Giraudon v. Innovative Industrial Properties, Inc. — Entry #68: REPLY to Response to Motion re 60 MOTION to Dismiss for Failure to State a Claim filed by Alan D

Case 1:25-cv-00182-GLR   Document 68   Filed 11/20/25   Page 1 of 21


                 IN THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF MARYLAND


IN TRE INNOVATIVE INDUSTRIAL       )
PROPERTIES, INC. SECURITIES        )
LITIGATION                         )        Case No. 1:25-CV-00182-GLR
                                   )
                                   )

  DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF THEIR MOTION TO
DISMISS LEAD PLAINTIFF’S CONSOLIDATED CLASS ACTION COMPLAINT FOR
            VIOLATIONS OF THE FEDERAL SECURITIES LAWS


         Case 1:25-cv-00182-GLR                         Document 68                 Filed 11/20/25               Page 2 of 21


                                                   TABLE OF CONTENTS

TABLE OF AUTHORITIES ...........................................................................................................ii.

INTRODUCTION ...........................................................................................................................1

ARGUMENT ...................................................................................................................................2

          I.         THE OPPOSITION DOES NOT CURE THE COMPLAINT’S LACK OF
                     FACTS. ....................................................................................................................2

                     A.         The Facts Cited in the Complaint Fail to Create Adverse
                                Inferences. ....................................................................................................2

                     B.         The Remaining Cases Plaintiff Cites Support Dismissal.............................8

          II.        PLAINTIFF FAILS TO OVERCOME NUMEROUS ARGUMENTS. .................9

          III.       DEFENDANTS CORRECTLY IDENTIFIED NUMEROUS
                     STATEMENTS AS FORWARD-LOOKING. ......................................................11

          IV.        PLAINTIFF’S SCIENTER ARGUMENT SIMLARLY FAILS...........................12

          V.         THE OPPOSITION UNDERSCORES THE PROLIXITY OF THE
                     COMPLAINT. .......................................................................................................14

CONCLUSION ..............................................................................................................................15


                                                                       i


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                                                 TABLE OF AUTHORITIES
                                                                                                                                 Page(s)

Cases

City of Sterling Heights Police & Fire Ret. Sys. v. Abbey Nat’l, PLC,,
  423 F. Supp. 2d 348 (S.D.N.Y. 2006)......................................................................................... 8

Handal v. Innovative Indus. Props., Inc.,
  157 F.4th 279 (3d Cir. 2025) .................................................................................................... 10

In re Am. Int’l Grp., Inc. 2008 Sec. Litig.,
   741 F. Supp. 2d. 511 (S.D.N.Y. 2010)...................................................................................... 12

In re Emergent Biosolutions Inc. Sec. Litig.,
   2023 WL 5671608 (D. Md. Sept. 1, 2023) ................................................................................. 8

In re Genworth Fin. Inc. Sec. Litig.,
   103 F. Supp. 3d 759 (E.D. Va. 2015) ................................................................................... 5, 12

In re James River Gr. Holdings, Ltd. Sec. Litig.,
   2023 WL 5538218 (E.D. Va. Aug. 28, 2023) ................................................................... 5, 6, 13

In re Marriott Int’l, Inc., Customer Data Sec. Breach Litig.,
   543 F. Supp. 3d 96 (D. Md. 2021) ............................................................................................ 12

In re Mut. Funds., Inv. Litig.,
   437 F. Supp. 2d 444 (D. Md. 2006) .......................................................................................... 15

In re UBS AG Sec. Litig.,
   2012 WL 4471265 (S.D.N.Y. 2012) ........................................................................................... 7

In re Virtu Fin., Inc. Sec. Litig.,
   770 F. Supp. 3d 482 (E.D.N.Y. 2025) ........................................................................................ 8

Keeney v. Larkin,
  306 F. Supp. 2d 522 (D. Md. 2003) ............................................................................................ 8

Matrixx Initiatives, Inc. v. Siracusano,
 563 US. 27 (2011) ....................................................................................................................... 8

Noble Asset Mgmt. v. Allos Therapeutics, Inc.,
  2005 WL 4161977 (D. Colo. Oct. 20, 2005) .............................................................................. 7

Phillips v. LCI Int’l, Inc.,
  190 F.3d 609 (4th Cir. 1999) ...................................................................................................... 4

Plumhoff v. Cent. Mortg. Co.,
  286 F. Supp. 3d 699 (D. Md. 2017) .......................................................................................... 15
                                                                     ii


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Raab v. Gen. Physics Corp.,
  4 F.3d 286 (4th Cir. 1993) ...................................................................................................... 7, 9

Tchrs. Ret. Sys. of LA v. Hunter,
  477 F.3d 162 (4th Cir. 2007) .................................................................................................... 13

Tchatchou v. India Globalization Cap. Inc.,
  2021 WL 307415 (D. Md. Jan. 29, 2021) ............................................................................... 4, 5


                                                                  iii


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          Defendants,1 by and through their counsel, respectfully submit this Reply Memorandum of

Law in support of their Motion to Dismiss Lead Plaintiff’s Complaint.

