JPML Transfer Order — In re January 2021 Short Squeeze

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United States Judicial Panel on Multidistrict Litigation · No. 1:21-md-02989-CMA · Doc. 1 · 2021-04-01 · Docket on CourtListener

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UNITED STATES JUDICIAL PANEL 
on  
MULTIDISTRICT LITIGATION 
IN RE: JANUARY 2021 SHORT SQUEEZE 
TRADING LITIGATION   
MDL No. 2989 
TRANSFER ORDER 
Before the Panel:*  Plaintiffs in the Northern District of California Cheng action move 
under 28 U.S.C. § 1407 to centralize this litigation in the Northern District of California.  This 
litigation consists of 39 actions pending in fourteen districts, as listed on Schedule A.1  Since the 
filing of the motion, the parties have notified the Panel of fifteen related federal actions pending 
in ten districts.2   
A majority of responding plaintiffs support centralization.  Plaintiffs in twelve actions, and 
plaintiffs in one action in the alternative, support centralization in the Northern District of 
California.  Plaintiffs in two actions and one potential tag-along action suggest alternative venues 
for this litigation:  the District of the District of Columbia, the Southern District of Florida, and 
the Eastern District of New York.  Plaintiffs in eleven actions did not file a brief in response to the 
motion, but submitted Notices of Waiver of Oral Argument indicating support for centralization 
with no position on district. 
Several plaintiffs either oppose centralization, in full or in part, or oppose their inclusion 
in any MDL.  Plaintiffs in the Central District of California Gossett action request centralization 
of actions naming as defendants only the Robinhood entities and a small set of market makers 
and/or hedge funds.  The Gossett plaintiffs oppose inclusion of any other actions in the MDL, 
particularly those alleging an industry-wide antitrust conspiracy.  Plaintiffs in four Florida actions 
oppose centralization entirely.  Alternatively, they request exclusion from the MDL.  Plaintiffs in 
the Northern District of Illinois Lagmanson and District of New Jersey Muncy actions likewise 
request exclusion from any centralized proceedings. 
* Judges Catherine D. Perry and Dale A. Kimball did not participate in the decision of this matter.
Additionally, one or more Panel members who could be members of the putative classes in this
litigation have renounced their participation in these classes and have participated in this decision.
1 The motion initially listed 41 actions, two of which have been voluntarily dismissed. 
2 These and any other related actions are potential tag-along actions.  See Panel Rules 1.1(h), 7.1, 
and 7.2. 
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All responding defendants support centralization.  Robinhood Markets, Inc., Robinhood 
Financial, LLC, and Robinhood Securities, LLC (collectively, Robinhood) support centralization 
in the Northern District of California or, alternatively, in the Middle District of Florida.  The 
Charles Schwab Corporation, Charles Schwab & Co., Inc., TD Ameritrade, Inc., TD Ameritrade 
Clearing, Inc., and TD Ameritrade Holding Corporation (collectively, Schwab) support 
centralization in the Middle District of Florida.  Defendants Apex Clearing Corporation, 
Candlestick Capital Management LP, and Melvin Capital Management LP support centralization 
in the Southern District of Texas or, alternatively, in the Middle District of Florida.  Four other 
defendants did not file briefs in response to the motion, but submitted Notices of Waiver of Oral 
Argument indicating support for centralization in either of these districts.3  Additionally, fourteen 
non-responding defendants filed Notices of Waiver of Oral Argument indicating support for 
centralization with no position on district.4 
On the basis of the papers filed and the hearing session held,5 we find that the actions listed 
on Schedule A involve common questions of fact, and that centralization in the Southern District 
of Florida will serve the convenience of the parties and witnesses and promote the just and efficient 
conduct of this litigation.  These actions share factual questions arising from trading restrictions 
imposed by Robinhood and other brokers in late January 2021 in response to a dramatic rise in 
trading and share prices for a group of “meme stocks.”6  The frenetic trading in these stocks by 
retail traders allegedly was spurred by members of a Reddit forum called “r/WallStreetBets,” who 
realized that, as the value of these securities increased, several major hedge funds and institutional 
investors that had taken short positions on these securities would be exposed to potentially ruinous 
losses (i.e., they were subject to a “short squeeze”).  Beginning on January 28, 2021, however, 
certain on-line trading platforms primarily used by the retail traders—in particular, Robinhood—
3 These defendants are Ally Financial, Inc., Dough LLC, Stash Financial, Inc., and Tastyworks, 
Inc. 
