Law

Groupon Lawsuits

The GROUPON lawsuit claims that the company made materially false statements and failed to disclose certain adverse facts. The company primarily relied on the Goods category to drive sales, but recently reported a 23% decline in sales year over year and announced it was exiting the category in North America by the third quarter. This news caused GROUPON’s share price to plummet by nearly 44%. The company also faces several other lawsuits related to the same issues.

Defendants

The complaint filed by Rahal accuses the defendants of making materially false and misleading statements, including failure to disclose material facts. In particular, Rahal claims that the defendants failed to disclose that Groupon had fewer customer engagements in the Goods category than they had estimated. This could have affected the Company’s ability to compete in the Goods category. As a result, the defendants’ positive statements were not only misleading but lacked a reasonable basis.

The complaint filed by Rahal alleges that the defendants misled investors by overstating the company’s revenue, reporting materially false financial results, and hiding the true growth of the business. While the company did not comment on pending litigation, several law firms have said they intend to file similar lawsuits on Groupon’s behalf. In November, Groupon pulled off one of the largest internet IPOs in history. Its IPO valued the company at $10 billion.

Class action

In a class action lawsuit against Groupon, the plaintiffs allege that the company made materially false and misleading statements to investors. The company allegedly failed to disclose that the business suffered from weak customer engagements. The stock price of Groupon plunged 41 percent from its high during the class period. The plaintiffs seek damages against Groupon and certain executives, board members, and underwriters for their failure to disclose these facts.

The settlement was based on the fact that both defendants have agreed to make changes to the advertising of their deals. The two parties agreed to clearly state that promotional expiration dates only apply to deals, and they will limit the number of annual Daily Deals that expire to less than thirty days. These changes have been criticized as insufficient to stop the use of Groupon. However, the lawsuit’s success lays bare a problem for the online discount marketplace.

Expiration dates

Recently, Groupon settled a class action lawsuit involving expired vouchers. The lawsuit claimed that Groupon violated federal law by not making expiration dates visible on their website. The company stressed that they are not admitting guilt and will modify their terms of service to make expiration dates more clear. Still, the company is under fire for the terms of its settlement agreement. Let’s take a closer look.

The settlement agreement between the plaintiffs and the defendants does not address all of the issues raised by the class action suit, which was filed against the popular website. However, it does give consumers more options to redeem expired vouchers. For example, Groupon will refund customers if their vouchers expire after December 1st, 2011. It has also agreed to sell 10% of its daily deals with short expiration dates for three years. The deadline to object to the settlement is July 27th, 2012.

Misleading investor statements

A shareholder is suing the online coupon website Groupon for making false or misleading statements to investors during its IPO. The lawsuit alleges that Groupon misrepresented certain financial information, including its revenue and refund rate. The site also allegedly concealed the fact that its business was suffering from poor customer engagement and was not competitive, despite reporting higher profits. Misleading investor statements in Groupon lawsuits can result in substantial compensation for investors.

The lawsuit is seeking class-action status and is led by individual investor Michael Carter Cohn. The suit argues that investors were duped by false statements made by Groupon’s then-CEO. However, the investors failed to plead their claims with the particularity required for a securities fraud case. In addition, the plaintiff failed to cite specific statements from its investor communications. In short, the investors’ complaint was not well-founded.

Underwriters

A Class Action Lawsuit has been filed against Groupon, Inc., and certain of its officers and directors, alleging that the company made false statements in its IPO registration statement and fourth-quarter 2011 earnings report. The complaint was filed in April 2012 in the U.S. District Court for the Northern District of Illinois. It alleges violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. If you purchased shares of Groupon common stock during November 4, 2011, and February 9, 2012, you may be eligible to join this lawsuit.

The IPO was handled by Morgan Stanley, Goldman Sachs, and Credit Suisse Securities, and the companies went public four years ago. The plaintiffs’ counsel, however, argues that dropping these claims would serve no purpose and be an unnecessary distraction during the trial. In addition to the lawsuits filed against the underwriters, Groupon is also suing certain current and former Groupon board members. The case is still pending.

Cost of litigation

A recent case involving IBM and Groupon saw the former win an $82 million verdict against the latter. In that case, the jury found that Groupon infringed on four patents belonging to the e-commerce industry. This verdict allowed IBM to pursue enhanced damages, which could go up to three times what was originally awarded. This amount does not include attorneys’ fees, though. A spokesperson for Groupon declined to comment.

As a matter of principle, discount programs that require advance payments are highly litigious environments. For example, a case involving Groupon involved 17 lawsuits. The judge certified the case as a class action last year, and the settlement details mirror Groupon’s current policy on expired coupons. However, the company has been criticized in the past for the “double-talk” of its affiliates. This is a problem in many ways.

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