On January 22, 2026, Judge Consuelo B. Marshall of the United States District Court for the Central District of California denied a motion for judgment on the pleadings filed by an electric automobile company (the “Company”) and several of its officers (together, the “Defendants”) in a securities class action alleging violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
Ind. Pub. Ret. Sys. v. Rivian Auto., Inc., No. 2:24-cv-4566-CBM-JPR (C.D. Cal. Jan. 22, 2026).
Plaintiffs alleged that Defendants misrepresented that the Company, which manufactures electric vehicles, had been on track to achieve gross margin profits in 2024 by reassuring investors that the Company was “unscathed by [the] macroeconomic factors” that were impacting the electric vehicle industry. Yet, according to Plaintiffs, the Company was allegedly suffering from the same “weakened demand and reduced prices” issues that its peers were experiencing. Plaintiffs also alleged that Defendants’ statements regarding high customer demand for the Company’s products were misleading because the “demand” was based on a preorder backlog which had refundable deposits that could be canceled without penalty. In addition, because the backlog allegedly required consumers to wait years before purchasing a vehicle, it significantly increased cancellation risk. Defendants moved to dismiss the action, and, on August 20, 2025, the Court denied Defendants’ motion, finding that Plaintiffs sufficiently pled that Defendants made actionable false and misleading statements regarding consumer demand.
On the same day that the Court denied Defendants’ motion to dismiss, the Ninth Circuit issued its opinion in
Sneed v. Talphera, Inc., 147 F.4th 1123 (9th Cir. 2025) (which we previously covered
here), affirming the lower court’s dismissal of a proposed securities class action. In
Sneed, shareholders alleged that a pharmaceutical company’s marketing slogan, “tongue and done,” was misleading advertisement for an opioid that could only be administered intravenously. The Ninth Circuit noted that the shareholders failed to adequately allege that the slogan would mislead a reasonable investor because investors generally examine the context surrounding the statement. The Ninth Circuit reasoned that “[c]ontext matters because we presume that a reasonable investor . . . acts with care and seeks out relevant information” and that “a reasonable investor would not blindly accept a marketing slogan by itself when she has access to other contextual information.” In their motion for judgment on the pleadings, Defendants argued that the Ninth Circuit’s holding in
Sneed required the Court to examine the “full context” of the Company’s disclosures. Had the Court done so, Defendants argued, it would have found that reasonable investors would not have been misled by Defendants’ statements because Defendants made “on-point disclosures addressing the very issues Plaintiffs allege[d] were concealed.”
The Court disagreed. It noted that
Sneed did not create new case law requiring the examination of context surrounding allegedly misleading statements but merely cited existing case law that noted that examining the full context surrounding such statements is appropriate. And, in any event, the Court said, it had already examined the “on-point disclosures” that Defendants argued addressed the issues Plaintiffs alleged at the motion to dismiss stage. The Court reiterated its holding on the motion to dismiss that Plaintiffs sufficiently pled falsity because “the statements created an impression of a state of affairs that differed in a material way from what actually existed.” Finally, the Court noted that, despite Defendants’ risk disclosures, Plaintiffs plausibly alleged Defendants made misleading statements about demand based on the backlog, specifically because the Company stopped publicly reporting preorders in November 2022 while continuing to make statements regarding increases in demand.
Because the Court could not find as a matter of law that Defendants’ alleged misstatements would not have misled a reasonable investor, the Court denied Defendants’ motion for judgment on the pleadings.