                                         INTRODUCTION

          On August 22, 2025, Defendants filed their Motion to Dismiss the Complaint, and

accompanying Memorandum (Dkt. 60, 60-1, the “Memorandum” or “Mem.”). Defendants argued

that the Complaint should be dismissed with prejudice due to its (i) failure to state a claim for any

violation of Section 10(b) and Rule 10b-5 under the PSLRA, and (ii) failure to state a claim for

individual liability on behalf of the manager Defendants. Defendants further argued that the

Complaint should be dismissed, not based on the Complaint’s length, but due to its redundancy

and overall confusing content. On October 21, 2025, Plaintiff filed its Opposition to the Motion to

Dismiss (the “Opposition” or “Opp.”).

          Plaintiff’s Opposition doubles down on the deficient theories of the Complaint. First,

Plaintiff argues that Defendants must have misrepresented due diligence performed years before

the class period when accepting four tenants, which ultimately became IIPR’s paying tenants with

long payment histories. Second, Plaintiff argues that Defendants were entitled to receive, and did

receive on a regular basis, periodic financial data from each of those four tenants (despite failing

to plead facts in support). Third, Plaintiff contends that publicly-available information, which was

part of the “total mix” of information available to investors, reported that each of those four tenants

encountered material financial difficulties. Fourth, Plaintiff simply presumes, based on zero

confidential sources or non-public information, that data Defendants allegedly received enabled

them to predict that those four tenants were going to default in the near-term, but Defendants

concealed such knowledge from the market or misled the market with allegedly false assurances.


1
    Defined terms from the Motion to Dismiss the Complaint and Memorandum are used herein.

Defendants’ Reply Memorandum in Support of Motion to Dismiss                             Page 1 of 17


       Case 1:25-cv-00182-GLR           Document 68        Filed 11/20/25      Page 6 of 21


       This tortured theory breaks down with even a cursory inspection. First, the factual

connections Plaintiff irrationally attempts to make are temporally unsound, undercutting any

inferences. Second, there are no well-pled facts suggesting that Defendants had a clairvoyant

vision from a crystal ball about these tenants’ futures and likelihood of defaulting—or at least any

information better than that already known by the market. Third, the Opposition and Complaint

make clear that Plaintiff’s theory is grounded in information available to the investing public—

information the market is presumed to have in the efficient market necessary for Plaintiff’s fraud-

on-the-market claims. While making these arguments, Plaintiff relies on inapposite case law, fails

to address (i) its editorial manipulation of Defendants’ statements, (ii) allegations in the Complaint

that lack supporting facts, (iii) and the forward-looking nature of Defendants’ statements, and fails

to allege scienter in its prolix Complaint. For these reasons, detailed further below, Plaintiff’s

claims should be dismissed.

                                           ARGUMENT

I.     THE OPPOSITION DOES NOT CURE THE COMPLAINT’S LACK OF FACTS.

       Defendants argued that the Complaint concluded—but did not prove or otherwise show—

that Defendants made any false or misleading statements that would constitute a violation of

Section 10(b) or Section 20(a). The Opposition fails to rebut these arguments, underscoring the

Complaint’s flaws, and warranting dismissal.

       A.      The Facts Cited in the Complaint Fail to Create Adverse Inferences.

                1.    The Complaint’s Temporal Infirmities Undercut Allegations of Falsity.

       Plaintiff’s roughly 10-page Statement of Facts mirrors the Complaint, complete with copy

and pasted snippets of statements with argument added on top. See, e.g., Opp. at 4 (alleging that

Defendants “placed special emphasis” on risk mitigation by citing to an 88 paragraph passage of


Defendants’ Reply Memorandum in Support of Motion to Dismiss                            Page 2 of 17


       Case 1:25-cv-00182-GLR            Document 68        Filed 11/20/25       Page 7 of 21


the Complaint); Opp. at 6 (claiming Defendants “assured investors” of tenants’ solid financial

footing” while quoting that Defendants “feel very good about our current tenant roster”).

