Jeffrey A. Klafter's Application for Appointment as an Interim Lead Counsel — In re January 2021 Short Squeeze Trading Litigation (Dkt. 243-4, S.D. Fla.)
Summary
Document 243-4 in Case 1:21-md-02989-CMA, entered on the FLSD docket April 26, 2021 and relating to all actions, is Jeffrey A. Klafter's ten-page Application for Appointment as an Interim Lead Counsel. Plaintiffs Patryk Krasowski and Nick Parker ask the Court to appoint Jeffrey A. Klafter of Klafter Lesser LLP as an Interim Lead Counsel with primary responsibility for the Robinhood Tranche, one of the three tranches discussed during the April 19, 2021 Initial Status Conference. The tranches listed are All Antitrust claims against all Defendants, All State Law claims against the Robinhood entities and other Robinhood related defendants, and All State Law claims against the other broker defendants. The application closes by pointing to Ms. Salas' lack of experience to lead the case.
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- Date
- 2021-04-19
Cite this document
“Jeffrey A. Klafter's Application for Appointment as an Interim Lead Counsel (Dkt. 243-4).”
Original at archive.org, dated 2021-04-19. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-04-19-these-are-the-plaintiffs-in-krasowski-et-al-v-robinhood-financial-llc-21-cv-758/
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Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 1 of 10
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 21-2989-MDL-ALTONAGA/Torres
In re:
JANUARY 2021 SHORT SQUEEZE
TRADING LITIGATION
__________________________________/
This Document Relates to All Actions
JEFFREY A. KLAFTER’S APPLICATION FOR APPOINTMENT AS AN INTERIM
LEAD COUNSEL
I. INTRODUCTION
Plaintiffs Patryk Krasowski and Nick Parker (“Plaintiffs”)1 respectfully submit this
application to appoint Jeffrey A. Klafter of Klafter Lesser LLP (“Applicant”) as an Interim Lead
Counsel in this MDL, with primary responsibility for handling the Robinhood Tranche.2 The
Robinhood Tranche is one of the three tranches (or buckets) discussed during the April 19, 2021
Initial Status Conference. The three tranches are: (1) All Antitrust claims against all Defendants;
(2) All State Law claims against the Robinhood entities and other Robinhood related defendants;
and (3) All State Law claims against the other broker defendants (TD Ameritrade, Schwab, E-
Trade, WeBull) and other related defendants.3 These tranches make logical sense as the
Antitrust claims asserted in a number of complaints involve require the pleading of a conspiracy
among many parties that are not parties in the broker-centric State Law complaints and involve
1 These are the plaintiffs in Krasowski, et al. v. Robinhood Financial LLC, 21-cv-758 (N.D. Cal.).
2 Applicant uses the word “primary” as all Court appointed Interim Lead Counsels will need to
collaborate on a number of issues to ensure they are not taking inconsistent positions or
duplicating efforts.
3 There is also a fourth tranche (Securities Law claims), but recognizing that such claims are
governed by the PSLRA, (ECF No. 209), this Application only concerns the non-federal
securities claims in this MDL.
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 2 of 10
discrete legal issues. Having separate tranches for the Robinhood defendants and the other
broker defendants is also necessitated because the majority of cases filed in this MDL only assert
State Law claims against the Robinhood defendants and certain related parties, such as Citadel
and Melvin Capital and because the State Law claims against the other brokers will also involve
certain discrete issues. There was general agreement on the part of Plaintiffs and Defendants as
to these three tranches and that there should be separate leadership for each tranche but also
communication between the leadership of the three tranches to promote efficiencies. See
Transcript of April 19, 2021 Initial Conference at 8-17.4
As set forth in the Klafter Lesser LLP Firm Resume attached as Exhibit A to the
Declaration of Mr. Klafter filed separately (“Klafter Decl.”), Mr. Klafter brings to this complex
and multifaceted MDL decades of years of experience in being lead or co-lead of numerous class
actions including those in which breach of fiduciary duty and breach of contract claims were the
focal point and has also successfully prosecuted a class action against a client of Cravath Swaine
& Moore – Robinhood’s counsel in this MDL. See Point II(B)(2), below. This is significant as the
principal claims that will be asserted against the Robinhood entities will include breach of
fiduciary duty, breach of contract claims and aiding and abetting related claims.5
The appointment of Interim Lead Counsel sought by this application will provide the
greatest benefit to the class of Robinhood investors whose holdings plummeted in value due to
4 If any other applicant maintains that the Robinhood and Other Broker Tranches should be
combined, and if the Court were to agree, Applicant requests that he be appointed Interim Lead
Counsel with primary responsibility over both Tranches.
