In re Robinhood Order Flow Litigation, Master File No. 4:20-cv-09328-YGR

Background

The court considered Ji Kwon’s unopposed motion under Rule 42(a) of the Federal Rules of Civil Procedure and the Private Securities Litigation Reform Act of 1995. The motion requested three things: consolidation of related actions, appointment of Kwon as lead plaintiff, and approval of the lawyers Kwon selected as lead counsel.

The related class actions challenged the conduct of Robinhood Financial LLC, Robinhood Securities, LLC, and Robinhood Markets, Inc. concerning the alleged failure to disclose processes involving payment for order flow. The actions were brought by Ji Kwon, Eduardo Luparello, Sarkhan Nabi, Robel Ghebrehiwet, and Isaac Landreth in the Northern District of California.

Rulings

The court granted the motion and consolidated the related actions for all purposes under Rule 42(a). The consolidated proceeding was assigned Master File No. 4:20-cv-09328-YGR and was given the caption “In re Robinhood Order Flow Litigation.” The court directed that future filings be made only in the Master File and administratively closed the Luparello, Nabi, Ghebrehiwet, and Landreth actions. Administrative closure was a case-management step; the order did not state that those claims were dismissed.

The court determined that Kwon was the most adequate lead plaintiff and satisfied the requirements of the Private Securities Litigation Reform Act. It appointed Kwon as lead plaintiff to represent the interests of the class. The court approved Kwon’s selection of Ahdoot & Wolfson, PC, Bursor & Fisher, PA, and Liddle & Dubin PC as lead counsel.

The court expressed concern that the leadership structure might be too large and could produce extra fees, costs, or duplication. It ordered lead counsel to file, within five business days, an outline of the leadership structure and anticipated responsibilities explaining how counsel would avoid inefficiency and duplicative fees and costs. Lead counsel was authorized to coordinate litigation activity, including motions, discovery, depositions, settlement discussions, pleadings, trial preparation, and communications with the court and defendants’ counsel. Plaintiffs could not initiate motions, discovery requests, or other pretrial proceedings without lead counsel’s approval.

Additional Directives and Disposition

The court ordered Kwon to file an amended consolidated complaint by May 17, 2021. That complaint would become the operative complaint and supersede the complaints previously filed in the related actions. Defendants were not required to answer or otherwise respond to the complaints in the administratively closed actions.

The court also established procedures for newly filed or transferred cases arising from the same subject matter. Such cases would be consolidated with the related actions unless an objecting party sought relief within ten days after receiving the order and the court granted that request. The parties were required to take reasonable steps to preserve relevant documents and electronically stored information.

This was a procedural case-management order. The court did not decide the merits of the allegations concerning payment for order flow or determine whether any defendant violated securities law.