Popular securities trading app Robinhood was sued in a class action complaint by plaintiff Travis Taaffe for crashing and going down on a favorable trading day. Robinhood “provides ‘commission-free’ trades in stocks, funds and options using an internet/cloud-based platform for individual customers and/or users” through its app. On March 2, Robinhood users, including Taaffe, were unable to access the app.
Taaffe used the Robinhood app to “acquire, trade and hold securities in Florida.” On March 2, the Dow, S&P 500 and Nasdaq all rose by 1,294, 136 and 384 points respectively, in “what was the biggest ever point gain in a single day.” However, during this time “Robinhood’s entire trading platform was completely inaccessible and unavailable to all of its customers and/or users. Thus, customers and/or users were not even able to access their cash, securities and/or other property kept on the Robinhood platform, let alone use Robinhood’s services to buy, sell or trade securities.” Robinhood informed customers at 9:33 am ET that the platform was down; it was not back up until March 3 at 2:19 am. This outage meant that Robinhood users were not able to use the platform to access their funds, trade, to put more money into trade or to cash securities during “all but 3 minutes of New York Stock Exchange trading hours, 9:30am until 4:00pm on March 2.” Issues with the platform continued on March 3.
In a blog post, the co-CEOs of Robinhood admitted their responsibility for the app going down and explained the cause of the issue. “We now understand the cause of the outage was stress on our infrastructure— which struggled with unprecedented load. That in turn led to a ‘thundering herd’ effect— triggering a failure of our DNS system.”
Taaffe has accused Robinhood of breach of contract for “failing to provide a functioning platform for Plaintiff and class members to access their personal funds, securities and/or other property.” Plaintiff alleged that Robinhood breached the implied warranty of merchantability because it did not “provide a trading platform that is acceptable and reasonably fit for the ordinary purposes for which it was being contracted, in this case, for including but not limited to: the purchase and sale of securities, transferring funds into Robinhood or transferring funds out of Robinhood.” Taaffe also claimed that Robinhood was negligent in caring for its platform via the maintenance and support of its app on a day to day basis to minimize instances of app shortages.
The plaintiff has sought class action certification and for Taaffe to be the class representative. Plaintiff has also sought to be awarded equitable relief, the complete value of damages now or in the future from Robinhood’s actions, an award for attorneys’ fees, an award for punitive, compensatory and other damages, injunctive relief, and any other relief as determined by the court.
The case was filed in the Florida Middle District Court. Plaintiff is represented by Shumaker, Loop & Kendrick, LLP.