Online Trading Co. Tries to Dodge Robinhood App Outage Class Action Lawsuit

Allegations that the Robinhood app outage cost investors are overbroad and “free of detail,” according to the online trading company in a recent motion to dismiss the case.

According to the defendants in the consolidated Robinhood app outage class action lawsuits, the plaintiffs employ a “shoot for the moon” approach that results in an “absurdly overbroad” proposed Class.

Robinhood Markets Inc., Robinhood Financial LLC and Robinhood Securities LLC say the proposed Class should, in truth, be much narrower if it was limited to those affected by the alleged March outage of the stock trading app.

The Robinhood app is one of many recently introduced investment apps that allows investors to buy stocks from their mobile devices with a few touches.

A series of class action lawsuits were filed after the Robinhood investment app first went down March 2, 2020, and then again March 9, 2020.

According to the plaintiffs, in addition to the trading platform being inaccessible, Robinhood was unavailable by phone or email. Further, the plaintiffs said that the outage caused them to miss all but the last three minutes of record stock market gains.

The class action lawsuits were consolidated in California federal court. In a recent version of the complaint, Robinhood users claim the app has failed to work for them an additional 47 times since the original outage.

In addition, in a motion for a temporary restraining order that was shot down by a federal judge, the plaintiffs alleged that Robinhood was asking users to release it from liability by offering a $75 “goodwill” credit.

In its recent motion to dismiss, Robinhood questioned the Class proposed by the plaintiffs.

The proposed Class includes all Robinhood customers in the United States, the motion notes. However, this Class is far too broad for several reasons, says Robinhood arguing that a number of Robinhood users did not attempt to use the app during the outage and were unaffected.

Robinhood also argues that the plaintiffs fail to connect their proposed Class to the dates of the outages — March 2 and 3, as well as March 9 — that allegedly led to damages.

“The Court should require Plaintiffs to propose a non-fail-safe class limited to individuals who suffered a cognizable injury due to the outages and have standing to assert a claim,” Robinhood’s motion to dismiss contends.

In addition, the app developers argue the class action lawsuit allegations should be dumped because playing the stock market always involves risk, making it impossible to ascertain the damages suffered by the plaintiffs and Class Members.

“Some trades result in a gain; others in a loss,” the motion argues. “The absence of any information regarding any specific trades at issue also renders Plaintiffs’ alleged loss speculative. For example, to the extent that Plaintiffs were allegedly prevented from buying shares of stock during an outage, there is no way to know if or when those shares would have been sold and for what price.”

Robinhood’s motion also denies the existence of a contractual relationship between the plaintiffs and the defendants.

Additionally, the app makers deny there is a threat of future injuries from “a hypothetical future outage” and are asking the court to tank claims for an injunction and declaratory relief.

Were you affected by the Robinhood app outage in March? We want to hear about it! Tell us in the comment section below.

The proposed Class is represented by Anne Marie Murphy, Mark C. Molumphy, Leslie Hakala, Noorjahan Rahman, Tyson C. Redenbarger and Julia Q. Peng of Cotchett Pitre & McCarthy LLP; and Matthew B. George, Maia C. Kats, Laurence D. King and Mario M. Choi of Kaplan Fox & Kilsheimer LLP.

The plaintiffs’ liaison counsel is Steve A. Lopez of the Gibbs Law Group LLP.

The plaintiffs’ executive committee is represented by Courtney M. Werning of Meyer Wilson Co. LPA, Leslie Pescia of Beasley Allen, Susana Cruz Hodge of Lite DePalma Greenberg LLC, Rachele Byrd of Wolf Haldenstein Adler Freeman & Herz LLP, Jamisen Etzel of Carlson Lynch LLP, Erin Comite of Scott + Scott Attorneys at Law LLP, Brandon Taaffe of Shumaker Loop & Kendrick LLP, Tina Wolfson of Ahdoot & Wolfson PC and Steve A. Lopez of the Gibbs Law Group LLP.

The Robinhood App Outage Class Action Lawsuit is In re: Robinhood Outage Litigation, Case No. 3:20-cv-01626, in the U.S. District Court for the Northern District of California.

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