5 Due to the complexity of the issues presented by this MDL that will be included in the
Robinhood Tranche, if appointed as an Interim Lead Counsel, Mr. Klafter will propose, for the
Court’s approval, a Steering Committee for this tranche consisting of a relatively small and
efficient number of attorneys. Mr. Klafter’s goal will be to recommend attorneys to serve on this
Robinhood Tranche Steering Committee who will have relevant experience and for the
Committee to be as diverse as is possible.
2
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 3 of 10
Robinhood’s wrongful shutting off of any purchases in numerous securities. They deserve the
most capable leadership; not those who view this litigation as a means to get their first experience
in prosecuting a complex class action. Application of the Federal Rule of Civil Procedure 23(g)
factors, which are also embodied in the Manual for Complex Litigation (Fourth) § 21.11 (2004)
(“MCL”), further demonstrate why this Court should approve Mr. Klafter Interim Lead Counsel.
II. APPOINTING MR. KLAFTER AS AN INTERIM LEAD COUNSEL IS IN THE
BEST INTEREST OF THE CLASSES
A. Legal Standard for Appointment of Interim Lead Counsel
In appointing lead counsel to represent a putative class, Courts must consider the factors
established in Federal Rule of Civil Procedure 23(g). Fed. R. Civ. P. 23(g)(3). The same
standards govern appointment of interim lead counsel. See MCL § 21.11 (2004) (contemplating
interim class counsel appointments where litigation involves multiple overlapping and duplicative
class actions); In re: Farm-Raised Salmon and Salmon Products Antitrust Litigation, 19-21551-CIV-
ALTONAGA, ECF No. 97 at 1 (S.D. Fla. June 3, 2019). These factors are: (1) the work counsel
has done in identifying or investigating potential claims in the action; (2) counsel's experience in
handling class actions, other complex litigation, and the types of claims asserted in the action; (3)
counsel's knowledge of the applicable law; and (4) the resources that counsel will commit to
representing the class. Fed. R. Civ. P. 23(g)(1)(A); MCL § 21.271.
B. Jeffrey A. Klafter Satisfies the Rule 23(g) Factors
1. Rule 23(g)(1)(A)(i) and (iv) – Identifying or Investigating Potential Claims in
the Action and Committing Resources to Represent the Class
Mr. Klafter began diligently investigating and identifying potential claims as soon as he
and his firm, Klafter Lesser LLP, were contacted by numerous Robinhood customers who
complained of Robinhood’s restriction on purchases of a number of securities including
GameStop and AMC. Mr. Klafter then spoke with dozens of such customers and analyzed
3
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 4 of 10
numerous screen shots evidencing Robinhood’s block on further purchases of these and other
stocks and further analyzed the significant decline in the value of the holdings of these customers
coinciding with Robinhood’s refusal to allow any purchases of these stocks and exercises of call
options on such stocks as well. Mr. Klafter then gathered and analyzed extensive information
concerning the purported role of Citadel and Melvin Capital in Robinhood’s decision to block
purchases in these stocks and then, after being retained by two impacted Robinhood customers,
researched the applicable law to determine what claims could reasonably be asserted, and
prepared, with the assistance of his associate, Mr. Amir Alimehri, a detailed complaint for filing.
Notably, unlike many of the complaints filed that are a part of this MDL, the suit filed by Klafter
Lesser LLP devoted careful attention to defining a class of individuals who suffered an
identifiable harm, rather than seeking to proceed with a class defined solely as those who could
not purchase the restricted stocks, as many other cases did. See Klafter Decl. ¶¶ 3-4 and Exhibits
B and C.
Since the commencement of Krasowski, et al. v. Robinhood Financial LLC, Mr. Klafter and his
firm have continued to dedicate significant resources to field further inquiries from, and gather
facts from, many additional Robinhood customers and from the hearings the House Financial
Services Committee held concerning Robinhood’s block on purchases. Klafter Decl. ¶ 7. Mr.
Klafter also developed a strong working relationship with Mr. Saveri, who Applicant understands
is also seeking an Interim Lead Counsel appointment given his significant antitrust experience..