4 These defendants include:  Alpaca Securities LLC; Barclays Bank PLC; Citadel Securities LLC; 
Citadel Enterprise Americas LLC; The Depository Trust Company; The Depository Trust & 
Clearing Corporation; eToro USA Securities, Inc.; E*Trade Financial Holdings LLC; E*Trade 
Financial Corporation; E*Trade Securities LLC; Morgan Stanley Smith Barney LLC; Open to the 
Public Investing, Inc.; Point72 Asset Management, L.P.; and Sequoia Capital Operations LLC. 
5 In light of the concerns about the spread of the COVID-19 virus (coronavirus), the Panel heard 
oral argument by videoconference at its hearing session of March 25, 2021.  See Suppl. Notice of 
Hearing Session, MDL No. 2989 (J.P.M.L. Mar. 8, 2021), ECF No. 240. 
6 These meme stocks allegedly include:  GameStop Corp. (GME); AMC Entertainment Holdings 
Inc. (AMC); American Airlines Group Inc. (AAL); Bed Bath & Beyond Inc. (BBBY); BlackBerry 
Ltd. (BB); Express, Inc. (EXPR); Koss Corporation (KOSS); Naked Brand Group Ltd. (NAKD); 
Nokia Corp. (NOK); Sundial Growers Inc. (SNDL); Tootsie Roll Industries, Inc. (TR); and 
Trivago N.V. (TRVG). 
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restricted the ability of retail investors to purchase the relevant securities.7  Plaintiffs allege that 
these trading restrictions created a one-way sell situation and resulted in a steep decline in share 
prices for the meme stocks, which in turn caused plaintiffs economic injury and allowed the various 
institutional investors to cover their short positions in these securities.     
All the actions in this litigation arise from the trading restrictions imposed by the on-line 
trading platforms.  At the center of this controversy is Robinhood, which, including potential tag-
along actions, is named as a defendant in all but five actions.8  The defendants in those five actions 
are named as defendants in several other actions along with Robinhood.  These actions thus will 
entail common discovery of Robinhood, other broker defendants, and the various institutional 
investor and clearinghouse defendants.  Nearly every action asserts similar claims for breach of 
contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, 
and negligence.  Numerous actions also assert causes of action under antitrust, securities, and state 
consumer protection laws.  Similarly, there is significant overlap in the putative classes asserted 
in these actions, most of which include all Robinhood users affected by the trading restrictions. 
Centralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings (including 
with respect to class certification); and conserve the resources of the parties, their counsel, and the 
judiciary. 
The opposing plaintiffs raise several arguments against centralization, but most of these 
stem from the differences in theories, claims, and defendants involved in this litigation.  Some 
plaintiffs allege that Robinhood was inadequately capitalized and was unable to meet regulatory 
and clearinghouse deposit requirements.  Others allege that Robinhood and other brokers restricted 
trading because they had financial ties to investors that had taken short positions in the meme 
stocks.  Still others allege an industry-wide conspiracy to protect the institutional investors.  
Similarly, plaintiffs assert numerous causes of action sounding in the common law, antitrust law, 
securities law, and state consumer protection law against varied defendants.  And while most 
actions name only Robinhood as a defendant, others name more than forty brokers, funds, and 
clearinghouses as defendants. 
7 For instance, certain trading platforms allegedly disabled the “buy” functions on their websites 
and/or mobile applications.  Some retail traders had their queued purchase orders cancelled without 
their consent, while others were unable to search for the relevant securities on certain platforms. 
8 Three actions name only TD Ameritrade, Inc., one action names TD Ameritrade along with three 
Citadel entities, and one action names only Webull Financial LLC as a defendant.  As mentioned, 
TD Ameritrade (a Schwab defendant) supports centralization, and Citadel filed a Notice of Waiver 
of Oral Argument indicating support for centralization.  Plaintiffs in one of these actions also 
supports centralization, while plaintiff in another filed a Notice of Waiver of Oral Argument 
indicating support for centralization.  Plaintiffs in the other three actions and Webull Financial did 
not respond to the motion.  See Panel Rule 6.1(c) (“Failure to respond to a motion shall be treated 
as that party’s acquiescence to it.”).   
