In re Robinhood Outage Litigation

Background

The court had previously granted final approval of a class settlement creating a $9.9 million non-reversionary common fund, meaning the fund would benefit the class and would not revert to Robinhood. Plaintiffs’ counsel requested $2,970,000 in attorneys’ fees, equal to 30% of the settlement; $1,102,432.84 in unreimbursed litigation expenses; and $2,500 service awards for each named plaintiff.

Attorneys’ Fees

Under Federal Rule of Civil Procedure 23(h), courts may award reasonable attorneys’ fees and costs in a class action. The court applied the percentage-of-the-fund method, under which fees are calculated as a percentage of the common settlement fund. It considered the results achieved, the risks and difficulty of the litigation, the attorneys’ skill and work, the contingent nature of the fee, and awards in similar cases.

The court found that the settlement was a reasonable result. Plaintiffs stated that it represented more than 48% of estimated losses. The court noted that the case involved novel facts and legal issues, including whether Robinhood had a legal obligation to maintain contingency plans for an online-only securities trading platform. Robinhood contested liability, moved for summary judgment on all claims, and challenged plaintiffs’ experts. Plaintiffs’ counsel conducted factual investigation, discovery, depositions, and damages analysis.

The court also used the lodestar method as a cross-check. The lodestar measures the attorneys’ time and work using reasonable hourly rates. Counsel reported more than 9,281 hours of work and a combined lodestar of $5,420,870. The requested $2,970,000 represented a negative multiplier of 0.54 compared with that lodestar. The court concluded that a fee award equal to 30% of the settlement fund was fair and reasonable and approved it. Class Counsel was given sole discretion to allocate the fee award among plaintiffs’ counsel and other attorneys based on their contributions; no other counsel could receive an independent fee award.

Expenses

The court found that the $1,102,432.84 in requested expenses was supported by counsel’s declarations and billing records. The expenses included consultant costs, legal research, court reporting, copying, mailing, and other customary litigation expenses. The court found the request fair and reasonable and approved it. Class Counsel likewise had sole discretion to allocate the expense award based on attorneys’ contributions, and no other counsel could receive an independent expense award.

Service Awards

The court expressed skepticism about large service awards to named plaintiffs. Although plaintiffs requested $2,500 for each named plaintiff, the court found that the record did not support that amount for everyone. It approved $1,500 for Daniel Beckman, Emma Jones, Mahdi Heidari Moghadam, Howard Morey, Colin Prendergast, Raghu Rao, Michael Riggs, and Jason Steinberg. The court stated that these plaintiffs were members of the settlement class, materially assisted counsel, and provided personal financial information that had to be disclosed in court filings and expert reports.

The court denied the service-award requests for Joseph Gwaltney, Leila Kuri, Jared Leith, Omeed Mahrouyan, Kevin Russell, Jared Ward, and Mengni Xia because they were not members of the settlement class.

Disposition

Judge James Donato approved the requested attorneys’ fee award of $2,970,000 and expense award of $1,102,432.84; approved $1,500 service awards for eight named plaintiffs; and denied the service-award requests for seven other named plaintiffs.