In re Robinhood Outage Litigation

Background

The court had granted final approval of a class settlement. The settlement created a $9.9 million non-reversionary common fund, meaning the fund would benefit the class and would not return to Robinhood. Plaintiffs’ counsel requested attorneys’ fees equal to 30% of the fund, or $2,970,000; reimbursement of $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 used the percentage-of-the-fund method, under which fees are calculated as a percentage of a common fund benefiting the class. It also used the lodestar method as a cross-check; the lodestar generally measures the reasonable value of the lawyers’ time.

The court found that the $9.9 million settlement was reasonable. Plaintiffs stated that it represented more than 48% of estimated losses of $20.5 million. The case involved factual and legal issues concerning whether Robinhood had a legal obligation to maintain contingency plans for traders using 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 and discovery, took depositions, and worked with a damages consultant.

Counsel collectively spent more than 9,281 hours on the matter through June 30, 2022. The court determined that the hours were reasonable and calculated a combined lodestar of $5,420,870. The requested $2,970,000 fee represented a negative multiplier of 0.54 compared with that lodestar. The court concluded that a fee equal to 30% of the fund was fair and reasonable and approved the $2,970,000 award. Class Counsel retained sole discretion to allocate the 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 requested $1,102,432.84 in expenses was adequately supported by counsel’s declarations and billing records. The expenses included amounts for consultants, legal research, court reporting, copying and mailing, and other customary litigation costs. The court found the request fair and reasonable and approved it. Class Counsel likewise had sole discretion to allocate the expense award, and no other counsel could receive an independent expense award.

Service Awards

The court expressed skepticism about unusually large service awards to named plaintiffs. It found that the record did not show that the requested $2,500 amount was warranted or that every named plaintiff should receive it.

The court 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 publicly in court filings and expert reports.

The court denied the service-award request 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

The court approved the requested attorneys’ fee award of $2,970,000 and the requested expense reimbursement of $1,102,432.84. It approved $1,500 service awards for the eight listed settlement-class plaintiffs and denied the service-award request for the seven listed non-settlement-class plaintiffs.