Groupon Agrees To Pay $13.5 Million To Resolve Claims It Misled Investors Over Its Financial State

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Groupon class action lawsuit overview: 

• Who: Groupon has agreed to a $13.5 million class action settlement with a group of its investors. 
• Why: The settlement agreement was made to resolve claims Groupon misled investors about its financial state prior to announcing that it was going to stop selling physical goods and that two of its top executives were leaving the company. 
• Where: The class action lawsuit was filed in Illinois federal court. 

Groupon has agreed to pay $13.5 million to resolve claims it misled investors about the state of its finances prior to the company ending its sale of physical goods and announcing that two of its top executives were leaving. 

Investors are seeking preliminary approval of the proposed settlement agreement, which they say will recover 9.6% of the maximum damages that could possibly be made available to investors. 

The best-case scenario for investors would have been a settlement agreement worth approximately $140 million, according to the investors motion for preliminary approval. 

Investors filed a class action lawsuit against Groupon in April 2020 over allegations that the company had withheld from its shareholders that its sales of physical goods were suffering, reports Law360. 

Further, investors argued Groupon had made misleading positive statements about the company and failed to be transparent about the importance its sales of physical goods had on its finances. 

Groupon’s former CEO accused of misleading investors

Groupon’s then-CEO Rich Williams said in a November 2019 press release that he was confident about how the company was performing, which investors argue artificially inflated its stock price, reports Law360. 

Investors argued in their initial complaint against Groupon that its stock price would end up dropping after the company announced months later in February that it was ending its sales of physical goods. 

“As a result of these materially false and/or misleading statements, and/or failures to disclose, Groupon’s securities traded at artificially inflated prices during the class period,” the investors said, reports Law360. 

In 2019, Groupon attempted to get a class action lawsuit dismissed that was filed by a user accusing the company of improperly using Instagram photos and usernames for commercial purposes without receiving consent. 

Were you financially injured after Groupon announced it was ending its sale of physical goods? Let us know in the comments! 

The plaintiffs are represented by Louis C. Ludwig of Pomerantz LLP. 

The Groupon Physical Goods Class Action Lawsuit is Rahal, et al. v. Groupon Inc., et al., Case No. 1:20-cv-02581, in the U.S. District Court for the Northern District of Illinois.

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