Ruling Sends Back Sanctions Determination in Class Action Against Crypto Trading App Robinhood

News | May 20, 2024 By:

On Thursday, May 2, 2024, the Court of Appeals of Washington, Division Three, issued a ruling in the class action lawsuit Gordon v. Robinhood Fin. LLC.

The class action was originally filed in Spokane County Superior Court in October 2019 by Isaac Gordon against investment brokerage Robinhood. Gordon alleged that he received an unsolicited referral text message from Robinhood’s customer referral program promoting investing in stocks, exchange-traded funds, options, and cryptocurrency using Robinhood’s website and app.

Gordon claimed the text message violated Washington’s Consumer Protection Act and Commercial Electronic Mail Act, as he did not consent to receive promotional messages. He sought to represent a class of similarly impacted individuals. Robinhood later removed the case to federal court under the Class Action Fairness Act, citing over $5 million in potential damages.

During discovery, it emerged that Gordon had actually received the text from the brother of one of his attorneys, Brian Cameron. Further evidence indicated Gordon and his legal team, including Cameron and Kirk Miller, had essentially manufactured the claim. Gordon’s initial discovery responses were found to be incomplete and misleading.

The federal court dismissed Gordon as the class representative, decertified the class due to fraud, and remanded the individual claim back to the superior court. Gordon then voluntarily dismissed his case without informing the court of Robinhood’s pending motion to stay proceedings.

On appeal, the Court of Appeals upheld the superior court’s decision to dismiss Gordon’s claim with prejudice as a sanction due to manufacturing the lawsuit and numerous instances of dishonesty. However, it rejected imposing over $750,000 in attorneys’ fees on the grounds that Gordon’s individual claim was not legally frivolous, and the Consumer Protection Act was not exempt from class action litigation. The case was remanded for reconsideration of only CR 11 sanctions.

While Gordon failed to prove the class action claims, the appellate ruling clarified some principles around class action lawsuits, individual claims, and CR 11 sanctions related to allegedly frivolous litigation.

Please contact BlockTribune for access to a copy of this filing.