Former Groq engineers Benjamin Serebrin and Joshua Rubin have filed a lawsuit against the company's board. The plaintiffs allege that the 2025 deal with Nvidia, valued at $20 billion, involved a conflict of interest and failed to protect the rights of minority shareholders.
The agreement was structured as a non-exclusive license. It included a $17 billion licensing fee and a $3 billion bonus pool for engineers transitioning to Nvidia, including Groq founder Jonathan Ross. The plaintiffs claim this structure benefited top management while undervaluing the holdings of common shareholders.
The lawsuit notes that the deal effectively involved Nvidia hiring approximately 200 Groq engineers. The plaintiffs argue that the licensing fee was treated as taxable income for the startup rather than part of a full acquisition, and they contend that the final payouts failed to account for the future value of Groq's technology.
The legal challenge relies on Delaware law regarding changes in corporate control, though the plaintiffs acknowledge a lack of legal precedent for such 'acquisition hiring' cases. Groq stated the deal provided exceptional value and dismissed the lawsuit as meritless.
Separately, the US Department of Justice initiated an investigation in September to determine if the licensing agreement was structured specifically to bypass antitrust regulatory oversight.
