Plaintiff Travis Taaffe has filed an emergency motion for a temporary restraining order and preliminary injunction against securities trading app Robinhood. Taaffe has alleged that Robinhood has attempted to induce potential class members to waive their rights in exchange for a $75 credit.
Robinhood had been sued in 9 similar lawsuits after its app went down on a record-setting trading day. Customers and users were unable to access their funds, trade, or put more money in to trade or to cash securities. Robinhood stated that the app went down due to “stress on our infrastructure.” Taaffe’s suit accused Robinhood of breach of contract because it failed to provide a working platform for users to access funds and other properties; Robinhood was also accused of being negligent. The various lawsuits have sought to recover damages from not being able to trade on the “then-largest single-day point gain in all three major U.S. stock market indices.”
Taaffe has sought an order that would enjoin Robinhood from sending “misleading” communications to potential class members, require Robinhood to notify potential class members of the lawsuit, and require the voiding of any class action waiver that has been signed since the filing of the lawsuit.
The filing, according to the plaintiffs, was a result of Robinhood sending misleading communications to prospective class members to induce them to waive their potential claims. Robinhood “offered its users a ‘goodwill credit of $75’ in exchange for their signatures on a ‘DocuSign’ document…this DocuSign document includes a complete waiver of rights which is not identified or referred to in any way by Defendants to its users.” Additionally, users may not have realized they were signing a release; which does not mention the lawsuit. The $75 credit offered matches the “amount of money that Robinhood charges its users to withdraw their funds from its platform.” The plaintiffs argue that Robinhood’s actions and conduct were misleading and that the Court should act accordingly.
In response, Robinhood filed a memorandum in opposition to Taaffe’s filing. Robinhood alleges that the plaintiff filed the emergency motion without making an effort in good faith to contact Robinhood and its counsel in order to determine their position or to resolve the issue. Robinhood states that its communication “are not intended to interfere in any way with this putative class action or the right of any Robinhood customer to participate as a member of any prospective plaintiff class.”
Robinhood admitted it did reach out to “certain customers, offering payments and requesting that they sign a release” after the trading platform incident. However, the “release is intended to relate only to individual lawsuits and not to any class claims that are asserted in this lawsuit or in any of the seven putative class actions currently pending in California. Robinhood has no intention of enforcing the release to prohibit any customer from participating in this or any other putative class action and is prepared to enter a stipulation to that effect.”
Robinhood argued that because its communications are not misleading and do not interfere with the rights of prospective class members, the motion was unnecessary; Robinhood also argued that the circumstances do not constitute an “emergency” as the plaintiffs suggested.
Taaffe is represented by Shumaker, Loop & Kendrick, while Robinhood is represented by Hill Ward Henderson.