TABLE OF CONTENTS Page(s) TABLE OF AUTHORITIES ii PRELIMINARY STATEMENT 1 FACTUAL BACKGROUND 3 A. The Parties 3 B. MindMed Acquires 18-MC from Savant Resulting in Dr. Freeman Joining the Company 4 C. FCM Undertakes a Proxy Campaign to Change MindMed’s Leadership 5 D. MindMed Sues Dr. Freeman and FCM in Nevada 6 E. MindMed Sues FCM and the Nominees in the New York Action 7 F. MindMed’s Patently Irrelevant and Prejudicial Allegations 8 ARGUMENT 9 I. LEGAL STANDARD 9 II. MINDMED FAILS TO STATE A CLAIM UNDER §14(a) AND RULE 14A-9 BECAUSE IT CANNOT PLEAD TRANSACTION CAUSATION 9 III. MINDMED LACKS STANDING TO SUE FOR DAMAGES UNDER §14(a) AND RULE 14A-9 12 IV. MINDMED FAILS TO PLEAD ITS FRAUD BASED §14(a) AND RULE 14A-9 CLAIM WITH PARTICULARITY UNDER FED. R. CIV. 9(B) 14 V. MINDMED IS NOT ENTITLED TO EQUITABLE RELIEF 16 CONCLUSION 18 TABLE OF AUTHORITIES Cases Page(s) Amoco Prod. Co. v. Vill. of Gambell, AK, 480 U.S. 531 (1987) 16 Applied Energetics, Inc. v. Gusrae Kaplan Nusbaum PLLC, No. 21CV382, 2022 WL 956119 (S.D.N.Y. Mar. 30, 2022) 14 Ashcroft v. Iqbal, 556 U.S. 662 (2009) 9 Ashford Hosp. Prime Inc. v. Sessa Cap. (Master) LP, No. 3:16-CV-00527-N, 2017 WL 2955366 (N.D. Tex. Feb. 17, 2017) 13 Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212 (2d Cir. 2004) 3 Bobrowsky v. Curran, 333 F. Supp. 2d 159 (S.D.N.Y. 2004) 17 Cohen v. LyondellBasell Indus. N.V., No. 19-CV-2622, 2020 WL 5097773 (E.D.N.Y. June 23, 2020) 13 DCML LLC v. Danka Bus. Sys. PLC, No. 08 CIV., 2008 WL 5069528 (S.D.N.Y. Nov. 26, 2008) 11, 12 Diceon Elecs., Inc. v. Calvary Partners, L.P., 772 F. Supp. 859 (D. Del. 1991) 13 Enzo Biochem, Inc. v. Harbert Discovery Fund, LP, No. 20-CV-9992, 2021 WL 4443258 (S.D.N.Y. Sept. 27, 2021) 11, 13, 14 Frei v. Taro Pharm. U.S.A., Inc., 844 F. App’x 444 (2d Cir. 2021) 16 Gen. Elec. Co. by Levit v. Cathcart, 980 F.2d 927 (3d Cir. 1992) 11 Heil v. Lebow, No. 91 CIV. 8656, 1993 WL 15032 (S.D.N.Y. Jan. 13, 1993) 11 In re Banco Bradesco S.A. Sec. Litig., 277 F. Supp. 3d 600 (S.D.N.Y. 2017) 15 In re Columbia Pipeline, Inc., 405 F. Supp. 3d 494 (S.D.N.Y. 2019) 10 J.I. Case Co. v. Borak, 377 U.S. 426 (1964) passim Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) 10 Off. Sol. Grp., LLC v. Nat’l Fire Ins. Co. of Hartford, 544 F. Supp. 3d 405 (S.D.N.Y. 2021) 9 Ognibene v. Parkes, 671 F.3d 174 (2d Cir. 2011) 16 Org. for a Better Austin v. Keefe, 402 U.S. 415 (1971) 17 Pell v. Kill, 135 A.3d 764 (Del. Ch. 2016) 14 Plant Indus., Inc. v. Bregman, 490 F. Supp. 265 (S.D.N.Y. 1980) 17 Police & Fire Ret. Sys. of City of Detroit v. SafeNet, Inc., 645 F. Supp. 2d 210 (S.D.N.Y. 2009) 9, 11 Ramos v. New York City Dep’t of Educ., 447 F. Supp. 3d 153 (S.D.N.Y. 2020) 17 Rombach v. Chang, 355 F.3d 164 (2d Cir. 2004) 15 Royal Park Invs. SA/NV v. HSBC Bank USA, N.A., 109 F. Supp. 3d 587 (S.D.N.Y. 2015) 9 Rubenstein on Behalf of Jefferies Fin. Grp. Inc. v. Adamany, No. 22-2794, 2023 WL 6119810 (2d Cir. Sept. 19, 2023) 10 Salomon Bros. Mun. Partners Fund, Inc. v. Thornton, 410 F. Supp. 2d 330 (S.D.N.Y. 2006) 17 Scone Invs., L.P. v. Am. Third Mkt. Corp., No. 97 CIV. 3802, 1998 WL 205338 (S.D.N.Y. Apr. 28, 1998) 15 Thomas v. City of New York, 143 F.3d 31 (2d Cir. 1998) 17 United Paperworkers Int’l Union v. Int’l Paper Co., 801 F. Supp. 1134 (S.D.N.Y. 1992) 10 Vaughn v. Consumer Home Mortg., Inc., 293 F. Supp. 2d 206 (E.D.N.Y. 2003) 17 Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083 (1991) 12 Weisberg v. Coastal States Gas Corp., 609 F.2d 650 (2d Cir. 1979) 10 Statutes 15 U.S.C. §78n(a) passim Rules and Regulations Federal Rules of Civil Procedure Rule 9(b) 9, 14, 15 Federal Rules of Civil Procedure Rule 12(b)(1) 9, 12 Federal Rules of Civil Procedure Rule 12(b)(6) 8 17 C.F.R. §240.14a-9 passim MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT Defendants Scott Freeman (“Dr. Freeman”), Jake Freeman, Chad Boulanger, Farzin Farzaneh, Vivek Jain, Alexander Wodka, and FCM MM Holdings, LLC (collectively, “Defendants”), by and through