A few months ago, securities litigators viewed OT24 with excitement: The Court had granted cert in not one, but two cases addressing when a complaint adequately alleged securities fraud under the Private Securities Litigation Reform Act. No more: A few weeks ago, the Court took back the first of those grants, dismissing Facebook, Inc. v. Amalgamated Bank as improvidently granted. Then last week, to the surprise of almost no one, the second case, NVIDIA Corp. v. E. Ohman J:Or Fonder AB (No. 23-970), met the same end.  

NVIDIA and Facebook had a lot in common. NVIDIA is one of the world’s foremost chipmakers. In recent years, it has experienced enormous growth stemming largely from the use of its chips in artificial-intelligence applications. Before that, though, it benefited from the growth of cryptocurrency mining, an industry that (like AI) finds NVIDIA’s chips particularly appealing. When the price of bitcoin took a dive in 2018, NVIDIA’s sales followed. Disappointed investors promptly sued, alleging that NVIDIA executives (including its CEO) made false and misleading statements about the company’s prospects by downplaying how much crypto mining was contributing to its sales. To plead scienter, the plaintiffs alleged that internal NVIDIA documents—documents that plaintiffs had never seen and could only describe in generic terms—would show that NVIDIA knew its sales were heavily propped up by crypto sales. And to show falsity, they relied on an expert, who pointed to the number of crypto-mining processors sold and NVIDIA’s estimated percentage of those sales to opine that NVIDIA’s public statements about the breakdown of its sales were likely false. Much as in Facebook, a California District Court found those allegations inadequate and dismissed the case. And much as in Facebook, the Ninth Circuit reversed, holding that plaintiffs’ allegations were enough to get past the pleading stage.  

NVIDIA asked the Supreme Court to take up the case to answer two questions: First, whether PSLRA plaintiffs relying on internal company documents to plead scienter must plead the contents of those documents with particularity? And second, whether plaintiffs could satisfy the PSLRA’s falsity requirement by relying on expert opinions? The Court granted cert on both questions. But, once again like in Facebook, as the briefing developed, it became increasingly hard to identify a precise legal question posed by the case. Perhaps the Ninth Circuit was wrong to let the case proceed, but its error (if any) was just in (mis)applying an already established legal standard to the specific allegations of the complaint rather than creating some arguably incorrect legal rule that would affect scores of cases. Those doubts became even more acute at oral argument: Justices from both sides of the aisle (in particular, Sotomayor, Kagan, Gorsuch, and Barrett) spent most of the argument time asking NVIDIA’s lawyer why they had even taken the case in the first place. So when Facebook got DIG’ed a few weeks ago, just about everybody knew the writing was on the wall, making last week’s dismissal no surprise. 

So what does the dismissal of the term’s only two securities cases (at least so far) mean for the future of securities litigation at the Supreme Court? Probably not much. Rather, we think the dismissal of Facebook and NVIDIA highlights two features of the current Supreme Court. The first, and more obvious, is that this Court just isn’t interested in “error correction.” No matter how wrong a lower court’s application of established law to the facts may be or how consequential a decision may be to the parties, the Court doesn’t want to spend its time on a case unless it can use that case to announce a rule that will affect a significant chunk of cases going forward. When all was said and done, Facebook and NVIDIA flunked that test: The Justices could have affirmed or reversed the Ninth Circuit, but no matter which they did, it was hard to see how their decision could give lower courts a clean legal rule that would dictate the outcome of many future cases. These cases were just two one-offs, and writing lengthy opinions about how these one-offs should be decided just isn’t worth the Court’s time.     

Second, and a bit more speculatively, maybe some members of the Supreme Court bar are becoming too good at getting the Court to grant cert. After all, even novice Court watchers know that the Court doesn’t do a lot of error correction, so if you want it to grant cert, you have to appear to be presenting it with a clean legal dispute. Emphasis on “appear”: In the truncated genre of a cert petition, skillful advocates can do a good job of making a lot of cases sound like they turn on an open legal question. But when the rubber hits the road of full briefing and oral argument, questions that once seemed pretty law-y can sometimes be revealed as just disagreements about how to apply established law to the always slightly novel facts of an individual case. What’s the Court to do then? Sure, it could try to resolve the case as best it can, even if decision it ends up writing is a bit fact-heavy and case-specific. But that rewards the lawyers who arguably hid the ball (at least in those cases where the Court agrees that the lower court erred). Alternatively, the Court could DIG the case, making it as though cert was never even granted. While that leaves in place a decision some members of the Court might think was wrong, it also serves as a warning to lawyers in future cases that they may not profit from being too creative with their cert petitions. 

If nothing else, though, some members of the Court are likely to view their DIG’ing of two fairly similar cases in short succession as a bit of a misstep. So don’t be surprised if the Court gives some cases—particularly PSLRA cases—a bit of a closer look before granting cert going forward.