On December 11, 2024, the United States Supreme Court issued a
one-sentence decision dismissing the appeal—after having
already heard oral argument—in a putative class action
asserting claims under the Securities Exchange Act of 1934 against
a technology company and certain of its officers. NVIDIA Corp.
v. E. Ohman J:or Fonder AB, No. 23-970. The Court's order
dismissed the writ of certiorari as "improvidently
granted."
Relevant to the appeal, plaintiffs alleged that (a) expert analysis
revealed that defendants had materially understated the extent to
which NVIDIA's graphics processing units were purchased by the
volatile cryptocurrency mining industry and (b) the company's
CEO had known of the misrepresentations because he received
internal reports reflecting the truth. As discussed in prior posts,
the district court dismissed the case entirely and
with prejudice, but the Ninth Circuit, in a 2-1 decision, partially
reversed, holding that plaintiffs adequately alleged that
statements by two executives had been misleading, and adequately
alleged scienter as to the company's CEO. The Supreme Court granted certiorari to address the following
questions: "1. Whether plaintiffs seeking to allege scienter
under the Private Securities Litigation Reform Act
("PSLRA") based on allegations about internal company
documents must plead with particularity the contents of those
documents"; and "2. Whether plaintiffs can satisfy the
PSLRA's falsity requirement by relying on an expert opinion to
substitute for particularized allegations of fact." During oral argument on November 13, 2024, multiple
Justices expressed doubts as to whether the appeal presented legal
issues warranting Supreme Court review or whether the appeal merely
sought to change the result below.
The Supreme Court's order leaves in place the Ninth
Circuit's ruling. The case will now return to the United States
District Court for the Northern District of California for further
proceedings.
This dismissal follows a similar recent post-oral argument dismissal by the Supreme Court in another
putative securities class action also involving a technology
company. Facebook v. Amalgamated Bank, No. 23-980. The
result of that dismissal was to leave in place a decision by the
Ninth Circuit, discussed in a prior post.
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