The organization of the Agenda Item presentations during the Initial Conference was a
testament to those efforts. Applicant’s appointment as an Interim Lead counsel will assure a
collaborative effort with the other Court appointed Interim Lead Counsel and other counsel for
the benefit of all members of the classes.
4
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 5 of 10
As an Interim Lead Counsel, Klafter Lesser LLP is committed to devoting significant
resources to the prosecution of this litigation and will self-fund its share of the considerable costs
of prosecuting an MDL such as this without the assistance of any litigation funders. Klafter Decl.
¶ 6. Mr. Klafter has had experiences on large class actions and, as a result, understands the types
and volumes of resources needed in a litigation like the instant one. Klafter Decl. ¶ 5 (discussing
complex antitrust against Barclays in which Mr. Klafter was co-lead counsel and just under $2
million in expenses were incurred). Mr. Klafter is therefore well-equipped to command and
allocate the resources necessary to effectively and efficiently oversee the prosecution of this MDL.
2. Rule 23(g)(1)(A)(ii) and (iii) – Experience Handling Class Actions, Other
Complex Litigation, and the Types of Claims Asserted Here, As Well As
Knowledge of the Applicable Law
Mr. Klafter and his firm have extensive experience prosecuting class actions, either as sole
lead class counsel or as co-lead class counsel. Mr. Klafter began his legal career with the
Antitrust Division of the United States Department of Justice. After spending two years with the
DOJ, Mr. Klafter entered private practice. From 1988 until mid-2003, Mr. Klafter was a
partner at a leading class action firm, Bernstein Litowitz Berger & Grossmann LLP. Early in his
career, Mr. Klafter was one of the principal lawyers responsible for the prosecution of over 100
defendants to recoup the losses suffered by the purchasers of municipal bonds issued by the
Washington Public Power Supply System when it defaulted on those bonds. That litigation
resulted in the recovery of approximately $800 million, the largest securities fraud class action
settlement at the time, but was not fully resolved until after three months of trial. Since then,
among the many cases he has led, were, as sole lead counsel, the Independent Energy class action, in
which $48 million was recovered for investors; as co-lead counsel, the DaimlerChrysler AG Securities
class action, in which $300 million was recovered for investors; as co-lead counsel, the IBM
Securities Litigation class action, in which $20 million was recovered for investors; (IBM was
5
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 6 of 10
represented by Cravath Swaine & Moore) and as co-lead counsel in the Merced Irrigation District v.
Barclays Bank PLC class action $29 million was recovered for damaged energy traders. He has
also served as special counsel to lead counsel in the In re Ahold N.V. Securities & ERISA class action
in which $1.1 billion was recovered on behalf of the class.
Most pertinent to this MDL, Mr. Klafter has also served or is currently serving as sole
lead or co-lead counsel for a number of class actions in which breach of fiduciary duty and
breach of contract claims were or are the focal point. These include:
• IMH Secured Loan Fund (breach of fiduciary duty class action claims on behalf of investors
in IMH Senior Loan Fund whose managers reorganized the Fund for their own benefit to
the detriment to the investors) (co-lead counsel) ($1.345 million cash, $30 million security
offerings, and corporate governance settlement)).
• Living Independent Group (breach of fiduciary duty class action claims on behalf of
common shareholders in Living Independent Group, Inc. who did not receive any share
of the General Electric Co.’s purchase price of the company (lead counsel) ($3 million
settlement)).
• General Atlantic (breach of fiduciary claims on behalf of Post-Confirmation Committee
for causing the company’s bankruptcy) (sole counsel appointed by the Committee
comprised of significant healthcare companies) (settlement amount is confidential).
• Spirit Airlines (breach of contract class action on behalf of passengers who were
compelled to pay fees above the fare price to bring a carry-on on the plane) (co-lead
counsel) (ongoing).
• Ohio State University (breach of contract class claims on behalf of students for partial
refund of fees charged for the Spring and Summer 2020 semesters due to COVID
closures) (co-lead counsel) (ongoing).
• University of Pittsburgh ((breach of contract class claims on behalf of students for partial
refund of tuition and fees charged for the Spring 2020 semester due to COVID closures)
(co-lead counsel) (ongoing).
