No. 81 at p. 3.)
Following Jeffcoat’s letter, the undersigned directed any opposition be filed by December
18, 2025. (Electronic Order dated December 17, 2025). Counsel for Lead Plaintiff Keith Norman
filed a response (ECF No. 87) as did counsel for Defendants (ECF No. 88). Both letters echo the
idea that shareholder objection at this stage is “premature,” “strongly disfavored,” and that
Jeffcoat’s objections will be heard but at the appropriate time—prior to final settlement approval.
(ECF No. 87 at p. 2 (emphasis in original); ECF No. 88 at p. 1.) Though not permitted by this
Court, Jeffcoat filed a reply on December 22, 2025. (ECF No. 89.)
For the reasons that follow, the Court denies Jeffcoat’s request for a briefing schedule and
finds that objections to preliminary approval to be procedurally improper at this juncture.
DISCUSSION
Under Rule 23(e) of the Federal Rules of Civil Procedure, any class action settlement
requires judicial approval, which occurs in two stages: “(1) preliminary approval, where prior to
notice to the class a court makes a preliminary evaluation of fairness, and (2) final approval,
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where notice of a hearing is given to class members, and class members and settling parties are
provided the opportunity to be heard on the question of final court approval.” In re GSE Bonds
Antitrust Litig., 414 F. Supp. 3d 686, 691-92 (S.D.N.Y. 2019) (cleaned up). In determining
whether a settlement warrants preliminary approval, a district court considers whether it “will
likely be able to” approve the settlement under Rule 23(e)(2) — that is, whether it will likely find
that the settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2); see Davis v. J.P.
Morgan Chase & Co., 775 F. Supp. 2d 601, 604 (W.D.N.Y. 2011) (noting that the district court
“must carefully scrutinize the settlement to ensure its fairness, adequacy and reasonableness, and
that it was not a product of collusion.”) (quoting D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d
Cir. 2001)).
Preliminary approval of a settlement agreement is “the first step in the settlement
process” and requires only an “initial evaluation” of the fairness of the proposed settlement on
the basis of written submissions and, in some cases, an informal presentation by the settling
parties. Clark v. Ecolab, Nos. 07 Civ. 8623, 04 Civ. 4488, 06 Civ. 5672, 2009 WL 6615729, at *3
(S.D.N.Y. Nov. 27, 2009) (citing Herbert B, Newberg & Alba Conte, Newberg on Class Actions
(“Newberg”) § 11.25 (4th ed. 2002). Indeed, preliminary approval “simply allows notice to issue
to the class and for Class Members to object to or opt-out of the settlement. After the notice
period, the Court will be able to evaluate the settlement with the benefit of Class Members’
input.” In re Penthouse Executive Club Compensation Litigation, No. 10 Civ. 1145 (KMW),
2013 WL 1828598, at *2 (S.D.N.Y. Apr. 30, 2013) (citing Clark, 2009 WL 6615729, at *3))
As such, “a plaintiffs’ dissatisfaction with certain settlement terms is not a bar to
preliminary approval.” Id. at *2, *3. Notably, “the proper time for the Court to consider
objections to a settlement is at the final approval hearing.” Id. at *2 (granting plaintiffs’ motion
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for preliminary approval of class settlement despite one of the named plaintiffs’ objection to
preliminary settlement approval) (emphasis added); Yim v. Carey Limousine NY, Inc., No. 14-CV-
5883 (WFK) (JO), 2016 WL 1389598, at *5 (E.D.N.Y. Apr. 7, 2016) (“Plaintiff Yim's
disapproval of the amount he will receive under the settlement is not an impediment to
preliminary approval, however, because the proper time for the Court to consider objections to a
settlement is at the final approval hearing.”).
