NVIDIA 2010 Annual Report Download - page 122

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Product Defect Litigation and Securities Cases
In September, October and November 2008, several putative consumer class action lawsuits were filed against us, asserting
various claims arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products
used in notebook systems. Most of the lawsuits were filed in Federal Court in the Northern District of California, but three were filed
in state court in California, in Federal Court in New York, and in Federal Court in Texas. Those three actions have since been
removed or transferred to the United States District Court for the Northern District of California, San Jose Division, where all of the
actions now are currently pending. The various lawsuits are titled Nakash v. NVIDIA Corp., Feinstein v. NVIDIA Corp., Inicom
Networks, Inc. v. NVIDIA Corp. and Dell, Inc. and Hewlett Packard, Olivos v. NVIDIA Corp., Dell, Inc. and Hewlett Packard,
Sielicki v. NVIDIA Corp. and Dell, Inc., Cormier v. NVIDIA Corp., National Business Officers Association, Inc. v. NVIDIA Corp.,
and West v. NVIDIA Corp. The First Amended Complaint was filed on October 27, 2008, which no longer asserted claims against
Dell, Inc. The various complaints assert claims for, among other things, breach of warranty, violations of the Consumer Legal
Remedies Act, Business & Professions Code sections 17200 and 17500 and other consumer protection statutes under the laws of
various jurisdictions, unjust enrichment, and strict liability.
The District Court has entered orders deeming all of the above cases related under the relevant local rules. On December 11,
2008, NVIDIA filed a motion to consolidate all of the aforementioned consumer class action cases. On February 26, 2009, the
District Court consolidated the cases, as well as two other cases pending against Hewlett-Packard, under the caption “The NVIDIA
GPU Litigation” and ordered the plaintiffs to file lead counsel motions by March 2, 2009. On March 2, 2009, several of the parties
filed motions for appointment of lead counsel and briefs addressing certain related issues. On April 10, 2009, the District Court
appointed Milberg LLP lead counsel. On May 6, 2009, the plaintiffs filed an Amended Consolidated Complaint, alleging claims for
violations of California Business and Professions Code Section 17200, Breach of Implied Warranty under California Civil Code
Section 1792, Breach of the Implied Warranty of Merchantability under the laws of 27 other states, Breach of Warranty under the
Magnuson-Moss Warranty Act, Unjust Enrichment, violations of the New Jersey Consumer Fraud Act, Strict Liability and
Negligence, and violation of California’s Consumer Legal Remedies Act. On May 14, 2009, the District Court entered a case
schedule order, which set a September 28, 2009 hearing date for an anticipated motion to dismiss, a December 7, 2009 hearing date
for anticipated class certification motion, and a July 12, 2010 fact discovery deadline. The District Court subsequently entered an
order resetting the hearing date for an anticipated motion to dismiss for October 19, 2009, based on a stipulation of the parties. The
Court heard arguments on NVIDIA’s motion to dismiss on October 19, 2009, and took the matter under submission.
On November 19, 2009, the Court issued an order dismissing with prejudice plaintiffs causes of action for Breach of the Implied
Warranty under the laws of 27 other states and unjust enrichment, dismissing with leave to amend plaintiffs’ causes of action for
Breach of Implied Warranty under California Civil Code Section 1792 and Breach of Warranty under the Magnuson-Moss Warranty
Act, and denying NVIDIA’s motion to dismiss as to the other causes of action. The Court gave plaintiffs until December 14, 2009 to
file an amended complaint. On December 14, 2009, plaintiffs filed a Second Amended Consolidated Complaint, asserting claims for
violations of California Business and Professions Code Section 17200, Breach of Implied Warranty under California Civil Code
Section 1792, Breach of Warranty under the Magnuson-Moss Warranty Act, violations of the New Jersey Consumer Fraud Act, Strict
Liability and Negligence, and violation of California’s Consumer Legal Remedies Act. The Second Amended Complaint seeks
unspecified damages. On January 19, 2010, we filed a motion to dismiss the Breach of Implied Warranty under California Civil Code
Section 1792, Breach of Warranty under the Magnuson-Moss Warranty Act, and California’s Consumer Legal Remedies Act claims
in the Second Amended Consolidated Complaint.. A hearing on this motion is currently scheduled for June 14, 2010.
In September 2008, three putative securities class actions, or the Actions, were filed in the United States District Court for the
Northern District of California arising out of our announcements on July 2, 2008, that we would take a charge against cost of revenue
to cover anticipated costs and expenses arising from a weak die/packaging material set in certain versions of our previous generation
MCP and GPU products and that we were revising financial guidance for our second quarter of fiscal year 2009. The Actions purport
to be brought on behalf of purchasers of NVIDIA stock and assert claims for violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, as amended. On October 30, 2008, the Actions were consolidated under the caption In re NVIDIA Corporation
Securities Litigation, Civil Action No. 08-CV-04260-JW (HRL). Lead Plaintiffs and Lead Plaintiffs’ Counsel were appointed on
December 23, 2008. On February 6, 2009, co-Lead Plaintiff filed a Writ of Mandamus with the Ninth Circuit Court of Appeals
challenging the designation of co-Lead Plaintiffs’ Counsel. On February 19, 2009, co-Lead Plaintiff filed with the District Court, a
motion to stay the District Court proceedings pending resolution of the Writ of Mandamus by the Ninth Circuit. On February 24,
2009, Judge Ware granted the stay. On November 5, 2009, the Court of Appeals issued an opinion reversing the District Court’s
appointment of one of the lead plaintiffs’ counsel, and remanding the matter for further proceedings.
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Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