III. The Alternative Proposed Leadership Is Not in The Best Interest of the
Class
Natalia Salas of the Ferraro Law Firm previously proposed a leadership structure
including herself, Dennis Ellis of the Browne George Ross firm, and Frank Schirripa of the Hach
6
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 7 of 10
Rose Schirripa & Cheverie firm, (“Alternative Slate”) and a 10–12-person Executive Committee.
She did not indicate, however, who would be leading each tranche, although Mr. Schirripa’s
background is in antitrust. The appointment of Ms. Salas or Mr. Ellis as an Interim Lead with
primary responsibility for the Robinhood Tranche (or any tranche) would not be in the best
interest of the Robinhood class in this MDL for numerous reasons.6
While Applicant is mindful of, and very much agrees with, the Court’s expressed interest
in prior cases in promoting diversity and inclusion in MDL and other complex class action
leadership, that admirable goal should not result in the appointment of a leader who lacks any
material experience in prosecuting class actions or who has spent their legal career opposing class
actions. Entrusting someone who lacks this basic experience to lead any tranche of this MDL
could truly be prejudicial to all the plaintiffs in the MDL, and the classes they seek to represent,
due to the inter-related nature of many of the claims. The Class members here are entitled to
have lawyers with significant experienced in litigating complex class actions from start to finish in
charge of these class claims. That is why Courts employ the Rule 23(g)/MCL § 21.11 factors,
which favor experience, in appointing Interim Lead Counsel.7
6 To the extent the Alternative Slate claims support or its supporters file statements of support,
this Court should consider whether these supporters have any class action experience and
question whether any promises or side-deals were made for such support. See MCL § 10.224. To
the extent any statements are submitted recommending this Court appoint Applicant, Applicant
expects that they will come from experienced class action attorneys who know the value of
having experienced counsel leading this MDL. No promises of compensation or work have been
made to anyone by Applicant. Klafter Decl. ¶ 10.
7 Applicant believes that Ms. Salas, in her application, may challenge Mr. Klafter’s appointment
as Interim Lead Counsel on the grounds that his firm presently consists of all male lawyers. The
Klafter Lesser firm has always promoted diversity and inclusion. Just last summer, nearly half
the attorneys were women and it had a female partner since 2010. Additionally, Mr. Alimehri is
of diverse backgrounds and is an active participant in diversity and inclusion efforts in the legal
profession (including serving in a court-appointed role for such efforts). The firm is now in the
process of rebuilding a diverse group of attorneys. Klafter Decl. ¶ 9.
7
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 8 of 10
Mr. Ellis’ class action experience is limited to moving to dismiss class actions and
opposing the certification of classes. See, e.g., Ellis firm website bio (“Consumer Class Action
Defense: Mr. Ellis has a thriving practice representing consumer packaged goods companies
across the country. He has successfully defended such cases by obtaining motions to dismiss at
the pleading stage and denial of motions for class certification.”); see also Guido v. L'Oreal, USA, Inc.,
2013 U.S. Dist. LEXIS 94031 (C.D. Cal. July 1, 2013) (Mr. Ellis is lead lawyer for the defendant
which opposed class certification). Someone who has made a career out of representing
defendants in opposing class certification should not be given leadership over the Robinhood
Tranche or indeed any tranche.8
Ms. Salas has even less class action experience, and thus also is not qualified under Rule
23(g)/MCL § 21.11 to be appointed an interim lead counsel in this MDL. The only class action
experience Ms. Salas has (representing a plaintiff) to date is as the most junior lawyer from the
Ferraro firm in Byrd, et al v. McDonald's USA, LLC, et al, 20-CV-6447 (N.D. Ill.), which was only
just filed in October 2020, and is now subject to a motion to dismiss. Klafter Decl. ¶ 7. Further,
the race discrimination claims in that case are of no relevance to the claims in this MDL. The
only other litigation experience of Ms. Salas, who only joined the Ferraro firm last June, have
had nothing to do with class actions except for two cases, one of which Ms. Salas simply
represented what appears to be a non-party in opposing a motion to compel compliance with a
discovery subpoena and the other as a non-partner with Foley & Lardner for a client who was a
defendant in a products liability class action. See Klafter Decl. ¶ 8. The remaining cases Ms.
8 Positions taken in briefs opposing class certification could be used against the class and
Defendants could challenge his adequacy to represent the class in opposition to a class
certification motion. In addition, Mr. Ellis has had no involvement in this MDL to date.
