Taaffe v. Robinhood Markets, Inc.

CourtDistrict Court, M.D. Florida
DecidedMarch 31, 2020
Docket8:20-cv-00513
StatusUnknown

This text of Taaffe v. Robinhood Markets, Inc. (Taaffe v. Robinhood Markets, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Taaffe v. Robinhood Markets, Inc., (M.D. Fla. 2020).

Opinion

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

TRAVIS TAAFFE,

Plaintiff,

v. Case No: 8:20-cv-513-T-36SPF

ROBINHOOD MARKETS, INC., ROBINHOOD FINANCIAL LLC, and ROBINHOOD SECURITIES, LLC,

Defendants. ___________________________________/

ORDER This cause comes before the Court on Plaintiff’s Emergency Motion for Temporary Restraining Order and Preliminary Injunction and Incorporated Memorandum of Law in Support Thereof (the “Motion”), (Doc. 10), and Defendants’ Memorandum of Law in Opposition to Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction, (Doc. 12). The Court, having considered the parties’ submissions and being fully advised in the premises, will deny the Motion. I. BACKGROUND1 Robinhood Markets, Inc., Robinhood Financial LLC, and Robinhood Securities, LLC (collectively, “Robinhood” or “Defendants”) provide an internet/cloud-based platform for users2 to trade in stocks, funds, and options. (Doc. 1 ¶8). Robinhood provides these services to users through a mobile phone application. Id. at ¶9.

1 The Background is based on the facts as alleged in Plaintiff’s Class Action Complaint (the “Complaint”), (Doc. 1), as well as facts alleged in the Motion, (Doc. 10).

2 Plaintiff consistently refers to “customers and/or users” throughout the Complaint, but the Court will refer to this group as “users” for ease of reference. On Monday, March 2, 2020, the Dow Jones Industrial Average rose by over 1,294 points, the S&P 500 rose by over 136 points, and the Nasdaq rose by 384 points. Id. at ¶10. This increase represented “the largest point gain in a single day for all three stock market indices.” Id. However, Robinhood advised its users in a March 2, 2020 e-mail that, beginning that morning at 9:33 a.m.

EST, Robinhood “started experiencing downtime across our platform. These issues are affecting functionality on Robinhood, including your ability to trade.” Id. On March 3, 2020, at 2:19 a.m., Robinhood publicly announced, “Robinhood is currently back up and running. We’re testing through the night, and you may observe some downtime as we prepare for tomorrow.” Id. at ¶12. Significantly, Robinhood’s users, including Travis Taaffe (“Plaintiff”), were unable to access Robinhood’s platform to engage in trading activity, access their funds on the platform, transfer funds onto the system, or transfer funds off of the system for all but three minutes of the New York Stock Exchange trading hours on March 2, 2020. Id. at ¶13. On March 3, 2020, Robinhood’s co-CEOs explained that the “cause of the outage was stress on [Robinhood’s] infrastructure—which struggled with unprecedented load,” which

subsequently resulted in a “thundering herd” effect that “triggere[d] a failure of [Robinhood’s] DNS system.” Id. at ¶14. Robinhood’s platform experienced additional outages on March 3, 2020. Id. at ¶13. Plaintiff initiated this lawsuit on March 4, 2020, lodging three claims against Defendants: breach of contract, breach of implied warranty of merchantability, and negligence. Id. at ¶¶28–37. On March 26, 2020, Plaintiff filed the Motion, in which he seeks “the issuance of an emergency temporary restraining order and preliminary injunction” against Defendants. (Doc. 10 at 1). Plaintiff asserts that Robinhood has offered its users a “goodwill credit of $75” in exchange for their signatures on a “DocuSign” document within the thirty-six hours preceding Plaintiff’s filing of the Motion. Id. at 2–3. Plaintiff further claims that this “DocuSign” document includes a complete waiver of rights, which Robinhood fails to identify or otherwise reference for its users. Id. at 3. Plaintiff provides a copy of the allegedly misleading communications. (Doc. 10-1 at 3–5). The first communication is an e-mail, which provides, in relevant part:

Thanks so much for your patience as we evaluated the impact of the outage on your account. Based on our review, we’re able to offer you a goodwill credit of $75.00. To accept this offer, please review and sign the agreement that will be sent to you from Robinhood via DocuSign, which includes references to your incoming credit. Id. at 3. Plaintiff also provides a copy of the “DocuSign” document, entitled “Short-Form Release, which states that Robinhood offers a one-time payment in an undescribed amount “in satisfaction of any and all alleged losses or claims that you may have in connection with interruptions to trading operations of Robinhood occurring on or about March 2, 2020, and/or March 3, 2020.” Id. at 4. The document further provides: Robinhood offers this payment in full satisfaction of any alleged losses that 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. Id. at 5. Plaintiff argues Robinhood seeks to mislead the putative class members into “unknowingly” waiving their rights to participate in the instant putative class action in exchange for a $75 credit. (Doc. 10 at 4). Plaintiff points out that neither the letter nor the release mentions the instant action. Id. Further, according to Plaintiff, the system outages caused substantial monetary damages to putative class members, with “many” putative class members sustaining damages in the amount of “tens of thousands of dollars.” Id. Plaintiff contends that putative class members will suffer severe and irreparable harm by “unwittingly forfeiting their rights in exchange for inadequate relief and no programmatic relief,”

unless the Court immediately enjoins Robinhood. Id. To that end, Plaintiff requests the Court to: (1) enjoin Robinhood from sending any additional “misleading” communications to prospective class members; (2) require Robinhood to notify each prospective class member of the instant action and provide Plaintiff’s counsel with contact information for each prospective class member, including the e-mail address of each prospective class member; and (3) require that any releases entered into by Robinhood and prospective class members “be voided,” with prospective class members receiving an opportunity to “affirm” any release after receiving notice of the instant action and an opportunity to consult with counsel. Id. at 1–2. Plaintiff seeks relief under Rule 23(d) and Rule 65 of the Federal Rules of Civil Procedure. Id. at 1. II. LEGAL STANDARD

A. Rule 23(d) Rule 23 governs class actions in federal court. Fed. R. Civ. P. 23. The Court maintains “both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties.” Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981). As such, “the Court bears the responsibility under Rule 23(d) to preserve the integrity of the class action.” Jones v. Jeld-Wen, Inc., 250 F.R.D. 554, 560 (S.D. Fla. 2008). To that end, Rule 23(d) authorizes the court to issue certain orders in conducting a class action, such as orders that (i) require providing appropriate notice to some or all class members of any step in the action; (ii) “impose conditions on the representative parties or on intervenors”; or (iii) “deal with similar procedural matters.” Fed. R. Civ. 23(d)(1).

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Taaffe v. Robinhood Markets, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/taaffe-v-robinhood-markets-inc-flmd-2020.