        Contextualizing Plaintiff’s Statement of Facts proves just how lacking its claims are. In

addition to offering numerous concessions in the Statement of Facts that Plaintiff—and investors

writ large—had access to public information such that they understood the cannabis industry

brings with it “concentrated and acute” risks (Opp. at 3), Plaintiff repeats its allegations that it had

access to facts about IIPR’s tenants “from SEC disclosures, public sources, and court filings []

show[ing] that the Defaulting Tenants were near financial collapse.” Opp. at 7. Plaintiff once again

does not indicate how or when it learned of this publicly available information, only that the

information was public, and that it was “contemporaneous.” Opp. at 8. Among these allegedly

“contemporaneous” facts were warnings in public filings by 4Front, Gold Flora, and Tilt “from as

early as 2023” that those tenants’ auditors had questions about the companies’ ability to continue

as going concerns. Opp. at 7, Compl. ¶ 69. But warnings in 2023 are temporally remote from

statements made by Defendants a year later, 4Front or Tilt ceasing rent payments in September

2024 (Compl. ¶ 81), PharmaCann ceasing rent payments in December 2024 (Compl. 82), or Gold

Flora’s dissolution on March 27, 2025 (Compl. ¶ 68d). Indeed, even if (allegedly) auditors had

doubts regarding those entities’ status as a going concern, they went years both as going concerns

and rent-paying tenants. Moreover, disclosures in public filings made before February 2024, the

start of the purported Class Period, were accessible to Plaintiff before it started investing in IIPR.

        Similarly, the Opposition fails to address the facts and arguments advanced by Defendants

regarding the timing of the allegedly flawed diligence. As noted in the Memorandum, IIPR

performed diligence on potential tenants—before taking these businesses on as tenants. See Mem.

at 6, quoting 2023 10-K at 25. Again, timing is critical and, here, fatal to Plaintiff’s narrative.


Defendants’ Reply Memorandum in Support of Motion to Dismiss                              Page 3 of 17


       Case 1:25-cv-00182-GLR           Document 68         Filed 11/20/25      Page 8 of 21


PharmaCann signed its first lease in 2016. Compl. ¶ 29. The opposition fails to recognize the

temporally remote onboarding of 4Front, Gold Flora, and Tilt, years before the alleged class

period. In other words, the Complaint fails to explain the temporal gap between any allegedly

faulty diligence of IIPR’s “potential tenants” and the ultimate default of those tenants.

                2.     Plaintiff Fails to Plead Facts, Through Confidential Witnesses or
                       Otherwise, That Foresaw Any Specific Tenant Default.

       Defendants’ primary argument in the Memorandum is that Plaintiff fails to adduce any

specific facts to support an inference of knowledge, or reckless ignorance of falsity. Past the four

tenants at issue being financially distressed, Plaintiff pled no facts indicating that Defendants

knew, or should have known, that any default was imminent. While the public information

disclosed by the four tenants may suggest they might default, Plaintiff cites no confidential

witnesses, internal documents, or contemporaneous facts showing any knowledge that these

tenants would default. See Phillips v. LCI Int’l, Inc., 190 F.3d 609, 615 (4th Cir. 1999) (affirming

dismissal under the PSLRA where Plaintiffs mischaracterized facts in the public record and their

allegations were “not based on any confidential or private information[,]” thus providing no

grounds for statements to be deemed false or misleading). In its Opposition, Plaintiff argues that

it need not do so. Opp. at 17. But the cases on which it relies are all distinguishable.

       Plaintiff advances Tchatchou v. India Globalization Cap. Inc., 2021 WL 307415 (D. Md.

Jan. 29, 2021), for the tenet that a complaint need not provide confidential witness testimony. Opp.

at 18. In Tchatchou (which does not discuss confidential witness testimony at all), the Court relied

on the plaintiff’s presentation of contemporaneous facts which proved the impossibility of

statements that a company had a contract with a company to produce CBD drinks in Malaysia,

which was illegal in that country. *7-8. This contemporaneous fact made the company’s statement

in Tchatchou a direct and clear lie. Plaintiff has pled nothing of the sort here. Indeed, Plaintiff’s

Defendants’ Reply Memorandum in Support of Motion to Dismiss                               Page 4 of 17


       Case 1:25-cv-00182-GLR            Document 68        Filed 11/20/25      Page 9 of 21


closest argument, unsupported by fact, is that it must have been impossible for Defendants not to

know that their tenants were on the precipice of default, because they monitored their tenants.

These allegations—which rely on numerous assumptions rather than incontrovertible fact—are

nothing like those in Tchatchou. Here, all Plaintiff has is speculation.

       Plaintiff most heavily relies on In re Genworth Fin. Inc. Sec. Litig., 103 F. Supp. 3d 759

(E.D. Va. 2015), citing it passim throughout its Opposition. But this case, which is not binding on

this court in the first instance, proves just how threadbare the Complaint is here. Plaintiff relies on

Genworth because it involves allegations that a company falsely represented it was doing a

“review.” As Plaintiff puts it, the court there found that “assurances of a ‘broad, intensive review’

of a business line were misleading for omitting that defendants did not conduct such a review.”

