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Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 1 of 16
`
`MOSKOWITZ & BOOK, LLP
`345 Seventh Avenue, 21st Floor
`New York, New York 10001
`(212) 221-7999
`Attorneys for Plaintiff
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`AARON HOFFNUNG,
`
`Plaintiff,
`
`against –
`
`
` Index No.
`
`COMPLAINT
`
`
`
`
`GOODNESS GROWTH HOLDINGS, INC. f/k/a
`VIREO HEALTH INTERNATIONAL, INC. and
`VIREO HEALTH, INC
`
`
`
`Defendants.
`
`
`
`Plaintiff AARON HOFFNUNG, by his attorneys, Moskowitz & Book, LLP, as and
`
`for his Complaint against GOODNESS GROWTH HOLDINGS, INC. f/k/a VIREO
`
`HEALTH INTERNATIONAL, INC. and VIREO HEALTH, INC. (collectively, “Vireo” or
`
`“Defendants”) alleges as follows:
`
`NATURE OF ACTION
`
`1.
`
`The causes of action alleged herein are based upon Defendants’ retroactive
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`misclassification of Plaintiff as an independent contractor, rather than an employee.
`
`2.
`
`Plaintiff is a former employee, officer, and director of Defendants. As a
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`component of his compensation, Plaintiff was issued stock options.
`
`3.
`
`The laws of the United States and Internal Revenue Code provide a company
`
`that wishes to issue stock options with two types of stock options to choose from.
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`
`
`1
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 2 of 16
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`Specifically, the company can issue either incentive stock options (“ISOs”) or non-qualified
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`stock options, which are sometimes called non-statutory stock options (“NSOs”).
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`4.
`
`These two types of stock options are treated differently under the Internal
`
`Revenue Code. Specifically, the exercise of ISOs by an optionee is treated more favorably
`
`for tax purposes than the exercise of NSOs. NSOs are generally valued for tax purposes at
`
`an amount equal to the difference between the exercise price established by the stock option
`
`agreement and the fair market value of the shares on the date of exercise, and that value is
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`immediately taxable as ordinary income. By contrast, ISOs are generally not taxed until the
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`optionee sells or otherwise disposes of the shares, at which point the difference between the
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`exercise price and sale price is taxable as capital gains, usually at a rate far lower than the
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`rate applicable to ordinary income. Thus, from the point of view of the optionee, because
`
`of the special tax treatment ISOs receive, it is generally preferable to receive ISOs rather
`
`than NSOs.
`
`5.
`
`However, the law sets forth strict requirements concerning when ISOs can
`
`be granted or exercised. For example, ISOs can be granted only to employees, and they
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`must be exercised within three months following termination of employment—even if the
`
`former employee remains affiliated with the grantor in some other capacity. If the strict
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`requirements applicable to ISOs treatment are not met, then the stock options must instead
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`be treated for tax purposes as NSOs.
`
`6.
`
`When Plaintiff exercised his stock options at the end of 2020 and in early
`
`2021, Defendant was correctly treating Plaintiff as an employee by (i) withholding employee
`
`payroll taxes on biweekly basis (ii) providing benefits in the form of New York Family
`
`Leave Insurance (FLI) and State Disability Insurance (SDI) (iii) allowing for monthly stock
`
`
`
`2
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 3 of 16
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`option vesting (iv) confirming the number of ISOs on record (v) accepting Written Notices
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`to exercise ISOs (vi) not withholding taxes based on the “spread” between the grant price
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`and the price of the stock on the exercise date as would have been appropriate with the
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`exercise of NSOs.
`
`7.
`
` More than a year later, Defendant retroactively re-classified Plaintiff as an
`
`independent contractor, rather than an employee, effective prior to the dates on which he
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`exercised his stock options. As a result of that reclassification, Plaintiff’s options were
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`retroactively recategorized from ISOs to NSOs. That recategorization created a substantial
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`tax obligation that Plaintiff did not anticipate when he exercised the options, which were
`
`then considered ISOs, and that he would not have incurred if Defendant had continued to
`
`treat Plaintiff as an employee and the options as ISOs. Indeed, Plaintiff would not have
`
`exercised those options had they not qualified for ISO treatment.
