The court determined the "stock" was not a security. Calling something "stock" creates a rebuttable presumption that it's a security but the purchasers of the co-op "stock" didn't have any possible expectation of profit (the "stock" couldn't appreciate in value, would not pay dividends, was non-transferable, etc.) so it failed the Howey test. Merely calling something stock does not make it so.

You might find SEC v Lauer[1] interesting. Where a non-existent hypothetical investment was determined to be a security. As well as SEC v Edwards[2], where a fixed-rate leaseback agreement for payphones was determined to be a security.

[1] https://caselaw.findlaw.com/us-7th-circuit/1054989.html

[2] https://caselaw.findlaw.com/us-11th-circuit/1156201.html