Joshua Rubin and Benjamin Serebrin filed the complaint on Oct. 2 in the Court of Chancery of the State of Delaware. Both men left Groq before the deal was announced but held stock in the company, according to the lawsuit.
The case alleges that Groq's board "sold the company to Nvidia without the stockholder vote Delaware law requires and without any process designed to test or maximize the value of what Nvidia bought." It contends a majority of the board was conflicted and that its "conflicted choice cost Groq's stockholders billions of dollars."
According to the complaint, Nvidia allocated $17 billion to a license it labelled "non-exclusive," set aside $3 billion in Nvidia restricted stock units for the Groq employees who moved with the technology, and positioned the investment funds that designated Groq board members for windfall returns from what the plaintiffs describe as a later "squeeze-out." Roughly 150 to 200 Groq engineers are to become Nvidia employees as part of the arrangement.
Groq disputed the claims. A spokesperson told CNBC the licensing agreement "delivered exceptional value for Groq, our investors, and our employees," called the lawsuit "meritless" and said the company remains focused on "building the world's leading AI inference cloud." CNBC reported that Nvidia had been approached for comment.
The deal, announced in December, moved Groq founder and chief executive Jonathan Ross, president Sunny Madra and other senior leaders to Nvidia. Groq said it would continue as an independent company and has raised around $1 billion since June, including from Nvidia.
Nvidia has framed the transaction as a licence rather than a takeover. In an email to employees obtained by CNBC, chief executive Jensen Huang said, "While we are adding talented employees to our ranks and licensing Groq's IP, we are not acquiring Groq as a company," and outlined plans to integrate Groq's low-latency processors into Nvidia's AI factory architecture for inference and real-time workloads.