Opp. at 15. What Plaintiff fails to disclose is that the defendants in Genworth had provided specific

statements about the review, including how long it took and that it was completed in 2013, but

later directly admitted that they had not undertaken such a review. Genworth, 103. F. Supp. 3d at

772-773. In other words, that plaintiff’s claim for falsity of the “review” statement survived

because it alleged actual falsity based on a direct admission. Here, Plaintiff does no such thing,

instead alleging that statements about conducting diligence must have been false because the

tenants ultimately failed. Claims like these in Genworth, where the plaintiff “failed to prove

sufficient facts to establish a reasonable belief in the falsity of [the] statements[,]” were summarily

dismissed. Id. at 782. Plaintiff’s allegations here are irrefutably akin to the latter claims and

therefore warrant dismissal.

       Plaintiff’s reliance on In re James River Gr. Holdings, Ltd. Sec. Litig., 2023 WL 5538218

(E.D. Va. Aug. 28, 2023) is equally misplaced. In that case, the court allowed a Section 10(b)

claim to survive because the plaintiffs had cited to direct testimony from an earlier litigation in


Defendants’ Reply Memorandum in Support of Motion to Dismiss                             Page 5 of 17


      Case 1:25-cv-00182-GLR            Document 68        Filed 11/20/25       Page 10 of 21


which the company’s directors directly admitted to the falsity of the relevant statements, as well

as interview testimony from a former employee who likewise admitted to the falsity. Id. at *11.

Plaintiff has not advanced any admissions, or confidential statements, to support its conclusion

that Defendants lied about conducting diligence on their tenants. The case law Plaintiff cites refutes

Plaintiff’s contention that it need not cite a confidential witness, internal documents, or any

contemporaneous facts.

       Plaintiff’s citation to facts suggesting that IIPR’s tenants were in financial distress likewise

does not create an inference that Defendants had specific undisclosed knowledge. Setting aside

that these facts are not actionable because they were known to the market (discussed below), the

facts alleged fail to show that Defendants foresaw any tenant default. Plaintiff alleges that “as early

as 2023” auditors for 4Front, Gold Flora, and Tilt “had substantial concerns about these companies

being able to continue as going concerns” and the companies were so “warning their investors.”

Opp. at 18-19. Indeed, Plaintiff even puts forth tables showing that these tenants had negative

working capital going back to 2022:


Compl. ¶ 70. But all this shows is that everyone knew these tenants were in distress. Plaintiff’s

conclusion that “Defendants knew or recklessly disregarded that [these tenants] were on the

precipice of financial collapse” is flawed because Plaintiff has alleged no facts indicating

Defendants’ Reply Memorandum in Support of Motion to Dismiss                             Page 6 of 17


      Case 1:25-cv-00182-GLR           Document 68       Filed 11/20/25     Page 11 of 21


Defendants had financial information that was unavailable to the market forecasting a future

default. Moreover, Plaintiff’s assumption is further undermined by the fact that these tenants paid

rent (and avoided default) through the latter half of 2024.

               3.      Publicly Known Facts Are Not Actionable.

       As discussed above, Plaintiff relies on public filings by tenants already known by the

market. Unfortunately for Plaintiff, this works in Defendants’ favor–Plaintiff cannot allege fraud

when it had access to the same information. Indeed, the public nature of those facts requires

dismissal of Plaintiff’s claims. See Raab v. Gen. Physics Corp., 4 F.3d 286, 290 (4th Cir. 1993)

(noting that failure to disclose material information may be excused where the information at issue

“has been made credibly available to the market by other sources”) (citations omitted). “When a

plaintiff complains that a defendant failed to disclose a material fact necessary to make its

statement not misleading, the concealed information must be information known to the defendants

that is not otherwise available to the investing public.” Noble Asset Mgmt. v. Allos Therapeutics,

Inc., 2005 WL 4161977, at *7 (D. Colo. Oct. 20, 2005). Generally speaking, information “in the

public domain” is held to be immaterial in PSLRA cases time and time again. See In re UBS AG

Sec. Litig., 2012 WL 4471265, at *32 (S.D.N.Y. 2012) (“The law in this Circuit is clear that a

party ‘can be relieved of a duty to disclose when certain developments affecting a corporation

become matters of general public knowledge’”) (citation modified).

       As argued at length in the Memorandum, and not overcome in the Opposition, Plaintiff has

not alleged the existence of any facts that were only known to IIPR that would have made any of

its statements false or misleading. Since the same mix of information was available to Defendants

as Plaintiff—a sophisticated entity in its own right—and in many cases was available to Plaintiff

for many years, Plaintiff cannot credibly allege that Defendants made false or misleading

statements because contextualizing information was already available.
Defendants’ Reply Memorandum in Support of Motion to Dismiss                          Page 7 of 17


      Case 1:25-cv-00182-GLR            Document 68      Filed 11/20/25      Page 12 of 21


       B.      The Remaining Cases Plaintiff Cites Support Dismissal.

       The remaining case law cited by Plaintiff does not help Plaintiff’s argument. Rather, it

demonstrates how Plaintiff’s claim fail, because all are cases in which claims without factual

support were dismissed, and only those where the plaintiff had provided factual support survived.