`
`8.
`
`Plaintiff now seeks a declaratory judgment that he was an employee of
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`Defendant when he exercised his stock options and that those options therefore qualified as
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`ISOs. Plaintiff further seeks an equitable order directing Defendant retroactively to correct
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`the incorrect classification of Plaintiff and to issue to Plaintiff an amended Form W-2 C
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`along with Form 3921 and any other appropriate tax documentation reflecting that the
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`options he exercised qualified as ISOs. In the alternative, Plaintiff seeks an award of
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`damages for Defendant’s negligent misrepresentations that Plaintiff was an employee and
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`that his stock options qualified as ISOs and for its breach of the Termination Agreement, in
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`an amount calculated to compensate Plaintiff for the tax burden that arose because of those
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`misrepresentations and that breach. Plaintiff approximates his pre-tax damages at
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`approximately $1,200,000.
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`
`
`3
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 4 of 16
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`THE PARTIES
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`9.
`
`Plaintiff Aaron (“Ari”) Hoffnung is an individual resident of Bronx County,
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`New York.
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`10.
`
`Defendant Goodness Growth Holdings, Inc. (formerly known as Vireo
`
`Health International, Inc.) is a foreign corporation, incorporated in and existing under the
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`laws of the state of British Columbia, Canada, with its primary United States offices in
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`Minneapolis, Minnesota.
`
`11.
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`Defendant Vireo Health, Inc. is a foreign corporation, incorporated in and
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`existing under the laws of the state of Delaware, with its primary offices in Minneapolis,
`
`Minnesota.
`
`12.
`
`Upon information and belief, defendant Vireo Health, Inc. is a wholly-
`
`owned subsidiary of defendant Goodness Growth Holdings, Inc.
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`13.
`
`Upon information and belief, neither of the Defendants is authorized to do
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`business in New York pursuant to Business Corporation Law § 1301 et seq.
`
`JURISDICTION AND VENUE
`
`14.
`
`This Court has subject matter jurisdiction over this action pursuant to
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`28 U.S.C. § 1332 because the matter in controversy exceeds the sum or value of $75,000 and there
`
`exists complete diversity between the parties.
`
`15.
`
`This Court is empowered to exercise personal jurisdiction over Defendants because
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`Defendants are physically present in, and transact business in, the State of New York and because
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`this dispute arises out of Defendants’ employment of Plaintiff within the State of New York.
`
`16.
`
`This Court is empowered to issue a declaratory judgment pursuant to
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`28 USC §§ 2201 and 2202.
`
`
`
`4
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 5 of 16
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`17.
`
`Venue
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`is proper
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`in
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`the Southern District of New York pursuant
`
`to
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`28 U.S.C. § 1391(b)(1) because Plaintiff resides in this District, Defendants employed Plaintiff in
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`this District, and a substantial part of the events that are the subject of the litigation transpired in
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`this District.
`
`FACTS
`
`18.
`
`Vireo is a multi-state cannabis company that is licensed to grow, process,
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`and/or distribute cannabis in eight state markets where cannabis has been legalized for
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`medical or recreational use. The Company “manufactures proprietary, branded cannabis
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`products in environmentally friendly facilities and state-of-the-art cultivation sites” and
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`operates 18 dispensaries across the United States.
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`19.
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`On or around November 5, 2015, Plaintiff became an employee of Vireo
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`when he was hired as Chief Executive Officer of Vireo’s wholly-owned New York State
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`subsidiary, Vireo Health of New York, LLC (f/k/a Empire State Health Solutions, LLC”).
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`20.
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`Plaintiff worked primarily in Vireo’s New York City offices located on 205
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`East 42nd Street in Manhattan.
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`21.