For example, in Calibuso, the court denied the proposed intervenor’s objection because
“the [settlement] train ha[d] already left the station, and the next stop is the preliminary approval
hearing.” Calibuso v. Bank of America Corp., No. 10-CV-1413 (PKC), 2013 WL 5532631, at *3
(E.D.N.Y. Oct. 4, 2013). There, shortly after the parties submitted their proposed settlement for
preliminary approval, counsel for named plaintiff Calibuso sought to object to the settlement on
grounds that the “achievements” made in a separate, “similar class action” would be “harmed by
the proposed [] settlement” in the Calibuso action. Id. at *1. The Honorable Pamela K. Chen, in
rejecting the proposed objections, noted that the objectors “will have an opportunity, vis-à-vis the
settlement process, to object to the Settlement, if she stays in the action, or simply opt out and
reject the Settlement altogether.” Id. at *2. Indeed, “as a practical matter,” the court determined
that “it would be cumbersome” to permit class members in “separate actions against the same
financial institutions” to move between the two cases and “threaten to thwart the parties’ . . .
interest in progressing with the Settlement” which had been negotiated at length. Id. at *3.
Moreover, in Sjunde AP-Fonden, the court granted the motion for preliminary approval
despite objections to the settlement. Sjunde AP-Fonden v. General Electric Co., No. 17-CV-8457
(JMF), 2025 WL 89271, at *1, *3 (S.D.N.Y. Jan. 14, 2025). There, the objections were made on
grounds that “the proposed Settlement would release claims asserted” in a separate, state court
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action with “factual overlap,” while not taking into account the value of those claims. Id. at *1,
*2. The court determined, however, that “these objections are no obstacle to preliminary
approval” because “at least for purposes of preliminary approval, the proposed settlement likely
provide[d] adequate relief and treats class members equitably relative to each other.” Id. at *2.
Additionally, in Davis, the court denied the proposed objector’s motion to intervene at the
preliminary approval stage. 775 F. Supp. 2d at 605. There, the court emphasized there “are
alternatives open to [the objectors] which would be less disruptive to these proceedings and to
the interests of the settling parties.” Id. Namely, their interests could be “fully protected at the
fairness hearing for final approval of the settlement,” just as those who do not wish to be bound
by the settlement can opt out prior to the final approval as well. Id. at 605-06. Consequently, the
court granted the motion for preliminary settlement approval and noted that “there is no reason
why” the objections of proposed interveners to the settlement “cannot be fully and adequately
aired at the fairness hearing and in the context of the Court's decision whether to finally approve
the settlement.” Id. at 608.
Here, like in Calibuso and Sjunde, Jeffcoat’s objection relates to concerns about the
release of claims asserted in the separate, related Ontario Action—one that contains “factual
overlap” “against the same financial institutions” as the present case. Further, as highlighted in
Davis and Calibuso, the fairness hearing and final settlement approval process would fully
protect the interests of Jeffcoat who wish to object to the terms of the settlement. As such, at the
preliminary approval stage, “it would be cumbersome” to permit objectors like Jeffcoat to
intervene and “threaten to thwart” the settlement before the final approval process. These
decisions from this Circuit reiterate that objections to the proposed settlement are properly aired
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at the fairness hearing in the context of a court’s final approval of the settlement, not at the
preliminary stage.
This approach is not unique to courts within the Second Circuit. See, e.g., Doe v. Cin-
Lan, Inc., No. 08-cv-12718, 2011 WL 37970, at *2-3 (E.D. Mich. Jan. 5, 2011) (“[S]hould
Proposed Intervenor choose to join this settlement, but also wish to object to it, they may voice
their concerns in writing and in person at the fairness hearing.”); In re TD Ameritrade Account
Holder Litigation, Nos. C 07-2852 SBA, C 07-4903 SBA, 2011 WL 4079226, at *7 (N.D. Cal.
Sept. 13, 2011) (overruling objections in connection with the motion for preliminary approval as
they were “germane to the final approval, as opposed to the preliminary approval, of the
Settlement”); In re Warfarin Sodium Antitrust Litigation, 212 F.R.D. 231, 263–64 (D. Del. 2002)
(denying motion to intervene, and noting that “the court provided every class member who did
not opt out with the opportunity to present argument or evidence of the unfairness of the
settlement in writing and/or orally at the fairness hearing”).