See In re Emergent Biosolutions Inc. Sec. Litig., 2023 WL 5671608 (D. Md. Sept. 1, 2023), Opp.

at 17 (allowing Section 10(b) claims to survive where Plaintiffs adduced specific facts that FDA

and auditors had discovered problems, as well as New York Times reports of known issues with

defendants’ products); City of Sterling Heights Police & Fire Ret. Sys. v. Abbey Nat’l, PLC, 423

F. Supp. 2d 348, 358 (S.D.N.Y. 2006), Opp. at 17 (denying motion to dismiss as to claims where

plaintiffs identified statements from a confidential source as well as later manager admissions, but

dismissing others because “[k]nowledge of potential concerns about certain holdings in the

portfolio, without more, does not preclude optimistic statements about overall future

performance”); In re Virtu Fin., Inc. Sec. Litig., 770 F. Supp. 3d 482, 516 (E.D.N.Y. 2025), Opp.

at 17 (dismissing numerous claims where plaintiff failed to “plead facts demonstrating that

Defendants made… statements with actual knowledge of their falsity[]” and where “Plaintiff only

makes conclusory allegations that ‘Defendants knew’”); Keeney v. Larkin, 306 F. Supp. 2d 522

(D. Md. 2003), Opp. at 18 (same).

       Plaintiff’s citation to Matrixx Initiatives, Inc. v. Siracusano¸ 563 US. 27, 37 (2011) is

likewise unpersuasive. This is because Plaintiff’s quote—while attributed to the Supreme Court—

is actually just a recitation from Rule 10b-5. Opp. at 20. But in the Memorandum, Defendants

quote analysis in that same case in which the Supreme Court said that this rule “do[es] not create

[a duty] to disclose any and all material information.” Matrixx, at 44, Mem. at 20. Accordingly,

Matrixx does not add to the analysis.


Defendants’ Reply Memorandum in Support of Motion to Dismiss                           Page 8 of 17


      Case 1:25-cv-00182-GLR           Document 68       Filed 11/20/25      Page 13 of 21


       Plaintiff’s cases underscore the Complaint’s failings for an additional and distinct reason:

in every case Plaintiff cites, the relevant defendants were all charged with having knowledge of

specific facts about their own businesses, and when the plaintiff could not prove knowledge of

such facts about the defendant’s own business, the claims were dismissed. Here, however, Plaintiff

concludes that Defendants had knowledge of specific facts about other businesses (the tenants) yet

advances no proof of any such actual knowledge. As discussed above, Plaintiff is charged with the

same knowledge as Defendants where the Complaint’s allegations rely on public information. See

supra at p. 7 (citing Raab, at 289). This is undoubtedly true as to public information about third

parties versus Defendants’ business itself. Given this additional distance between Defendants and

the facts at issue, Plaintiff’s failure to plead any specific facts regarding Defendants’ direct

knowledge of the detailed goings-on of other companies is especially egregious.

II.    PLAINTIFF FAILS TO OVERCOME NUMEROUS ARGUMENTS.

       Plaintiff’s Opposition presents inaccurate descriptions or misleading characterizations

regarding a number of well-pled arguments advanced in the Memorandum. Multiple times

throughout its Opposition, Plaintiff misattributes arguments, quotes to wrong sections of the

Complaint, and otherwise continues to press its inaccurate allegations in the hope of surviving

dismissal. But creative writing does not save the Complaint.

       In the Memorandum, Defendants provide, as Plaintiff puts it, more than 700 pages of

exhibits—all of which were necessary to attempt to make sense of Plaintiff’s meandering

Complaint. Among those exhibits are detailed breakdowns of Plaintiff’s misquotes,

misinterpretations, and missed warnings. See Mem. Exs. 17-19 (Dkt. 60-20 to 60-22). Despite

being faced with these statements in black and white, Plaintiff nonetheless announces that the

Complaint set out challenged statements “verbatim.” Opp. at 19. So too, Plaintiff argues that the

dozens of pages in these exhibits show “nothing that Plaintiff actually misquoted.” To the contrary,
Defendants’ Reply Memorandum in Support of Motion to Dismiss                           Page 9 of 17


      Case 1:25-cv-00182-GLR            Document 68         Filed 11/20/25      Page 14 of 21


Exhibit 17 shows Plaintiff selectively quoted statements, failed to provide important contextual

elements, or actually quoted other documents for propositions it then attributed to other statements.

