The Korea Consumer Agency issued a press release in 2015 stating that the health supplement product Baeksu-o sold by Naturalendo Tech was mostly fake. At that time, the shares of Naturalendo Tech, which were priced around 140,000 won, plummeted. Consequently, investors filed a lawsuit against the Consumer Agency for damages, but the Supreme Court recently confirmed that they lost the case.
On the 15th, the Supreme Court's Civil Division 1, led by Chief Justice Noh Tae-ak, dismissed the appeal in the lawsuit filed by 17 investors of Naturalendo Tech, including a person surnamed Kim, who sought to recover their investment losses from the Consumer Agency, ruling in favor of the defendant.
In March 2015, the Consumer Agency released a press statement indicating that most of Naturalendo Tech's Baeksu-o products contained 'Iyeobupiso,' which is a fake Baeksu-o ingredient. Iyeobupiso is toxic and banned for use as a food ingredient.
However, during the investigation, Naturalendo Tech was cleared of any wrongdoing. The prosecution noted, "Although Iyeobupiso was detected in the products, the contamination rate was very low at around 3%," and stated, "The company has also improved its inspection system to prevent (Iyeobupiso) contamination." Thus, it is difficult to argue that the company intentionally contaminated the products or turned a blind eye to it.
At the time, the shares of Naturalendo Tech were priced around 140,000 won, with a market capitalization in the mid-1 trillion won range. However, after the Consumer Agency's announcement, the share price halved each month. Currently, the share price stands at 2,300 won, and the market capitalization is 73 billion won.
As a result, investors in Naturalendo Tech filed a lawsuit against the Consumer Agency, claiming they suffered significant losses due to the false announcement.
However, the investors lost in both the first and second trials. The court stated, "Since the Consumer Agency confirmed the detection of Iyeobupiso in the products, it was necessary to inform consumers of this fact," adding, "It is difficult to consider the Consumer Agency's announcement as a falsehood."
The Supreme Court recognized issues with the Consumer Agency's announcement but did not acknowledge liability for damages. The court explained, "The Consumer Agency merely confirmed that Iyeobupiso was detected in Naturalendo Tech's Baeksu-o products, but did not assess the quantity, circumstances of the contamination, or any intent behind it." It continued, "Under such circumstances, the Consumer Agency issued a press release suggesting that the company intentionally deceived regarding the ingredients for cost-cutting, which cannot be considered for the public good."
However, the court noted, "The direct victim of the Consumer Agency's announcement is the company, and the plaintiffs, as shareholders, suffered indirect losses such as a decline in stock prices due to the loss of the company’s asset value," asserting that the judgments of the first and second trials, which denied substantial causality between the Consumer Agency's announcement and the investors' losses, were justified.