Lawsuits are probably the last straw that comes to an end for Nvidia’s icy, but that doesn’t mean it’s just going to knock them over. In fact, it looks like the chip giant would prefer to fire them before they even go to court.
The U.S. Supreme Court just heard Nvidia’s appeal of a lower court’s 2018 decision to join the class action lawsuit (via Reuters). The lawsuit alleged that Nvidia misled its investors by downplaying the degree to which its sales and revenues depended on the cryptocurrency market, thereby violating the Securities Exchange Act of 1934.
We’ve already seen Nvidia pay not to disclose such reliance on cryptocurrencies. In 2022, Nvidia agreed to $5.5 million with the Securities and Exchange Commission for failing to adequately disclose the extent to which cryptocurrency mining was responsible for GPU sales and revenue.
Which, as you may remember, was so gigantic that scalpers went crazy for the RTX 30 series, and Nvidia pushed “Lite Hash Rate” (LHR) versions of their graphics cards..
However, the 2018 lawsuit that has resurfaced is separate from this case. In fact, it has quite a checkered history – it was previously dismissed in 2021 and then reopened by the 9th Circuit Court of Appeals. Now Nvidia is trying to fight it again, claiming that it is not entirely satisfactory.
The current argument before the Supreme Court is whether the 2018 lawsuit is robust enough to go to trial given the rules set forth in the Private Securities Litigation Reform Act of 1995, which seeks to prevent frivolous court disputes.
According to Reuters, in response to Nvidia’s arguments, liberal Justice Ketanji Brown Jackson said, “I think my concern is that you seem to be requiring plaintiffs to actually have evidence in order to defend their case,” even though such evidence is typically often cited only at a later stage.
In other words, to put it very simply, it looks like Nvidia may be arguing that the litigants need more evidence for the lawsuit to even be considered in court.
However, plaintiffs can counter this by arguing that proving the claims in the lawsuit is what happens After the lawsuit was accepted for consideration. The Supreme Court is considering where to draw the line between these two positions – where the threshold for considering a lawsuit should be.
For this reason, Reuters also mentions that this lawsuit is “one of two cases before the Supreme Court this month that could lead to rulings that make it harder for private parties to hold companies liable for alleged securities fraud,” the other featuring Meta.
If Nvidia wins its appeal, it could set a precedent for what evidentiary threshold must be met for a class action lawsuit against immense companies to even be heard.
However, the burning question on my mind is: if Nvidia is doing so well, this renewed and ongoing lawsuit surely can’t be foisted on us by 2018 investors who stuck around and now have to laugh all the way to the bank, maybe? Perhaps this is being pushed by those who left back then and are kicking themselves. I know I would.