In re Seagate Technology Holdings plc Securities Litigation

Background

The plaintiffs allege that Seagate Technology Holdings plc and executive officers William D. Mosley and Gianluca Romano violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The claims concern Seagate’s statements about its sales of hard disk drive technology to Huawei Technologies Co., Ltd.

On May 12, 2025, the court granted in part and denied in part Seagate’s motion to dismiss. Seagate then moved to have that earlier order certified for an interlocutory appeal, meaning an appeal before the case is finished. Seagate also requested a stay of the case.

Seagate’s Proposed Appeal Questions

Seagate identified two proposed questions. First, it asked whether the Export Administration Regulations required a company to seek guidance from the Bureau of Industry and Security when it had “reasons for concern” about whether the Foreign Direct Product Rule applied to a product. Second, it asked whether “reasons for concern” required more than notice that conduct might possibly violate the rule—such as a level of awareness similar to willful blindness.

Court’s Analysis

Under 28 U.S.C. § 1292(b), certification for an interlocutory appeal requires a controlling legal question, substantial disagreement about that question, and a likelihood that an immediate appeal would materially advance the end of the litigation. The party seeking certification bears the burden of meeting those requirements. The court held that Seagate had not met its burden.

As to the first question, the court held that the meaning of Seagate’s statements about compliance with applicable rules and regulations was a mixed question of law and fact. The plaintiffs had plausibly alleged that Seagate represented that it had no reasons for concern that its sales to Huawei violated the Foreign Direct Product Rule. The court noted that the Bureau of Industry and Security guidance addressed not only the identity of a transaction’s end user but also other facts about a transaction, including circumstances that should create reasonable suspicion of an export-control violation.

The court also held that Seagate had changed its position. At the earlier motion-to-dismiss hearing, Seagate had agreed that its statements could reasonably be understood as representing that it had no reason for concern that its sales to Huawei violated the Foreign Direct Product Rule. Seagate later argued that its statements concerned only the identity of the end user, not whether the products fell within the rule. Because Seagate had not raised that theory in its motion-to-dismiss briefing, the court held that the argument was waived and was not properly appealable.

As to the second question, the court stated that the guidance appeared to require investigation when a company had reasons for concern, even before it had actual knowledge or a reason to know of a violation. The court also held that the meaning of Seagate’s representations was a mixed question of law and fact. The plaintiffs had plausibly alleged that Seagate was aware of a high probability that its interpretation of the Foreign Direct Product Rule was wrong but did not make the inquiry required by the guidance. Seagate had not raised this argument in its motion-to-dismiss briefing either, so the court held that it was waived.

Disposition

The court denied the motion for certification for an interlocutory appeal. The opinion does not separately state a disposition of Seagate’s request to stay the case. In a footnote, the court stated that Seagate’s request for reconsideration was waived because it was raised only in passing and, in any event, would be denied for the same reasons.