Opinion ID: 6501086
Heading Depth: 2
Heading Rank: 3

Heading: Federal Securities Class Action

Text: On June 21, 2019, certain NVIDIA stockholders filed a consolidated class action complaint (the “Securities Complaint”) in the United States District Court for the Northern District of California (the “Securities Class Action”).35 The Securities Class Action, which named NVIDIA and several of its directors as defendants, including Huang and Kress, alleged that the defendants violated federal securities laws by making false or misleading statements about the effect of crypto mining on 32 B102. 33 Ex. A at 9. 34 Id. 35 B110. 9 NVIDIA’s revenue and the demand for Gaming GPUs.36 The Securities Complaint supported its allegations with public filings, NVIDIA transcripts and presentations, testimony from relevant experts, and information from former NVIDIA employees, among other things.37 On March 16, 2020, the United States District Court for the Northern District of California dismissed in part the Securities Class Action, holding that the plaintiffs failed to meet the standard of proof for falsity and raise a strong inference of scienter with respect to any of the individual defendants.38 The court dismissed the motion with leave to amend.39 The plaintiffs then filed an amended securities complaint (the “Amended Securities Complaint”). The Amended Securities Complaint added anonymous testimony from a former NVIDIA employee, named FE 1, alleging that Huang and other executives had specific knowledge of the impact of cryptocurrency on the channel.40 Relevant to this appeal, the Amended Securities Complaint alleged that during a March 2017 meeting, FE 1 warned Senior Vice President and Head of Gaming, Jeff Fisher, and other executives that NVIDIA had to “take care” given the growing reliance on 36 B110-74 37 Ex. A at 10. 38 B229-54. 39 Id. 40 A692-778. 10 crypto miners in China, which Fisher called “dangerous” during the meeting.41 The Amended Securities Complaint also alleged a close relationship between Fisher and Huang, noting that “Fisher reported directly to Huang,” that Fisher was one of NVIDIA’s oldest employees, and that Fisher met with Huang weekly. 42 It also alleged that weekly sales reports quantifying the impact of crypto-mining demand on Gaming GPU sales was sent to Fisher and other executives throughout 2017. 43 NVIDIA filed a motion to dismiss the Amended Securities Complaint, which the court granted.44