Hacker News Reader

Comment by Nacdor | Hacker News Reader

How will this lawsuit get around the binding arbitration clause in their customer agreement?

https://cdn.robinhood.com/assets/robinhood/legal/Customer%20...

I am not a lawyer and I haven’t fully parsed the complaint but the class might be defined as anyone who owned GME and suffered damages or something like that, so not necessarily robinhood customers.

The class is all Robinhood customers, or alternatively, all Robinhood customers who tried to buy GME but couldn't.

Very simple. In a lawsuit they will claim market manipulation and SEC rules violations that are not covered by the binding arbitration. I hope we are not in the situation when a mafia guy shakes you down and makes you sign a contract to settle any grievances that you have with their mafia boss.

If it doesn't, does Robinhood really want to go to arbitration with all of WSB? I wonder who pays the upfront cost for the arbitrator?

I had the same thought because DoorDash was once pummeled with arbitration fees by angry drivers, and it looks like Robinhood doesn't specify who pays the fee. I'm assuming that leaves the burden on the consumer, but maybe their arbitrator (FINRA) has some rule I'm missing.

There are actually law firms that specialize in arbitration at scale.

Customers: "We want to sue you."

Company: "Sorry you can't do a class-action, we have a binding arbitration clause."

Law firm representing customers: "Ok, here is the paperwork for 1500 arbitrations, have fun with that. We can do this all day."

If they rule it doesn’t get around binding arbitration then there is no method for Robinhood to aggregate cases and they might face the costs of having 25,000+ cases to deal with.

I would imagine that this lawsuit is about the motive behind it.

If they go through arbitration they'll end up like DoorDash [1].

[1] https://www.latimes.com/business/story/2020-02-11/doordash-a...

DoorDash had an arbitration clause that said they would pay the filing fee. Robinhood doesn't have that in their arbitration clause. As far as I can tell, they don't specify who pays but it's possible the arbitration agency (FINRA) has some law governing that I guess.

If not, it's probably safe to assume the consumer has to pay the fee.

Remember when Robinhood tried opening checking accounts the first time and made a bunch of claims about SIPC insured and what not, and then the SIPC was all like "We told Robinhood we don't insure checking accounts", and then the FDIC was all like "Robinhood never talked to us about opening, or insuring, any checking accounts"...

Seems like something any financial lawyer would have checked the box on prior to making a HUGE announcement, so it's pretty plausible that Robinhood has no ideas about FINRA's laws about arbitration...

[1] https://www.forbes.com/sites/ronshevlin/2019/01/02/the-robin...

Reply on news.ycombinator.com