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`As a component of his compensation as an employee of Vireo, Plaintiff was
`
`granted Restricted Unit Awards in Vireo Health, LLC, the predecessor to defendant
`
`Goodness Growth Holdings, Inc. (f/k/a Vireo Health International, Inc.), in November of
`
`2015.
`
`22.
`
`In 2016, Plaintiff took on an additional role of serving as Chief Operating
`
`Officer of the U.S. holding company, Vireo Health, Inc. (f/k/a Vireo Health, LLC).
`
`23.
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`Over time, Plaintiff became involved in nearly every facet of the Company’s
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`business and was responsible for managing more than 400 employees across the country and
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`serving as an Officer and/or Director of more than a dozen subsidiaries, including those
`
`
`
`5
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 6 of 16
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`focused on the Arizona, Maryland, Missouri, Massachusetts, Nevada, New Jersey, New
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`Mexico, Pennsylvania and Puerto Rico markets.
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`24.
`
`In or around early 2018, Vireo Health, LLC reorganized in anticipation of
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`becoming publicly traded in Canada and Vireo Health International, Inc. was formed.
`
`25.
`
`As a part of the restructuring, in exchange for Plaintiff’s Restricted Unit
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`Awards in Vireo Health, LLC, and as a component of his compensation as an employee of
`
`Vireo, Plaintiff was granted stock options in Vireo Health International, Inc. Each of these
`
`grants was made in the form of an Incentive Stock Option Agreement made pursuant to
`
`Vireo Health International, Inc.’s Equity Incentive Plan.
`
`26.
`
`Each of the Incentive Stock Option Agreements provided that the options
`
`granted would continue to vest only during the period in which Plaintiff remained an
`
`employee of Vireo.
`
`27.
`
`In March of 2019, Plaintiff was instrumental in taking the international
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`holding company Goodness Growth Holdings, Inc. (f/k/a Vireo Health International, Inc.)
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`public by (i) raising more than $50 million through a brokered and non-brokered private
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`placement offering and (ii) having its securities begin trading on the Canadian Securities
`
`Exchange under the ticker symbol “VREO” and (iii) serving as a Director on its board.
`
`28.
`
`In October of 2019, Plaintiff was promoted to the role of Chief Strategy
`
`Officer of Goodness Growth Holdings, Inc. (f/k/a Vireo Health International, Inc.). In a
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`press release announcing this news, the Company’s Chief Executive Officer Kyle Kingsley,
`
`M.D. stated “Since joining in 2015, Ari has had a huge positive impact on Vireo's growth
`
`and success. As Chief Operating Officer, Ari's broad skill sets and leadership abilities helped
`
`us transform our business from a one-state operator into the impressive multi-state operator
`
`
`
`6
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 7 of 16
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`we are today. I am confident that in his new role, Ari will continue to successfully guide our
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`company through the rapidly evolving legislative and business landscapes.”
`
`29.
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`In or about January 2020, Vireo was experiencing financial distress and
`
`forced to reduce costs by eliminating workforce positions and closing its New York
`
`corporate office. As a part of that process, Vireo requested, and Plaintiff agreed, that
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`Plaintiff reduce his role at Vireo.
`
`30.
`
`On or about March 4, 2020, Plaintiff and Vireo executed a certain
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`Confidential Separation and Transition Services Agreement (the “Transition Agreement”).
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`The Transition Agreement recited that Plaintiff was retroactively resigning as an
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`“employee” of Vireo and various subsidiaries, nunc pro tunc to January 16, 2020, and that
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`he ceased providing services as an officer and employee of Vireo on that date.
`
`31.
`
`However, the Transition Agreement’s recitation regarding Plaintiff’s
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`resignation as an officer and employee was illusory. The Transition Agreement obligated
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`Plaintiff to provide up to ten hours per week of services, similar in nature to the services he
`
`provided since 2015, in exchange for ongoing bi-weekly wage payments during a twelve
`
`month period. The Transition Agreement further provided that Plaintiff was to continue (i)
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`using his Company-owned laptop and related equipment to provide services to Defendants;
`
`and (ii) acting as the Chief Strategy Officer of Vireo Health, Inc. and as the Chief Executive
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`Officer of Vireo Health of New York, LLC for a period of up to twelve months thereafter.