their counsel, submit this memorandum of law in support of their Motion to Dismiss Plaintiff’s First Amended Complaint (the “FAC”).1 PRELIMINARY STATEMENT This action represents a novel attempt by management of a publicly traded company (MindMed) to employ the federal securities laws to silence dissenting shareholders (like Dr. Freeman and FCM) that exercised their fundamental right to challenge management’s conduct, such as the indisputable and catastrophic collapse in MindMed’s stock price during current management’s tenure. But the securities laws do not function in that manner. Section 14(a) of the Securities Exchange Act of 1934 (“§14(a)”) was promulgated to protect shareholders in proxy campaigns, not management. As the Supreme Court made clear more than fifty years ago in J.I. Case Co. v. Borak, 377 U.S. 426 (1964), §14(a)’s purpose is to protect shareholders from “deceptive or inadequate disclosure in the proxy solicitation” process. Through this action, MindMed attempts to take a shield that was intended to protect shareholders and, instead, use it as a sword against them. Allowing MindMed or any other public company to use the securities laws against its own shareholders threatens to turn the statute on its head by dissuading shareholders from exercising their fundamental rights to engage in proxy campaigns and exercise free speech. Merely the threat of management’s ability to bring these suits would have a chilling effect on prospective dissidents. For the reasons that follow, the Court should dismiss the FAC with prejudice. The FAC does not — because it cannot — plead transaction causation under §14(a). To do so, a plaintiff must show that statements in proxy materials were essential to the accomplishment of a wrongful transaction. While FCM waged a proxy campaign to have its slate of directors elected as MindMed’s future Board of Directors, MindMed’s current management was successful in maintaining control of the Company. In other words, as the FAC concedes, “FCM Nominees lost their proxy contest.” Therefore, because the challenged proxy materials that sought approval of FCM’s slate of directors were rejected by MindMed’s shareholders, MindMed cannot, as a matter of law, plead transaction causation. Likewise, MindMed lacks standing to sue for damages under §14(a). Congress’s purpose in enacting §14(a), which lacks an express private right of action, was to protect shareholders with voting rights. Therefore, to have standing to sue for damages under §14(a), there must be an injury to a shareholder. Because FCM’s slate of directors were rejected by MindMed’s shareholders, the transaction that was the subject of the proxy materials could not have caused MindMed’s shareholders an injury as a matter of law. MindMed brings this action therefore not to recover harm caused to any of its shareholders (because it cannot), but instead to recover its own discretionary expenditures on proxy activities. To our knowledge, no court in this Circuit has found that an issuer has standalone standing (i.e., harm solely to the issuer without an injury to a voter-shareholder) to pursue a §14(a) claim for damages. This Court should not be the first. Finally, the FAC, which sounds in fraud, fails to satisfy Rule 9(b)’s heightened pleading requirements because it engages in impermissible group pleading. The FAC groups together all the Defendants without specifying the speaker of each statement or the speakers’ authority over such statements. Under these circumstances, Defendants cannot be apprised of the circumstances surrounding their purportedly fraudulent conduct. For these reasons and those that follow, MindMed has no viable claim for a violation of §14(a), and the FAC must be dismissed with prejudice. FACTUAL BACKGROUND2 A. The Parties MindMed is a publicly traded biopharmaceutical company organized under the laws of British Columbia. FAC
1,14. MindMed develops psychedelic products to treat brain health disorders. Id.
