A trader in Florida filed a lawsuit against Robinhood, a stock trading startup. The trader filed the lawsuit against the company alleging that it was negligent for failing to have backup systems to handle the trading volume and to prevent outages.
In the lawsuit, the plaintiff alleged that Robinhood breached its contract by negligently failing to have a properly functioning platform, which prevented the plaintiff from moving money during a stock surge. The man’s lawsuit followed an outage that lasted for two days, beginning on March 2 and lasting until late the following day. During that time, the stock market experienced a huge surge after the Federal Reserve made a surprise announcement of an interest rate cut.
During the outage, users of Robinhood could not access their securities and cash that was held on the platform. The lawsuit is proposed as a class action to represent all other Robinhood traders who were impacted by the outage. The plaintiff is seeking damages of at least $5 million. During the outage, many Robinhood users decried the company’s technical problems on social media. One Twitter account, called “Robinhood Class Action,” gained more than 6,000 followers in the days after the outage. Robinhood did not comment, but its user agreement includes language that says the company is not responsible for extended outages that are caused by circumstances beyond its control.
Legal disputes can arise during business operations. When a contract breach occurs, the party that suffers harm might benefit from retaining experienced business litigation attorneys. In some cases, business attorneys may be able to resolve the dispute outside of the court process through negotiations. In cases in which a major contract breach has occurred that prevents the parties from continuing to perform their contractual duties, the attorneys might litigate to recover damages for their clients.