`
`32.
`
`The Transition Agreement explicitly provided that Plaintiff’s stock options would
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`continue to vest during the twelve-month “transition” period, notwithstanding that the Incentive
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`Stock Option Agreements by which those options were granted explicitly provide that they will
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`continue vesting only while the optionee remains an employee.
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`
`
`7
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 8 of 16
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`33.
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`After the effective date of the Transition Agreement and for the remainder of
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`2020 and through March of 2021, Vireo continued to treat Plaintiff as an employee. His bi-
`
`weekly salary payments continued to be issued through Vireo’s payroll system. Vireo continued
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`to withhold payroll taxes and other withholdings, including New York Family Leave Insurance
`
`(FLI) and State Disability Insurance (SDI), in the manner that is appropriate for an employee and
`
`that would not have been lawful or appropriate had Plaintiff been an independent contractor or
`
`been receiving severance payments without the provision of any services.
`
`34.
`
`Throughout 2020, the terms and conditions of Plaintiff’s work were those of an
`
`employee, not those of an independent contractor.
`
`35.
`
`On October 5, 2020, Plaintiff resigned as Chief Strategy Officer and as a member
`
`of the Board of Directors of Vireo Health, Inc. but continued providing services to Vireo as
`
`required by the Transition Agreement. Vireo continued to treat Plaintiff as an employee,
`
`including by (i) withholding payroll taxes on a biweekly basis, (ii) providing benefits in the form
`
`of New York Family Leave Insurance (FLI) and State Disability Insurance (SDI), and (iii)
`
`allowing for ongoing stock option vesting.
`
`36.
`
`Vireo issued Plaintiff a Form W-2 for 2020, consistent with his employee status.
`
`Vireo did not request a W9 or issue Plaintiff a Form 1099 for that year, as it would have been
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`required to do had he been an independent contractor.
`
`37.
`
`In November 2020, Plaintiff contacted the Company about exercising his vested
`
`stock options.
`
`38.
`
`Because the tax laws and IRS regulations permit only $100,000 in ISOs to be
`
`issued in a given calendar year, and require that options in excess of that amount be treated as
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`NSOs, Plaintiff asked Defendants to assist him in calculating exactly how many options from
`
`
`
`8
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 9 of 16
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`each of the three grants he had been issued could be executed as ISOs, which required a
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`calculation of the fair market value of the shares as of the dates on which the options were
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`granted.
`
`39.
`
`On November 18, 2020, Plaintiff sent his initial calculations of the fair market
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`value of Vireo Health International, Inc. shares as of the dates of his stock options to Vireo’s
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`General Counsel and Chief Compliance Officer, Michael Schroeder, and asked Schroeder to
`
`confirm whether his calculations were correct.
`
`40.
`
`On December 28, 2020, Mr. Schroeder responded by email, indicating that he had
`
`asked Sam Gibbons, Vireo’s Vice President for Investor Relations, to confirm the number of
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`options that could be executed as ISOs.
`
`41.
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`On December 29, 2020, Mr. Gibbons provided Plaintiff with Vireo’s calculation
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`confirming the number of options he could execute as ISOs, explaining that Vireo’s calculations
`
`of fair market value differed slightly from the calculations previously circulated by Plaintiff, and
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`that the number of options that Plaintiff could exercise as ISOs therefore was also slightly
`
`different than Plaintiff had previously calculated.
`
`42.
`
`On December 29, 2020, in reliance on Vireo’s representations concerning the
`
`number of options he could exercise as ISOs, Plaintiff provided Vireo with a Written Notice to
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`Exercise 75,000 ISOs for a total of $14,250, which he immediately wired to the Company’s bank
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`account. Vireo treated the options exercised by Plaintiff as ISOs and did not withhold taxes
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`based on the “spread” between the grant price and the price of Vireo’s stock on the exercise date
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`as would have been appropriate with the exercise of NSOs.