The cases cited by Jeffcoat to bolster his position that objections to preliminary approval
are procedurally proper do not compel a contrary finding. Jeffcoat first cites to Aliano v. CVS
Pharmacy, Inc., a case involving objections to adequacy of representation due to a close,
longstanding relationship between the proposed class representative and proposed class counsel.
(ECF No. 81 at p. 3); No. 16-CV-2624 (FB) (SMG), 2018 WL 3625336, at *2 (E.D.N.Y. May 1,
2018). Notwithstanding the stark factual differences, the objections to adequacy of representation
were raised at the hearing on Aliano’s motion for preliminary approval, not prior. See id. (“I held
a hearing on Aliano's motion for preliminary approval on October 23, 2017. During that hearing,
counsel for the Worth plaintiffs raised concerns about Aliano's standing and adequacy as a
potential class representative.”).
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Jeffcoat also relies on Glover v. Connecticut General Life Insurance Company to argue
that he has standing to object at the preliminary approval stage. (See ECF No. 89 at p. 1); No.
3:16-cv-00827 (MPS), 2024 WL 4036721, at *1 (D. Conn. Sept. 4, 2024) (denying motion to
intervene as moot because the parties agreed at oral argument that the objectors had standing to
object to preliminary approval of the settlement). The issue before this Court is not one of
standing to object, but whether objections prior to a hearing are procedurally proper—an issue
absent in Glover. Rather, in Glover, the court granted the motion for preliminary approval and
immediately set a final hearing date, established the notice requirements for the class, and
directed that objections to the settlement be made prior to the final hearing. See Glover, 2024 WL
4036721, at *11-13.
Further, Jeffcoat’s reference to In re Payment Card Interchange Fee and Merchant
Discount Antitrust Litigation is equally misguided. (See ECF No. 89 at p. 2.) There, the
Honorable John Gleeson reiterated the concept that “the threshold for preliminary approval of a
proposed class action settlement is meaningfully lower than the threshold for final approval” and
that “[c]onsiderations of judicial economy counsel strongly in favor of not converting the
preliminary approval process into something akin to the plenary process that attends an
application for final approval.” No. 05-MD-1720 (JG) (JO), 2012 WL 5989763, at *1 (E.D.N.Y.
Oct. 24, 2012). The court also it saw “no need to establish procedures for absent class
members—who will have ample rights to be head before any final approval is even considered—
to intervene so they can be heard in connection with the pending application for preliminary
approval.” Id. While the court set a hearing for preliminary approval, it did so because of the
numerous objections it received prior to preliminary approval and the extensive submissions on
those objections. See id. These circumstances are seemingly absent from the present case where
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only one objector has appeared, nor has the Court been presented with any other indicia of
disapproval by other class members.
Lastly, the cases cited by Jeffcoat beyond this Circuit—Jeter v. Bullseye Energy, Inc.,
2018 WL 2323792, at *2 (N.D. Okla. Feb. 14, 2018), Tuttle v. Audiophile Music Direct, Inc.,
2023 WL 2477908, at *6 (W.D. Wash. Mar. 13, 2023), and Trombley v. Nat’l City Bank, 759 F.
Supp. 2d 20, 22 (D.D.C. 2011)—do not alter this Court’s conclusion. (See ECF No. 89 at p. 2.)
The court in Jeter noted that an independent evaluator for the settlement was “not needed”
because the record before the court and representation afforded to the proposed objectors
provided the court with ample information on the fairness, reasonableness, and adequacy of
specific aspects of the settlement. 2018 WL 2323792, at *1. Moreover, in Tuttle, the court ruled
on whether proposed intervenors met the requirements under Rule 24, not whether objections
prior to the preliminary hearing were procedurally proper. See 2023 WL 2477908, at *4-5.
Similarly, Trombley is equally silent as to the propriety of when the court should properly receive
objections to a motion for preliminary approval.
CONCLUSION
For the foregoing reasons, the Court denies Jeffcoat’s request for a briefing schedule and
finds that objections prior to preliminary approval to be procedurally improper.
Dated: Central Islip, New York
January 26, 2026
S O 	O R D E R E D:
/S/James M. Wicks
JAMES M. WICKS
United States Magistrate Judge
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