       A glaring example of the “editorial manipulation” Plaintiff denies is found in Plaintiff’s

argument that “Defendants claim it is an unsupported ‘leap of logic’ to conclude that Defendants

were monitoring all of IIPR’s tenants” when “no leap is required.” Opp. at 20. The Complaint

alleges “Defendants repeatedly told investors that all tenants … were subject to … ‘Meetings with

tenants to talk through operations and financials.” See Mem at 17, Compl. ¶¶ 61, 75. But the actual

statement at issue is that Defendants were monitoring their tenants, and “in some instances,” met

with tenants to discuss more matters. Compl. ¶¶ 60, 89, 168. Monitoring tenants and meeting with

all tenants to talk through operations and financials are different statements, and Defendants never

said the latter. Indeed, the Third Circuit has rejected other plaintiffs’ efforts to omit and gloss over

this precise “in some instances” phrase. Handal v. Innovative Indus. Props., Inc., 157 F.4th 279,

296 (3d Cir. 2025) (acknowledging that plaintiff’s quote “omits three critical words: ‘in some

instances’” and affirming dismissal of complaint with prejudice). Plaintiff’s double-down on this

simply untrue allegation is telling—it has been tried before and rejected.

       But even if Defendants had said that they met with every tenant and provided specific dates

and points of discussion, it still would not make a difference. This is because—unlike the case law

requires—Plaintiff has pled nothing to suggest either that such meetings (i) never happened or (ii)

that information was obtained that was inconsistent with what the market already knew. Plaintiff’s

Complaint—and the Opposition—raise questions (“But how could Gold determine what the risk

profile actually was as compared to the potential rate of return without the Company doing the due

diligence and monitoring necessary to determine that risk?”), but offer no viable factual allegations

to meet the PSLRA’s pleading standard. Thus, the Complaint must be dismissed.


Defendants’ Reply Memorandum in Support of Motion to Dismiss                             Page 10 of 17


       Case 1:25-cv-00182-GLR           Document 68         Filed 11/20/25      Page 15 of 21


III.    DEFENDANTS CORRECTLY IDENTIFIED NUMEROUS STATEMENTS AS
        FORWARD-LOOKING.

        Defendants also provide pages of warnings and other cautionary language, which

conclusively establish that many of the statements at issue in the Complaint were indeed forward-

looking. In response, Plaintiff argues it is Defendants who have cherry-picked statements, none of

which are forward looking or opinion. The statements Plaintiff argues are factual and

retrospective? “We feel very confident in the Illinois market” and “we feel very positive about the

future resolution for these issues.” Compl. ¶ 131, Mem. at 20-21. Plaintiff’s argument that these

are “present or historical facts” is preposterous. Simply because these statements are in the same

document as other historical facts (none of which Plaintiff actually challenges as false) do not

make these statements historical or false. Plaintiff fails to adduce any facts to show falsity, which

would require facts suggesting that: (1) IIPR did not make an investment in 4Front’s Illinois

facility; (2) there were no significant delays in construction to 4Front’s facility; (3) there was no

impact on 4Front’s cash flow; (4) Illinois is not a top 5 market in the U.S.; or (5) IIPR is not looking

to maximize the value of its portfolio. Thus, Plaintiff’s argument fails.

        Beyond this issue, Plaintiff simply ignores the entire paragraph—and accompanying multi-

page exhibit—in which Defendants show the precise “meaningful cautionary language” Plaintiff

argues is missing. Plaintiff instead argues—without actual support—that Defendants were

required to provide some sort of specific cautionary language about their tenants’ “teetering

finances.” Opp. at 22. Once again, this is inapposite, as the direct quotation Plaintiff relies upon

(“cautionary language ‘inadequate to shield defendants from liability for failing to disclose known

specific risks’”) demands that specific risks be known. Opp. at 22 (quoting In re Am. Int’l Grp.,

Inc. 2008 Sec. Litig., 741 F. Supp. 2d. 511, 531 (S.D.N.Y. 2010)).


Defendants’ Reply Memorandum in Support of Motion to Dismiss                             Page 11 of 17


      Case 1:25-cv-00182-GLR            Document 68        Filed 11/20/25       Page 16 of 21


       Plaintiff’s arguments as to puffery suffer similar defects. Relying on Genworth and City of

Sterling, Plaintiff argues that a statement about IIPR “very much lik[ing] the position” of its tenants

is pointed and specific. The Genworth and City of Sterling courts, however, explained that

statements of opinion, which include statements of “think” or “believe” are not actionable as a

statement of opinion. See Genworth, 103 F. Supp. 3d at 778 (explaining that use of “I believe” or

“I think” can “transform a statement of fact into opinion”) (internal citations omitted).

