Robinhood Defeats Certification of Proposed Class Asserting Securities Claims in Sprawling “Meme Stock” Litigation

On November 13, 2023, the U.S. District Court for the Southern District of Florida denied plaintiffs’ motion to certify a class asserting market manipulation claims under the federal securities laws against Cravath clients Robinhood Markets, Inc., Robinhood Financial LLC and Robinhood Securities, LLC (together, “Robinhood”).

Cravath is representing Robinhood as lead counsel in the sprawling and high‑profile “meme stock” litigation.

The purported class action securities claims have proceeded as one tranche within a complex and expansive multidistrict litigation comprising over 50 lawsuits, including numerous putative class actions, which were filed following Robinhood’s decision to temporarily place certain limits on trading in GameStop and other securities in the face of unprecedented market volatility in January 2021. In April 2021, these actions, pending in 14 different jurisdictions, were consolidated before the U.S. District Court for the Southern District of Florida and divided into four tranches of claims encompassing (1) federal securities law claims (the “Federal Securities Tranche”), (2) antitrust claims (the “Antitrust Tranche”), (3) state law claims against Robinhood (“Robinhood Tranche”) and (4) state law claims against other brokers.

In January 2022, Cravath secured the dismissal with prejudice of plaintiffs’ state law claims against Robinhood in the Robinhood Tranche; that decision was affirmed on appeal in August 2023. Cravath secured dismissal with prejudice of all claims in the Antitrust Tranche in May 2022; that decision is currently on appeal.

In the Federal Securities Tranche, plaintiffs filed their motion for class certification on April 28, 2023, and Cravath filed Robinhood’s opposition to the class certification motion on June 7, 2023. In opposing class certification, Cravath made several arguments, including that individualized issues would predominate over class‑wide issues, given the unusual conditions in the markets for the “meme stocks” during the proposed class period (January 28 to February 4, 2021). On November 13, 2023, Chief Judge Cecilia M. Altonaga agreed “with Robinhood that Plaintiffs have failed to demonstrate that common issues will predominate, because Plaintiffs have not offered a method of proving reliance class wide.” In denying the motion, Judge Altonaga agreed with Cravath that none of the four bases for proving class‑wide reliance asserted by plaintiffs had merit.

The Cravath team includes partners Kevin J. Orsini, Antony L. Ryan, Brittany L. Sukiennik and Daniel Slifkin and associates Bradley R. Niederschulte, Hussein Elbashir Elbakri, Kathleen E. Young, Robert A. DeNunzio, Amanda W. Miner, Shuyu Sun, Vineet Surapaneni and Chris Narh. Luis Miguel M. del Rosario and Tolulope E. Sogade also worked on this matter.

The case is In re January 2021 Short Squeeze Trading Litigation, No. 1:21‑cv‑2989 (S.D. Fla.).