The Supreme Court on Wednesday dismissed an appeal from Nvidia in a securities lawsuit against the chipmaking giant, allowing the case to move forward.
The court dismissed the appeal as “improvidently granted” in an unsigned, one-sentence opinion without explanation.
It marks the second time the court has done so in recent weeks; the justices last month similarly dismissed Facebook’s appeal in a securities lawsuit against the company.
Nvidia’s suit, brought by Swedish investment firm Ohman J:or Fonder, centers on allegations that company executives, including CEO Jensen Huang, misled investors about the extent its sales depended on volatile cryptocurrency miners.
Nvidia argued the investment firm did not meet the legal bar set by the Private Securities Litigation Reform Act, a federal law created in 1995 to prevent frivolous securities litigation.
During oral arguments last month, some of the justices appeared to have second thoughts about the high court’s involvement in the legal matter. Some suggested to Nvidia’s counsel the case might not require a blanket rule to make it more difficult for securities fraud claims to be brought forward.
“I’m not actually sure what rule we could articulate that would be clearer than our cases already say,” Justice Sonia Sotomayor said near the start of the argument.
“It’s less and less clear why we took this case and why you should win it,” Justice Elena Kagan said at another point during arguments.
The Supreme Court agreed in June to take up Nvidia’s arguments after the 9th U.S. Circuit Court of Appeals reversed a ruling dismissing the lawsuit.
By dropping the chipmaker’s appeal, the Supreme Court’s opinion enables the lawsuit to move forward. The case has not yet reached trial.
The allegations date back to 2018, after the company announced it missed revenue projections in the previous quarter and anticipated a year-to-year decline in its total revenues for the following quarter. The company’s stock price fell by 28.5 percent over the two trading days following the announcement.
Nvidia sells graphic processing units (GPUs), which are often used for video games but can also be used in mining of cryptocurrency. The digital currencies market is very volatile, often leading to fluctuation in demand for the GPUs.
The investors’ lawyer, Deepak Gupta, celebrated the court’s decision, calling it a “win for corporate accountability.”
“When corporations mislead shareholders, they undermine trust in our markets. Ensuring that investors can seek justice is essential to preserving fairness and transparency,” Gupta wrote in a statement Wednesday. “The corporate Supreme Court bar, supported by the U.S. Chamber and its allies, often tries to gin up nonexistent legal issues in an effort to curtail class actions. We hope the Court will think twice the next time a corporation uses the same playbook.”
Nvidia’s legal team declined to comment, though a spokesperson told The Hill that the company “would have preferred a decision on the merits affirming the trial court’s dismissal of the case.”
“But we are fully prepared to continue our defense,” the spokesperson added. “Consistent and predictable standards in securities litigation are essential to protecting shareholders and ensuring a strong economy, and we remain committed to supporting them.”
The Hill reached out to the Swedish investment firm and its legal team for comment.
Updated at 12:57 p.m. EST