       Plaintiff’s entire Complaint—and thus the Opposition—relies on one baseline assumption:

that Defendants must have known that their tenants were going to default. Without this critical

assumption, the Complaint falls apart, and every case in the Opposition becomes completely

inapposite. Repeating an accusation over and over is insufficient. Rather, Plaintiff must show the

Court facts at least suggesting Defendants knew their tenants would imminently default. Plaintiff

does not, because the real argument the Opposition advances is that the tenants did default,

therefore Defendants must have known. This is purely “impermissible [pleading] fraud by

hindsight.” See In re Marriott Int’l, Inc., Customer Data Sec. Breach Litig., 543 F. Supp. 3d 96,

150 (D. Md. 2021) (dismissing claims as “fraud by hindsight” where plaintiffs relied on a later

report, but pled “nothing at all about any of the individual Defendants or what they knew at the

time the allegedly false or misleading statements were made”).

IV.    PLAINTIFF’S SCIENTER ARGUMENT SIMLARLY FAILS.

       Plaintiff’s scienter argument is a rehash of its prior arguments, and restatement of the

Complaint. According to Plaintiff, because tenants defaulted, and because IIPR conducted

diligence on potential tenants before signing them to leases, the only possible inference is that

Defendants did or should have known about their imminent defaults. But, this is based solely on

the facts in the prior sentence: (1) tenants defaulted; and (2) IIPR conducted due diligence. See


Defendants’ Reply Memorandum in Support of Motion to Dismiss                            Page 12 of 17


      Case 1:25-cv-00182-GLR          Document 68        Filed 11/20/25      Page 17 of 21


Opp. at 23-24 (“IIPR stated that it ‘rel[ied] on our management team to perform due diligence

investigations of our potential tenants…” Compl. ¶ 91 (emphasis added)).

       Plaintiff unwittingly concedes the issue here, arguing “it is plausible to infer” one of two

options regarding IIPR’s alleged scienter. Opp. at 24. One of two options being plausible does not

meet the high standard in the Fourth Circuit of “alleg[ing] facts that support a ‘strong inference’

that each defendant acted with at least recklessness in making the false statement.” Mem. at 22

(quoting Tchrs. Ret. Sys. of LA v. Hunter, 477 F.3d 162, 184 (4th Cir. 2007)). Plaintiff argues in

passing that the possibility a landlord can have tenants who default “is certainly not more

compelling” than a nefarious plot between a company and its managers.

       Plaintiff instead argues it proved scienter by recasting a statement that IIPR was monitoring

its tenants to mean they “possessed knowledge of the true state of affairs” of those tenants. Opp.

at 26 (quoting James River, at *19). But the James River defendants said they did a deep dive into

their company’s finances “every single quarter,” and then the plaintiff adduced facts and testimony

that no such deep dive had occurred—alleging that the company and its managers actually had

access to information (because it was their company) that would contradict their representations.

Here, Plaintiff argues that Defendants must have had IIPR’s tenant’s information—but alleges no

facts. In other words, Plaintiff has not actually argued that any statement by any Defendant

regarding a “deep dive” or conducting diligence was in fact false or misleading. Plaintiff has not

provided any information to suggest that there was (i) no deep dive, (ii) no diligence, or (iii) no

meetings. Instead, Plaintiff argues that there is no way Defendants could have ever done diligence

because the tenants defaulted. The Court is not required to accept this argument as fact, and it is

certainly not required to take conclusory argument as fact. Moreover, to do so would erroneously

allow the long-rejected technique of pleading fraud by hind-sight.


Defendants’ Reply Memorandum in Support of Motion to Dismiss                         Page 13 of 17


      Case 1:25-cv-00182-GLR           Document 68        Filed 11/20/25      Page 18 of 21


       This tactic is most egregious in footnote 17, where Plaintiff states as absolute fact that

Defendants “had the specific tenant financial information that would have alerted them of the risk.”

Opp. at 26, n.17. But no fact was pled to support this statement. Plaintiff’s protestations prove

unequivocally that it indeed “stack[s] inference upon inference”—assuming (a) that because two

of IIPR’s leases had a specific provision (including one from 2019) all leases must have had that

provision, (b) that the tenants actually provided documents under that lease term, and (c) that

information showed more than what the market knew. Plaintiff presents all of these assumptions

as fact. This fails to meet the pleading standards. See also supra at p.7 (Raab).

       Finally, Plaintiff fails to rebut Defendants’ argument about a lack of motive. Plaintiff does

not argue that Defendants saw additional investments, additional income, or otherwise received

any benefit whatsoever from any purported fraud or delay. Nor does Plaintiff argue it would have

even been possible for IIPR’s stock price to hit the levels necessary for a payout. Just because

Plaintiff—and IIPR—lost money on a risky proposition does not point to fraud.

