On November 7, 2025, Judge John G. Koeltl of the United States District Court for the Southern District of New York denied a motion for leave to amend a putative securities class action complaint asserting claims against a software company (the “Company”) and certain of its officers (the “Individual Defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.
In re Adobe Inc., No. 23-cv-9260 (S.D.N.Y. Nov. 7, 2025). In denying plaintiffs’ motion for leave to amend with prejudice, the Court held that the proposed second amended complaint (“SAC”) would be futile because plaintiffs failed to cure the defects identified in the first amended complaint (“FAC”), which, as we previously covered, the Court
dismissed on March 27, 2025.
The Court noted that plaintiffs’ proposed SAC largely mirrored the FAC in which plaintiffs alleged that defendants misrepresented the threat posed to the Company by a competitor through. three categories of alleged misstatements: (1) downplaying competition from the competitor; (2) concerning the viability of the Company’s own products; and (3) regarding plans to merge with the competitor. The SAC included an additional category of alleged misstatements regarding (4) the total addressable market (“TAM”), reflecting the total potential revenue that the Company could generate for its product in a given year if it were able to capture 100% of the market.
The Court held that plaintiffs failed to plead materiality as to any of the alleged misstatements. First, with respect to alleged statements downplaying competition from the competitor, the Court reaffirmed that plaintiffs alleged, at most, a potential competitive threat rather than concrete, realized harm to the Company’s business. The Court emphasized that the Company openly identified its competitor in its public filings, undercutting any theory that the Company framed the competitive risk as merely hypothetical. The Court also held that plaintiffs failed to plead any revenue loss to the Company’s flagship products. In support of their allegations, plaintiffs cited a survey from the UK Competition and Markets Authority purporting to show that customers believed the competitor’s product was an alternative to the Company’s. However, the Court held that the same source generally characterized the competitor’s ability to compete with the Company’s flagship products as “very limited,” even long after the class period.
Second, the Court held that alleged statements about the viability of the Company’s own product were accurate when made. To the extent they expressed judgments or optimism—such as that the product “keeps getting better and better” or that it appeared among “flagship” applications—the Court held they were inactionable opinions or corporate puffery. The Court further held that plaintiffs’ reliance on the Company’s later regulatory submissions describing the product as a failed attempt did not establish that the contemporaneous opinion statements were disbelieved when made.
Third, as to alleged statements regarding the Company’s merger strategy, the Court again rejected plaintiffs’ contention that the Company misled investors by emphasizing organic growth while negotiating a large acquisition. The Court emphasized that the Company never disclaimed an acquisition, expressly stating it would remain “on the lookout” and “burn calories to acquire” valuable assets.
Fourth, the Court held plaintiffs did not plausibly allege falsity as to the new TAM theory, reasoning that plaintiffs’ argument—that the Company overstated TAM because it purportedly included market segments that the Company could not reasonably capture given competition—was inconsistent with plaintiffs’ own definition of TAM as the total potential revenue if a company captured 100% of a market. The Court held that no reasonable investor would understand TAM to predict the market share the Company would actually achieve, and plaintiffs did not identify any representation that the Company would, in fact, capture the entire market.
With respect to scienter, the Court rejected the proposed amendment for the same reasons as it did when granting the prior motion to dismiss. Specifically, in holding that plaintiffs failed to adequately plead motive and opportunity, the Court emphasized that the Individual Defendants generally increased their holdings during the putative class period, and the few stock sales that occurred were executed under Rule 10b5-1 plans or to cover taxes. Addressing plaintiffs’ recklessness theory, the Court again held that plaintiffs did not plead an “extreme departure from the standards of ordinary care,” noting that plaintiffs identified no internal documents, confidential witnesses, or contemporaneous facts showing defendants knew their statements were false or misleading when made. Furthermore, the Court found that the regulatory materials plaintiffs cited were either consistent with the Company’s public statements or spoke to potential future competition rather than realized harm.
Having found that the proposed SAC failed to sufficiently plead any actionable claim, the Court denied plaintiffs’ motion for leave to further amend.