`
`43.
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`On January 4, 2021, in reliance on Vireo’s representations concerning the number
`
`of options he could exercise as ISOs, Plaintiff provided Vireo with a Written Notice to Exercise
`
`
`
`9
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 10 of 16
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`1,034,867 ISOs for a total of $238,631.51, which he immediately wired to the Company’s bank
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`account. Vireo treated the options exercised by Plaintiff as ISOs and did not withhold taxes
`
`based on the “spread” between the grant price and the price of Vireo’s stock on the exercise date
`
`as would have been appropriate with the exercise of NSOs.
`
`44.
`
`On or about January 31, 2021, Vireo issued a Form W-2 to Plaintiff for 2020
`
`which reflected that he had been an employee throughout that year, and that Vireo had withheld
`
`payroll taxes accordingly, along with deductions for New York Family Leave Insurance (FLI)
`
`and State Disability Insurance (SDI).
`
`45.
`
`On February 4, 2021, in reliance on Vireo’s representations concerning the
`
`number of options he could exercise at ISOs, Plaintiff provided Vireo with a Written Notice to
`
`Exercise 920,628 ISOs for a total of $293,303.88, which he immediately wired to the Company’s
`
`bank account. Vireo treated the options exercised by Plaintiff as ISOs and did not withhold taxes
`
`based on the “spread” between the grant price and the price of Vireo’s stock on the exercise date
`
`as would have been appropriate with the exercise of NSOs.
`
`46.
`
`From January 1, 2021, through March 5, 2021, the Company continued to
`
`withhold payroll taxes and other withholdings, including New York Family Leave Insurance
`
`(FLI) and State Disability Insurance (SDI), in the manner that is appropriate for an employee and
`
`that would not have been lawful or appropriate had Plaintiff been an independent contractor or
`
`been receiving severance payments without the provision of any services.
`
`47.
`
`On April 19, 2021, Plaintiff, through a corporate entity, entered into a Consulting
`
`Agreement with a Vireo entity for the first time. Prior to that date, he never served as a
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`consultant to Vireo, but only as an employee and was never asked to provide a W-9 form or
`
`issued a 1099.
`
`
`
`10
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 11 of 16
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`48.
`
`On January 12, 2022, Vireo’s Chief Administrative Officer & Director Amber
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`Shimpa and Vireo’s Assistant Controller Joe Duxbury informed Plaintiff that Vireo’s auditors
`
`had discovered the Company made several mistakes, including stock option valuation and
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`employee classification errors; that Vireo had retroactively determined that he was not an
`
`employee when he exercised his options in December 2020, January 2021 and February 2021;
`
`and that Vireo accordingly now considered all of his options to have been NSOs. Vireo further
`
`requested that Plaintiff remit to Vireo $135,000 to cover FICA taxes on the “income” it
`
`calculated he had earned in connection with the exercise of his options.
`
`49.
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`Specifically, Vireo falsely asserted—despite having issued Plaintiff a Form W-2
`
`for all of 2020—that Plaintiff “was terminated as a W-2 earning employee in Q1 of 2020.”
`
`50.
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`On or about February 1, 2022—just weeks after falsely asserting that Plaintiff
`
`ceased being an employee in Q1 of 2020—Vireo issued Plaintiff an incorrect Form W-2 for 2021
`
`demonstrating its illogical and inconsistent treatment of Plaintiff’s employee status. On one
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`hand, the Form W-2 correctly classified Plaintiff as an employee by reporting employee payroll
`
`and benefit withholdings from Plaintiff’s wages for the period from January 1, 2021 through
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`March 5, 2021. On the other hand, the Form W-2 incorrectly classified Plaintiff as an
`
`independent contractor by treating all of Plaintiff’s stock options as NSOs.
`
`51.
`
`Because of Vireo’s retroactive assertion that Plaintiff was not an employee,
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`Plaintiff now faces an additional tax liability that he would not have incurred if Vireo had
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`correctly treated him as an employee and his options as ISOs.
