Judge Grants Motion to Dismiss Securities Fraud Class Action Against Coupang, Inc.

Coupang, Inc. and its founder and certain executives, board members, and IPO underwriters have been cleared of securities fraud claims following a motion to dismiss granted by Judge Vernon S. Broderick of the Southern District of New York. The plaintiffs had alleged that defendants made false and misleading statements about the propriety of Coupang's business practices, including labor and employment relations, dispute resolution, and intellectual property misappropriation. However, the Court held that plaintiffs failed to plead with particularity that any statements related to Coupang's allegedly "illegal" business practices were actionable. The Court further rejected plaintiffs' arguments regarding the defendants' alleged failure to disclose information about workplace safety violations, dispute resolution, supplier coercion, and intellectual property misappropriation. The Court ultimately dismissed the complaint in its entirety with prejudice, citing plaintiffs' failure to adequately allege a primary violation of Section 10(b) of the Securities Exchange Act and their inability to show a strong inference of scienter.

Key Takeaways:

• The Court dismissed the complaint in its entirety with prejudice, citing plaintiffs' failure to adequately allege a primary violation of Section 10(b) of the Securities Exchange Act.
• The defendants made several arguments regarding the inactionability of certain statements, including puffery and generic risk disclosures, which the Court ultimately accepted.
• The Court held that plaintiffs failed to allege specific facts showing that any of the individual defendants had knowledge of or participated in the alleged fraud.
• The Court declined to address loss causation, as it found that plaintiffs failed to adequately allege a primary violation of Section 10(b).
• The Court dismissed the derivative Section 20(a) control person claims, as well as the control person liability under Section 15 of the Securities Act.

Statistics:

• Between March 11, 2021, and March 14, 2022, defendants made 24 public statements regarding Coupang's operations, which allegedly came to light through various investigations and enforcement actions by the Korea Fair Trade Commission (KFTC).
• The plaintiffs alleged that defendants made material misrepresentations and omissions in 8 Form S-8 registration statements and several post-IPO public statements.
• The Court identified 5 categories of alleged misstatements and omissions regarding Coupang's business: (i) statements regarding labor and employment relations, (ii) alleged omissions regarding dispute resolution, (iii) statements regarding price matching, (iv) statements touting the Company's platform, and (v) alleged manipulation of search algorithms and product reviews.

Sources:

• N.Y.C. Pub. Pension Funds v. Coupang, Inc., et al., 22-CV-7309 (VSB) (S.D.N.Y. Sept. 10, 2025)
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