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This variation arises because the reasons why Robinhood and the other brokers imposed 
the trading restrictions on the meme stocks remain subject to dispute.  The discovery necessary to 
bring certainty as to the brokers’ motivations and conduct will be similar across the actions and 
will benefit from centralized treatment.  Excluding any one of these causes of action or defendants 
is problematic because many of the complaints assert causes of action in two or more of these areas 
and name defendants that overlap with other actions.  For instance, the Gossett plaintiffs ask us to 
exclude the actions against the antitrust actions naming multiple non-Robinhood defendants, but 
many of those actions assert the same breach of contract and breach of fiduciary duty claims 
asserted in actions limited to Robinhood.  Plaintiff in D. New Jersey Muncy asks that his claims 
under the Securities Exchange Act be excluded from the MDL, but other plaintiffs also assert 
claims under the Exchange Act, as well as common law claims and antitrust law claims.9  We are 
not persuaded that individual issues relating to liability will overwhelm the common factual 
questions these actions present.   In any event, attempting to separate actions by cause of action or 
named defendant is impracticable and would undermine the efficiencies to be obtained through 
centralized pretrial proceedings.  
Several of the opposing plaintiffs suggest that centralization of multiple defendants is 
inappropriate because this will raise trade secret and confidentiality concerns that could complicate 
and delay the litigation.  Denying centralization would hardly alleviate any trade secret concerns, 
however, because many of these cases name multiple defendants.  Moreover, we have not hesitated 
to centralize actions involving multiple, competing defendants where an industry-wide collusion 
or conspiracy is alleged.  See, e.g., In re Generic Digoxin & Doxycycline Antitrust Litig., 222 F. 
Supp. 3d 1341, 1343 (J.P.M.L. 2017).   
Some of the opposing plaintiffs also argue that informal cooperation and coordination of 
similar cases can alleviate any overlap in the pretrial proceedings.  But this litigation involves more 
than fifty cases and as many, if not more, involved counsel.  Given the number of parties and 
counsel, centralization is the only practicable means of coordinating the pretrial proceedings in 
this litigation. 
The four Florida plaintiffs argue that centralization is not appropriate because they have 
agreed to file a consolidated complaint in Florida state court that asserts a single count for violation 
of the Florida Deceptive and Unfair Practices Act.  Centralization, however, will not prevent 
plaintiffs from filing a state court action (which, of course, is not subject to centralization under 
Section 1407).  To the extent the Florida plaintiffs’ actions remain in federal court, they share 
9 Plaintiff in Muncy argues that the plaintiffs asserting these other Exchange Act claims have not 
perfected their claims under the Private Securities Litigation Reform Act (PSLRA).  Whether 
plaintiffs have complied with the PSLRA is a disputed question best left to the transferee court to 
resolve.  Likewise, whether other plaintiffs’ state law marketing and fraud claims are precluded by 
federal securities law is a merits question that we do not address.  See In re Ivy, 901 F.2d 7, 9 (2d 
Cir. 1990) (“Section 1407 does not empower the MDL Panel to decide questions going to the 
jurisdiction or the merits of a case.”). 
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common factual questions regarding the Robinhood trading restrictions with numerous other 
actions in this litigation. 
Accordingly, we will not exclude any of the actions from this MDL.  To be sure, this will 
be a complex litigation that will require careful management.  The transferee court, though, can 
employ any number of pretrial techniques—such as establishing claim-specific or defendant 
specific tracks and creating an attorney leadership structure that reflects the differences in the 
claims—to manage the differences that these actions may present.  And, if the transferee court 
determines that coordinated or consolidated pretrial litigation of any action or group of actions will 
not enhance justice and efficiency, the transferee court can suggest Section 1407 remand with a 
minimum of delay.  See Panel Rules 10.1–10.3.  
The Southern District of Florida is an appropriate transferee district for this litigation. 
There are ten Short Squeeze actions pending in Florida, four of which are in the Southern District. 