`
`
`
`11
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 12 of 16
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`VIREO’S FINANCIAL INCENTIVE TO TREAT OPTIONS
`AS INCENTIVE STOCK OPTIONS AT TIME OF EXERCISE
`Upon information and belief, Defendants’ business has been unprofitable and
`
`52.
`
`heavily reliant on the proceeds of debt and equity financing since its inception.
`
`53.
`
`At the time the Plaintiff began inquiring about exercising his stock options in late
`
`2020, Defendant’s business was experiencing financial distress and in need of cash.
`
`54.
`
`Plaintiff was required to wire more than $500,000 to Defendants’ bank account in
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`connection with his ISO exercises. Had Defendant informed Plaintiff that his stock options were
`
`NSOs he would not have exercised his options and Company would have been deprived
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`$500,000 in cash that it critically needed at that time.
`
`55.
`
`Throughout 2020, the Company suffered several executive departures, was forced
`
`to liquidate key assets, and dilute shareholders by selling additional equity to raise cash.
`
`56.
`
`On March 10, 2020, Defendant announced through a press release a $10 million
`
`equity offering at a price of CAD $0.77 representing a decrease of more than 80 percent from the
`
`stock’s March 20, 2019, opening price of CAD $5.65.
`
`57.
`
`On June 12, 2020, Defendant announced through a press release the resignation of
`
`Bruce Linton, who was named the Company’s Executive Chairman only a few months prior, as
`
`Board Member.
`
`58.
`
`On June 22, 2020, Defendant announced through a press release the sale of its
`
`Pennsylvania cultivation business.
`
`59.
`
`On June 29, 2020, Defendant announced through a press release the appointment
`
`of its third CFO is less than one year.
`
`60.
`
`On October 1, 2020, Defendant announced through a press release the sale of its
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`Ohio business.
`
`
`
`12
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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 13 of 16
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`61.
`
`On November 16, 2020, Defendant announced through a press release the sale of
`
`its Pennsylvania retail business.
`
`62.
`
`On March 31, 2021, the Defendant submitted a Form 10-K Annual Report, for the
`
`fiscal year ended December 31, 2020, to the United States Securities & Exchange Commission,
`
`which indicated that the Company: (i) had incurred a net loss in 2020, under U.S. generally
`
`accepted accounting principles, of $22,942,194 (ii) anticipates requiring additional financing,
`
`(iii) may face difficulties acquiring additional financing, (iv) if unable to raise capital when
`
`needed, would be materially, adversely affected, and could be forced to reduce or discontinue its
`
`operations.
`
`63.
`
`64.
`
`
`FIRST CAUSE OF ACTION
`(Declaratory Judgment)
`
`Plaintiff repeats and realleges the foregoing allegations as if fully set forth herein.
`
`Plaintiff is entitled to a declaratory judgment that he was an employee of Vireo
`
`when he executed his ISOs and to an order requiring Vireo to amend and reissue all documentation
`
`necessary to establish that Plaintiff was an employee and that his stock options should be treated,
`
`for tax purposes, as ISOs.
`
`SECOND CAUSE OF ACTION
`(Negligent Misrepresentation)
`
`Plaintiff repeats and realleges the forgoing allegations as if fully set forth herein.
`
`As the administrators of the Vireo Health International Inc. Equity Incentive Plan,
`
`65.
`
`66.
`
`of which Plaintiff was a participant and beneficiary, Vireo owed Plaintiff a fiduciary duty to act in
`
`the interest of plan participants. Vireo violated its fiduciary duty by misrepresenting the nature of
`
`the stock options Plaintiff was granted pursuant to that plan, including the extent to which those
`
`options could be exercised as ISOs rather than NSOs. Accordingly, once Vireo decided to provide
`
`
`
`13
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`

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`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 14 of 16
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`Plaintiff with information concerning the extent to which his stock options qualified as ISOs, it
`
`was obligated to do so accurately.
