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UPDATE: On Oct. 5, 2020, allegations that the Robinhood app outage cost investors are overbroad and “free of detail,” according to the online trading company in a motion to dismiss the case.
The plaintiff in a Robinhood class action lawsuit recently asked for a temporary restraining order, claiming the investment app is trying to “wipe out” liability for two days of loss trading by offering users a $75 “goodwill” credit if they sign a release of their legal rights.
According to plaintiff Travis Taaffe, by offering these credits Robinhood is attempting to bar their customers from participating in the pending class action lawsuit.
“Defendants are attempting to mislead the putative class members into unknowingly waiving their rights to participate in the class action — whether they know it exists or not — in exchange for as little as a $75 credit,” Taaffe said in his motion. “Defendants’ conduct must not be allowed to continue.”
Based on these actions, Taaffe asked for a temporary restraining order which would block Robinhood from continuing with their “misleading communications to prospective class members.” Taaffe also asked that the company be required to void any releases that may have been signed and notify users about his and other Robinhood class action lawsuits.
Robinhood then filed a response to the restraining order request, calling Taaffe’s motion “unnecessary.” According to the company, none of their users will be barred from joining a class action lawsuit. Instead, the releases and $75 goodwill credits were reportedly intended to stop individual lawsuits against the company.
“Robinhood is voluntarily providing compensation to affected customers that reached out to us based on a case-by-case review of data,” a Robinhood spokesperson told Law360.
“We are doing so as quickly as possible because we believe it is in our customers’ best interests to receive compensation now — without the burdens of a litigation process. The plaintiff’s assertion that we intend to preclude any customers from participating in any pending class action is inaccurate.”
Despite these assurances, Taaffe and his attorneys remain unconvinced. The plaintiff noted in a statement that the claims released as a part of the goodwill credit are similar to those he brought in his class action lawsuit.
Taaffe also reveals that, despite Robinhood calling the motion “unnecessary,” he and his counsel had “no choice” but to file for a temporary restraining order because the company refused to speak to them before.
Unfortunately for Taaffe, U.S. District Judge Charlene Edwards Honeywell denied his motion after finding that the plaintiff “failed to establish a clear record of abusive communications from defendants.”
Although the judge said that there is a dispute regarding the purpose of Robinhood’s payments and releases, Judge Honeywell noted that Taaffe “does not request an evidentiary hearing.”
“Instead, he asks this court to rush to an evidentiary determination and issue injunctive relief immediately based on an undeveloped record,” she wrote. “The court declines this invitation.”
Judge Honeywell also asked Taaffe to defend his suit from dismissal based on lack of jurisdiction. The Robinhood class action lawsuit reportedly fails to mention where Robinhood is headquartered, although Florida resident Taaffe included that the company was incorporated in Delaware.
The judge says she needs more information to determine if the Middle District of Florida has jurisdiction and to make other determinations about diversity citizenship.
The plaintiff filed his Robinhood lawsuit in early March, alleging that he and other users of the mobile app were barred from using it due to repeated outages. Allegedly, Taaffe was unable to access his accounts on March 2 and March 3.
This alleged inability to access and trade his stocks was reportedly made worse by the fact that March 2 was a historic day on the stock market. The Dow Jones Industrial Average had its largest point gain in history on March 2, rising more than 1,294 points. Other indicators of stock performance, the S&P and Nasdaq, reportedly had similar increases.
Robinhood has admitted to the outages. In a statement, the company’s founders said that “multiple factors contributed to the unprecedented load that ultimately led to the outages. The factors included, among others, highly volatile and historic market conditions; record volume; and record account sign-ups.”
Taaffe argues that he and other users were financially harmed by the outages and accuses the company of breach of contract, negligence and other breaches.
Were you affected by the Robinhood system outages in early March? Have you been contacted by the company about a goodwill credit? Share your experiences in the comment section below.
Taaffe and the proposed Class are represented by Michael S. Taaffe, Michael D. Bressan and Jarrod J. Malone of Shumaker, Loop & Kendrick LLP.
The Robinhood Class Action Lawsuit is Taaffe v. Robinhood Markets Inc., et al., Case No. 8:20-cv-00513, in the U.S. District Court for the Middle District of Florida.