According to the parties, some of the events central to this litigation—in particular, Robinhood 
Securities’ decision to restrict trading on the meme stocks, took place in Florida.  The Southern 
District of Florida is a relatively convenient and accessible forum, with the resources and the 
capacity to efficiently handle what may be a large and complex litigation.  The Honorable Cecilia 
M. Altonaga, to whom we assign this litigation, is an able jurist with multidistrict litigation
experience.  We are confident that Judge Altonaga will steer this litigation on an efficient and
prudent course.
IT IS THEREFORE ORDERED that the actions listed on Schedule A and pending outside 
the Southern District of Florida are transferred to the Southern District of Florida and, with the 
consent of that court, assigned to the Honorable Cecilia M. Altonaga for coordinated or 
consolidated pretrial proceedings.  
      PANEL ON MULTIDISTRICT LITIGATION 
        Karen K. Caldwell 
Chair 
Nathaniel M. Gorton 
Matthew F. Kennelly 
David C. Norton 
Roger T. Benitez  
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IN RE: JANUARY 2021 SHORT SQUEEZE 
TRADING LITIGATION   
MDL No. 2989 
SCHEDULE A 
Central District of California 
KAYALI, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 2:21-00835 
GOSSETT, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 2:21-00837 
Northern District of California 
WIEG v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 4:21-00693 
DAYS v. ROBINHOOD MARKETS, INC., ET AL., C.A. No. 4:21-00696 
DALTON v. ROBINHOOD SECURITIES, LLC, ET AL., C.A. No. 4:21-00697 
KRASOWSKI, ET AL. v. ROBINHOOD FINANCIAL LLC, ET AL., 
C.A. No. 4:21-00758
CEZANA v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 4:21-00759 
CHENG, ET AL. v. ALLY FINANCIAL INC., ET AL., C.A. No. 4:21-00781 
CURIEL-RUTH v. ROBINHOOD SECURITIES LLC, ET AL., C.A. No. 4:21-00829 
FEENEY, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 4:21-00833 
KRUMENACKER v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 4:21-00838 
MOODY, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 4:21-00861 
Southern District of California 
NORDEEN, ET AL. v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 3:21-00167 
District of Colorado 
DANIELS v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 1:21-00290 
District of Connecticut 
ZIEGLER v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 3:21-00123 
FRESA v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 3:21-00134 
Middle District of Florida 
DIAMOND v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 6:21-00207 
SCHAFF v. ROBINHOOD MARKETS, INC., ET AL., C.A. No. 8:21-00216 
SCHAFF v. TD AMERITRADE, INC., C.A. No. 8:21-00222 
PERRI, ET AL. v. ROBINHOOD MARKETS, INC., ET AL., C.A. No. 8:21-00234 
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Northern District of Florida 
BAIRD v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 4:21-00061 
Southern District of Florida 
COURTNEY v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 0:21-60220 
FRAY v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 0:21-60226 
JUNCADELLA v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 1:21-20414 
SCALIA v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 9:21-80238 
Northern District of Illinois 
GATZ v. ROBINHOOD FINANCIAL, LLC, C.A. No. 1:21-00490 
KAYALI, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 1:21-00510 
LAGMANSON, ET AL. v. ROBINHOOD MARKETS, INC., ET AL., 
C.A. No. 1:21-00541
CHERRY v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 1:21-00574 
HISCOCK v. TD AMERITRADE, INC., C.A. No. 1:21-00624 
District of New Jersey 
ZYBURA v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 2:21-01348 
MUNCY v. ROBINHOOD SECURITIES, LLC, ET AL., C.A. No. 2:21-01729 
NOORZAIE v. ROBINHOOD MARKETS, INC., ET AL., C.A. No. 3:21-01361 
Southern District of New York 
NELSON v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 1:21-00777 
WILLIAMS v. WEBULL FINANCIAL LLC, C.A. No. 1:21-00799 
Eastern District of Pennsylvania 
MINNICK, ET AL. v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 2:21-00489 
Southern District of Texas 
ROSS, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 4:21-00292 
NG, ET AL. v. ROBINHOOD FINANCIAL, LLC, ET AL., C.A. No. 4:21-00311 
Eastern District of Virginia 
LAVIN v. ROBINHOOD FINANCIAL LLC, ET AL., C.A. No. 1:21-00115 
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