`
`67.
`
`In December 2020, in response to Plaintiff’s inquiry concerning the number of ISOs
`
`he could execute, Vireo provided Plaintiff with exact calculations as to the number of options he
`
`could execute as ISOs. Vireo knew, or should have known, that Plaintiff would rely on those
`
`calculations when determining whether to execute options, and how many options to execute.
`
`68.
`
`Plaintiff thereafter executed options in reliance on Vireo’s calculations concerning
`
`their qualifications for treatment as ISOs. But for Vireo’s assurances that the options qualified for
`
`ISO treatment, Plaintiff would not have executed those options.
`
`69.
`
`Because of Plaintiff’s reliance on Vireo’s assurances, he has incurred a substantial
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`tax liability.
`
`70.
`
`Accordingly, Plaintiff is entitled to damages in an amount sufficient to make him
`
`whole, which Plaintiff currently estimates at more than $1,200,000.
`
`THIRD CAUSE OF ACTION
`(Breach of Contract)
`
`Plaintiff repeats and realleges the forgoing allegations as if fully set forth herein.
`
`On March 4, 2020, Plaintiff entered into the Transition Agreement with Vireo,
`
`71.
`
`72.
`
`which obligated him to continue to provide services to Company in exchange for ongoing wage
`
`payments and vesting of stock options, all for up to a twelve-month period.
`
`73.
`
`Plaintiff performed services for 12 months, similar in nature to the services
`
`he had provided since 2015.
`
`74.
`
`Vireo made required wage payments and deducted all applicable payroll
`
`taxes through the end of March 2021, as more fully set forth above.
`
`
`
`14
`
`

`

`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 15 of 16
`
`75.
`
`On or about January 31, 2021, Vireo issued a Form W-2 to Plaintiff for 2020
`
`which reflected that he had been an employee throughout that year, and that Vireo had
`
`withheld payroll taxes accordingly, along with deductions for New York Family Leave
`
`Insurance (FLI) and State Disability Insurance (SDI).
`
`76.
`
`Vireo breached the Transition Agreement by retroactively misclassifying Plaintiff
`
`as an independent contractor despite its promise to continue wage payments in exchange for
`
`continuing to provide services
`
`77.
`
`Vireo incorrectly treated all of Plaintiff’s stock options as NSOs when it
`
`misclassified him as an independent contractor, which caused a significant increase in Plaintiff’s
`
`tax liability for the NSO options.
`
`78.
`
`Because of Vireo’s retroactive assertion that Plaintiff was not an employee,
`
`Plaintiff now faces an additional tax liability that he would not have incurred if Vireo had correctly
`
`treated him as an employee and his options as ISOs
`
`REQUEST FOR RELIEF
`
`WHEREFORE, Plaintiff requests that this Court order the following relief in
`
`favor of Plaintiff and against Defendants jointly and severally:
`
`1.
`
`Declaratory judgment that Plaintiff was an employee of Defendants
`
`when he executed stock options, and requiring Defendants to issue
`
`appropriate paperwork and
`
`tax documentation demonstrating
`
`Plaintiff’s employee status;
`
`Damages in an amount to be awarded at trial;
`
`Attorneys’ fees in an amount to be determined at trial;
`
`An award of prejudgment interest and costs; and
`
`2.
`
`3.
`
`4.
`
`
`
`15
`
`

`

`Case 1:22-cv-02210 Document 1 Filed 03/17/22 Page 16 of 16
`
`5.
`
`Such other and further relief that the Court may deem just and proper.
`
`
`Dated:
`
`
`
`New York, New York
`March 16, 2022
`
`
`MOSKOWITZ & BOOK, LLP
`
`
`
`By:_/s/ Chaim B. Book_____________
`Chaim B. Book
`Christopher R. Neff
`
`
`
`
`Attorneys for Plaintiff
`345 Seventh Avenue, 21st Floor
`New York, New York 10001
`(212) 221-7999
`
`
`
`
`
`
`
`16
`
`

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