Another attorney, Matthew Venezia, has been the only attorney from Mr. Ellis’s firm who has
been involved in this litigation since its inception.
8
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 9 of 10
Salas has been a counsel in are either Americans with Disabilities Act cases or business-to-
business and intellectual property disputes.
Further bearing on Ms. Salas’ inadequacy to serve as an interim lead counsel over this
MDL is the complaint the Ferraro firm filed for the Juncadella plaintiffs. That complaint,
attached as Exhibit B to the Klafter Declaration, irresponsibly brought claims on behalf of a class
of “All Robinhood customers within the United States.” (Juncadella Compl. ¶ 67). This proposed
class is totally divorced from the wrongdoing at issue in this MDL. Further, this complaint
provides not a single detail as to how any of the plaintiffs named in it were harmed. This is
significant as the only claim of these plaintiffs appear to be pursuing as a class is that they and
other class members “were not able to execute trades in any of the restricted stocks.” (Juncadella
Compl. ¶ 68).9 There is therefore a substantial question as to whether any of the Juncadella
plaintiffs have standing to pursue claims in this MDL. This is because it cannot be proven
whether the plaintiff (or class member) would have made money or lost money if they were able
to purchase any of the restricted shares. Indeed, the only court to be faced with a bare inability
to purchase claim against Robinhood concluded it was speculative and that the plaintiffs so
alleging did not have standing. See Cobos v. Robinhood Fin. LLC, No. 2:21-cv-00843-VAP-MRWx,
2021 U.S. Dist. LEXIS 54562, at *6, 9 (C.D. Cal. Feb. 10, 2021).10 No lead counsel should be
appointed when every client they represent is under a “standing” cloud. Under the leadership of
9 Curiously, the Juncadella Complaint also alleges that each plaintiff “owns or owned stock within
the Restricted Basket during the Class period,” (Juncadella Compl. ¶¶ 27-42), but the Complaint
nowhere defines what the “Class Period” is, further underscoring a lack of care in drafting the
complaint.
10 In marked contrast, the Krasowski Complaint provides details regarding each plaintiff and
demonstrates how defendants’ actions precluding purchases of the securities at issue that led to a
cratering of the prices of those securities damaged the securities they already held. (See Klafter
Decl. Ex. C, Krasowski Compl., ¶¶ 2-3, 28).
9
Case 1:21-md-02989-CMA Document 243-4 Entered on FLSD Docket 04/26/2021 Page 10 of
10
proposed Interim Lead Counsel with primary responsibility for the Robinhood Tranche, the
class will be limited to those that can show they were damaged by the depression of the price of
the stocks at issue caused by Robinhood’s wrongdoing and therefore have standing. This crucial
pleading deficiency only underscores Ms. Salas’s and the Ferraro firm’s inexperience with any
type of class action, which is also evident from the Ferraro firm’s own website, which focuses on
the personal injury nature of the firm’s practice. 11
As a result of the foregoing, it should be clear that neither the Ferraro firm nor Ms. Salas
can be entrusted with as a lead counsel over any aspect of this MDL.
CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request that this Court appoint Mr.
Klafter as Interim Lead Counsel with primary responsibility for the Robinhood Tranche.
DATED: April 26, 2021 Respectfully submitted,
KLAFTER LESSER LLP
/s/Jeffrey A. Klafter
Jeffrey A. Klafter
Amir Alimehri
2 International Drive, Suite 350
Rye Brook, NY 10573
Telephone: (914) 934-9200
Email: jak@klafterlesser.com
amir.alimehri@klafterlesser.com
11 Applicant expects Ms. Salas’ application to emphasize that she will have Mr. James L. Ferraro
(head of the Ferraro firm) to guide her. A lead counsel appointment, however, is personal to the
attorney. See MCL § 22.62 (“Where several counsel are competing to be lead counsel or to serve
on a key liaison committee, the court should establish a procedure for attorneys to present their
qualifications, including their experience in managing complex litigation and knowledge of the subject
matter, their efforts in researching and investigating the claims before the court, and the
resources that they can contribute to the litigation.” (emphases added)). Thus, while an applicant
may utilize the resources of their firm, the applicant must personally have the requisite
experience to lead the case. Underscoring Ms. Salas’ lack of experience, Mr. Ferraro himself, on
the signature block on the Juncadella complaint, listed himself as first and listed Ms. Salas at the
bottom, even below a male attorney 10 years junior to her.
10
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