Class counsel, on behalf of approximately 150,000 Robinhood investors, moved for initial approval of a settlement with Robinhood Financial over March 2020 outages on the company’s s online securities trading platform. The motion says that the court should approve the non-reversionary cash settlement because it provides a strong recovery with tangible and immediate compensation to injured class members, particularly in view of the risks protracted litigation presents.
The case has been ongoing for two years and concerns events that occurred in early 2020 when Robinhood’s trading platform locked traders out while the market made big gains, resulting in significant trader losses. It happened several times before complaints streamed in, alleging the failure was due to lack of oversight procedures.
In addition to traders, regulatory agencies took notice. For instance, Robinhood was hit with a record fine from FINRA over the same outages.
In the private realm, more than one dozen actions were eventually filed in, removed to, or transferred to the Northern District of California and consolidated in July 2020.
This February, and after answering the traders’ amended complaint, Robinhood moved for summary judgment, asserting that the users’ contract and tort claims fail because Robinhood does not have a legal duty to ensure its platform operates without interruptions or technological failures.
In May, the parties informed the court that they had reached an accord. This week’s motion notes that the settlement comes not only while summary judgment and Daubert challenges pend, but also class certification.
It seeks to compensate Robinhood customers who fall within one or more of three categories and who have been identified by the plaintiffs’ damages expert based on the “Customer Trading Information, using the ‘Ex Post’ methodologies.” Further, it says the settlement will pay class members directly without requiring them to file claim forms.
The motion adds that plaintiffs’ counsel will seek no more than 30% of the settlement fund or about $3 million in fees and up to $1.12 million in unreimbursed expenses.
The plaintiffs are represented by interim co-lead counsel Kaplan Fox & Kilsheimer LLP and Cotchett, Pitre & Mccarthy LLP. Gibbs Law Group LLP is liaison counsel.
Robinhood is represented by Farella Braun + Martel LLP and Debevoise & Plimpton LLP.
