U.S. Supreme Court seems likely to allow class action to proceed against Nvidia

The U.S. Supreme Court seemed likely to keep alive a class-action lawsuit accusing Nvidia of misleading investors.

The Supreme Court on Wednesday seemed likely to keep alive a class-action lawsuit accusing Nvidia of misleading investors about its dependence on selling computer chips for the mining of volatile cryptocurrency.

The justices heard arguments in the tech company's appeal of a lower-court ruling allowing a 2018 suit led by a Swedish investment management firm to continue.

It’s one of two high court cases involving class-action lawsuits against tech companies. Last week, the justices wrestled with whether to shut down a multibillion-dollar class action investors’ lawsuit against Facebook parent Meta stemming from the privacy scandal involving the Cambridge Analytica political consulting firm.

On Wednesday, a majority of the court that included liberal and conservative justices appeared to reject the arguments advanced by Neal Katyal, the lawyer for Santa Clara, California-based Nvidia.

“It’s less and less clear why we took this case and why you should win it,” Justice Elena Kagan said.

The lawsuit followed a dip in the profitability of cryptocurrency, which caused Nvidia's revenues to fall short of projections and led to a 28% drop in the company's stock price.

In 2022, Nvidia paid a $5.5 million fine to settle charges by the Securities and Exchange Commission that it failed to disclose that cryptomining was a significant source of revenue growth from the sale of graphics processing units that were produced and marketed for gaming. The company did not admit to any wrongdoing as part of the settlement.