V.     THE OPPOSITION UNDERSCORES THE PROLIXITY OF THE COMPLAINT.

       Plaintiff incorrectly argues that Defendants’ prolixity argument “rests on a misreading of

the Complaint,” because Rule 8 is proper when complaints are confusing and hard to understand.

Opp. at 28-29. Defendants’ prolixity argument is not based on the Complaint’s length. Rather,

Defendants identified cases where this Court dismissed far shorter complaints due to their

repetitive and conclusory nature. See Mem. at 12. That Defendants had to seek, analyze, and

append “over 700 pages of exhibits” in an attempt to understand what Plaintiff was actually trying

to convey proves Defendants’ point further. Defendants admit in the Memorandum that they

consented to a longer Complaint—but that does not give Plaintiff carte blanche to submit a

redundant, confusing, and meandering pleading that leaves the reader scratching their head about

relevant facts and allegations. Even if the Complaint was half as long, it would still suffer from
Defendants’ Reply Memorandum in Support of Motion to Dismiss                         Page 14 of 17


         Case 1:25-cv-00182-GLR             Document 68         Filed 11/20/25       Page 19 of 21


these same deficiencies, and would merit dismissal for prolixity. See Mem. at 12 (citing Plumhoff

v. Cent. Mortg. Co., 286 F. Supp. 3d 699, 702 (D. Md. 2017)).

          Plaintiff’s threadbare argument regarding group pleading is likewise unavailing. The

Complaint does not detail facts specified to each individual defendant.2 Plaintiff responds to this

noted deficiency by citing to three paragraphs of the Complaint that identify three individual

Defendants as responsible for specific statements. The rest of the Complaint—namely paragraphs

1 through 278, which are incorporated by reference into Plaintiff’s two-paragraph-long Count II—

go completely unaddressed. This is not enough and neither is Plaintiff’s conclusory, blanket

statement that every Defendant is liable for every statement made because each could “control

public statements about IIPR.” Opp. at 29. Plaintiff’s group pleading warrants dismissal.

          Plaintiff’s attempt to cure its “control person liability” pleading deficiencies is also

insufficient. Plaintiff cites to 10 paragraphs from its Complaint that contain references to slides

identifying individual Defendants as “senior management.” Plaintiff then (a) assumes that such

identified Defendants prepared those slides (Compl. ¶ 98) or (b) reiterates the same rote (and often

conclusory) allegations that an individual had a “role as a manager” and management played a role

in overseeing tenants. And from there, Plaintiff concludes that “the most compelling inference”

was direct knowledge of falsity (id. 105, 108, 116, 151, 182, 200, 215). These boilerplate and

unsupported allegations will not prop up a Section 20(a) claim. Count II should be dismissed.

                                              CONCLUSION

          For the foregoing reasons, the Court should dismiss the Complaint with prejudice.


2
    See Mem. at 9 (citing In re Mut. Funds., Inv. Litig., 437 F. Supp. 2d 444, 446 (D. Md. 2006)).

Defendants’ Reply Memorandum in Support of Motion to Dismiss                                  Page 15 of 17


     Case 1:25-cv-00182-GLR      Document 68      Filed 11/20/25       Page 20 of 21


Dated: November 20, 2025                   Respectfully submitted,


                                           /s/ Jarren N. Ginsburg
                                           Jarren N. Ginsburg
                                           FOLEY & LARDNER LLP
                                           Washington Harbour
                                           3000 K Street, N.W.
                                           Suite 600
                                           Washington, D.C. 20007-5109
                                           202.295.4071
                                           Facsimile: 202.672.5399
                                           [email protected]

                                            Todd A. Murray (admitted pro hac vice)
                                            Andrew A. Howell (admitted pro hac vice)
                                            2021 McKinney Avenue, Suite 1600
                                            Dallas, TX 75201-3340
                                            214.999.4862
                                            [email protected]
                                            [email protected]


                                            Attorneys for Defendants


Defendants’ Reply Memorandum in Support of Motion to Dismiss                 Page 16 of 17


     Case 1:25-cv-00182-GLR         Document 68     Filed 11/20/25    Page 21 of 21


                              CERTIFICATE OF SERVICE


       I HEREBY CERTIFY that on this 20th day of November, 2025, a true and correct copy

of the above and foregoing DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF

THEIR MOTION TO DISMISS LEAD PLAINTIFF’S CONSOLIDATED CLASS ACTION

COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS was filed and

served via CM/ECF upon all counsel of record.


                                                       /s/ Jarren N. Ginsburg
                                                       Jarren N. Ginsburg


Defendants’ Reply Memorandum in Support of Motion to Dismiss                    Page 17 of 17