Plaintiff Ryan McCormack (both individually and on behalf of all others similarly situated) filed suit on Thursday in the Southern District of New York against defendants including Dingdong LTD. The suit alleges that the company made material misrepresentations in their registration statement leading to their initial public stock offering in a way that led investors to evaluate their company incorrectly.
Defendant Dingdong is a fresh grocery provider whose mission is best described as “directly providing users and households… fresh produce, meat and seafood and other daily necessities through a convenient and excellent shopping experience supported by an extensive self-operated frontline fulfillment grid.” The complaint explains that a key component of Dingdong’s business is that it obtains its products from sources including farms and cooperatives.
In June of 2021, defendant Dingdong held an initial public stock offering, or IPO on the New York Stock Exchange in which American depository shares were listed. 4.07 million shares were listed at $23.50 per share.
Despite the company holding their IPO in June, the registration statement that the company had filed in connection with the IPO is alleged to have “misrepresented Dingdong’s commitment to ensuring the safety and quality of the food it distributes to the market.” Dingdong allegedly marketed fresh fish and vegetable products while providing products that were past their sell-by date. Dingdong’s IPO grossed almost $95.7 million in proceeds.
The plaintiff contends that the defendant’s misrepresentation of their services led investors to evaluate the company to be worth more than it was, leading them to purchase their shares “without material information to their detriment,” and suffer damages. Since the misrepresentations and omissions came to light, Dingdong’s stock price has declined over 89%.
The complaint cites three individual counts of violations of the Securities Act. The plaintiff is seeking class certification, compensatory damages, recission, disgorgement, pre- and post-judgment interest, a trial by jury, litigation fees, and any other relief deemed equitable by the Court.
The plaintiff is represented in the litigation by Scott+Scott Attorneys at Law LLP.