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25 thoughts onRobinhood Class Action Lawsuit Judge Denies Restraining Order
Anthony Vaughn add me. My app went out and the dollar amount it was going up changed. ADD ME
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Add me.. I e been using Robin Hood for like 2 years now and experienced the same thing.. I feel that is illegal to bribe you with something to get your info and share it.
i believe i have a claim against Robinhood. I brought it to their attention many times. I never received direct answers to my questions. They just displayed the generic FAQs questions with pre-determined responses. Not once did they bother to explain why they lied about a terrible , but convenient for them financially. I was doing well with call options on CGC and rode call credit spread options from 18 usd approx.to 44 usd and the expiration for the spread options was Jan.25,2019. I proceeded to execute the spread as always but this time apparently, as previous times something was having technical issues, i was immediately notified it was being resolved or that it was not worthwhile or not allowed on platform. When creating spread the system kept delaying the side and just pressing button to close out the spread and roll over the gains to the next mont expiration. Nothing worked and i sent various txts to ask why it wouldnt allow me to close out my spread? Now i could not see any responses in my email or in APP. Then on the 22nd of January, 2019, 3 days prior to expiration right after close sometime, someone deposited approx. 8,000 + into my account and i was notified that one side of my spread was exercised and then the next day other side was assigned .I was informed that it was going to be reviewed and approval by the proper agency first, then i would see the adjustments to my account but this all happened 3 days before expiration for the 1st side of spread, then 2 days before for other side of spread. I asked why this happened as i asked when the system denied me the ability to close out my spread days early as i have done most of the times i traded spreads on Robinhood. I asked why they ignored my repeated requests for tech.assistance to close spread asap as i hoped the price wouldnt continue to rise before allowing me to proceed.. I had appreciated their tech. assistance before without even asking they monitored everything but woudnt answer anything about if they can exercise early and without giving me notice that they were doing it. When a few dqys passed after exp.date, i txted several messages asking if the clearing house cleared it yet, they said it should be done anytime soon or next day. still nothing on who it was that jumped my spot. I kept asking cust.service to answer my questions on why, how, and no response or explanation was given to me nor did they tell me that the record of transactions would be changed to reflect 80,000 to 85,000 approx. on both sides of spread. The refusal to respond to this inquiry in txt message. Just told me to be patient and i would have to cooperate with being charged for their monetary help for their loaning of the capital to cover funds used. A percentage of the funds for their financial help required to cover. The rest i would receive in my account. I was denied access to this even after complaints i made to view the details. After time passed i was able to see what had transpired and the realization that i was lied to and details of transaction were repeatedly ignored. I advised them i would report the shady hidden details done for me and would have the amount they charge to lend money.in such instances. They were not honest about the gains incurred during the uptrending gains i know i made good profits from, just to be lied to , manipulated to believe the unauthorized actions without any explanation until after they stole my gains won, including the uptrend to 48.00 before leveling out there for a few more days. If they said hey we took control of your account and are just going to mislead you to believe it had to settle with the clearing house, or company that checks all options transactions to approve them before money gains are received. The fact is that i was not told they, Robinhood, were exercising one side of call spread for themselves, n the short call assign. was someone else, not them. Instead i was told it was still my gains left after the charge for loaning the funds to complete the side they covered with the sale proceeds of the exercised long call options. They just ignored my requests for the breakdown and an explanation of what they did. No responses as to why they refused to help me at the time i tried to close out the spread. Specifically, i told them to please just explain the reason to not help with system freezing at the wrong times, and jumping in front of my gains, then decided to lie about needing just a few days for the clearing of it.
Im waiting thinking wow, i did good with timing when enetering and then trying to exit as i had been doing consistently. If it was a loss or no gains, why was i ignored and forbiddeen to see details of it in my activity history like all the other trades? i have all documentation now including many details that shed ligt on their shady transactions designed to take advantage of the average not rich traders. Plz advise if u need to study my documents that show wat they did.. my phone 562 367-1054
I haven’t been notified by so please add me
I have not been contacted by robinhood about a goodwill credit. Also I would like to throw in that I believe they are manipulating stock share prices. Ex.. you put a bid in at a certain price and it automatically accepts it at a higher price that what you are seeing at the moment. Stock will be at 6.00 you put a bid in to buy it. Right when it goes thru the stock has dropped and amazingly you have already lost money within a millisec.
So true!
add me.
Please add me
I emailed Robinhood and complained about their app being down in early March. I received an email indicating I needed to review my account from March 2 and 3 then I another email with the subject line Immediate Action Required: Submit Your Account Review – it needed to be reviewed by 4/24. I submitted it and today received an offer of $75. This is what the document states: Robinhood – Short-Form Release
Based on a review of the activity in your account(s) at Robinhood Financial LLC (“Robinhood”) and any previous communication we may have had with you, we are hereby offering you a one-time payment to your Account of $_7_5_____ in satisfaction of any and all alleged losses or claims you may have in connection with interruptions to trading operations of Robinhood occurring on or about March 2, 2020, and/or March 3, 2020.
Robinhood offers this payment in full satisfaction of any alleged losses you may have experienced or claims you may have against Robinhood or any of its parents or affiliates and their respective employees and directors arising from or in any way related to the interruptions to trading operations referenced above, without any admission of liability. By signing below, you agree to release Robinhood with respect to any and all such alleged losses and claims as a condition of accepting the offered payment.
Add me please