The Second Circuit affirmed the district court’s dismissal of all claims with prejudice

On December 16, 2025, Davis Polk secured an appellate victory when the United States Court of Appeals for the Second Circuit affirmed the district court’s dismissal with prejudice of all claims against its clients Mobileye Global Inc. and several current and former senior officers in a putative securities class action. The amended complaint asserted securities fraud claims under the Securities Exchange Act of 1934 and the Securities Act of 1933 in connection with a purported “channel-stuffing” scheme. In its opinion, the panel affirmed dismissal of the case, concluding that the plaintiffs failed to allege any false or misleading statements.

Mobileye is an Israeli technology company that sells proprietary advanced driver-assistance systems (ADAS). It sells its flagship product, the EyeQ chip (which implements certain safety features into vehicles, such as lane departure or obstacle warnings), to Tier 1 automotive equipment suppliers, which then incorporate the Mobileye products into equipment they sell to original equipment manufacturers such as Ford. In early 2024, Mobileye announced that in the course of planning for 2024, it learned that certain Tier 1 customers had accrued excess EyeQ chips that materially exceeded prior estimates, leading to lower revenue projections for the first quarter of 2024.

Following a drop in the stock price, the plaintiffs filed suit, alleging that Mobileye had engaged in an undisclosed scheme to sell excess EyeQ chips to boost current revenue at the expense of future revenue, largely based on annual minimum commitment contracts that Mobileye entered into with certain Tier 1 customers in 2022 and 2023. The plaintiffs alleged that these contracts and their impact on Mobileye’s business were not adequately disclosed and that certain statements by Mobileye’s executives misled investors into thinking that EyeQ chip sales to Tier 1 customers matched actual demand. Mobileye moved to dismiss the complaint. Judge Denise L. Cote of the Southern District of New York granted the motion, agreeing with Davis Polk’s arguments that, among other things, the amended complaint failed to adequately plead any material misrepresentations or omissions or other deceptive acts in light of the company’s extensive disclosures.

The Second Circuit agreed on all fronts, concluding that the plaintiffs failed to plead an actionable Exchange Act claim based on any alleged misstatements or omissions because Mobileye’s disclosures – including its Form 10-Ks describing its minimum-commitment contracts, customers’ previous accrual of inventory and potential associated future risks – rendered the challenged statements neither false nor misleading. The panel likewise determined that the remaining challenged statements concerning demand stabilization, performance metrics, market share and customer capacity were inactionable, including because they were accurate and otherwise not misleading given their context, and/or they constituted forward-looking statements or opinions. The Second Circuit likewise rejected the plaintiffs’ other claims for scheme liability and alleged violations of Section 11 of the Securities Act.

The Davis Polk team included partner Dana M. Seshens (who argued the appeal), counsel Daniel J. Schwartz and associates Tess Liegeois, Allie (Allison) Siesser, Matthew J. Whang and George Palau. All members of the Davis Polk team are based in the New York office.

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