Case 3:20-cv-01626-JD Document 160 Filed 02/18/22 Page 1 of 28
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`Karen P. Kimmey (State Bar No. 173284)
`Farella Braun + Martel LLP
`235 Montgomery Street, 17th Floor
`San Francisco, California 94104
`Telephone: (415) 954-4400
`kkimmey@fbm.com
`Maeve L. O’Connor (appearance pro hac vice)
`Elliot Greenfield (appearance pro hac vice)
`Brandon Fetzer (appearance pro hac vice)
`Debevoise & Plimpton LLP
`919 Third Avenue
`New York, New York 10022
`Telephone: (212) 909-6000
`mloconnor@debevoise.com
`egreenfield@debevoise.com
`bfetzer@debevoise.com
`Attorneys for Defendants
`ROBINHOOD MARKETS, INC.;
`ROBINHOOD FINANCIAL LLC;
`ROBINHOOD SECURITIES, LLC
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`IN RE ROBINHOOD OUTAGE
`LITIGATION
`
` Case No. 3:20-cv-01626-JD
`
`DEFENDANTS’ NOTICE OF MOTION
`FOR SUMMARY JUDGMENT;
`MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT THEREOF
`
`Date: May 12, 2022
`Time: 10:00 a.m.
`Judge: Hon. James Donato
`Ctrm: 11, 19th Floor
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`TABLE OF CONTENTS
`NOTICE OF MOTION AND MOTION .......................................................................................... 1
`STATEMENT OF RELIEF SOUGHT ............................................................................................. 1
`MEMORANDUM OF POINTS AND AUTHORITIES .................................................................. 1
`STATEMENT OF ISSUES TO BE DECIDED ................................................................................ 1
`PRELIMINARY STATEMENT ....................................................................................................... 2
`BACKGROUND ............................................................................................................................... 4
`I.
`ROBINHOOD. ...................................................................................................................... 4
`II.
`ROBINHOOD’S CUSTOMER AGREEMENT. .................................................................. 5
`III.
`THE MARCH 2020 OUTAGES. .......................................................................................... 6
`IV.
`SUBSEQUENT CHANGES AT ROBINHOOD. ................................................................. 7
`V.
`THE FINRA SETTLEMENT. .............................................................................................. 9
`ARGUMENT .................................................................................................................................... 9
`I.
`PLAINTIFFS’ CONTRACT CLAIMS FAIL AS A MATTER OF LAW. .......................... 9
`A.
`Plaintiffs Cannot Establish That Any Provision of the Customer Agreement
`Was Breached or Frustrated. ................................................................................... 10
`Plaintiffs Cannot Maintain an Unjust Enrichment Claim Because the
`Parties’ Relationship Is Governed by Contract. ...................................................... 12
`PLAINTIFFS’ NEGLIGENCE CLAIMS ARE BARRED BY THE ECONOMIC
`LOSS RULE. ....................................................................................................................... 13
`PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIM FAILS AS A
`MATTER OF LAW. ........................................................................................................... 16
`PLAINTIFFS’ UCL CLAIM FAILS AS A MATTER OF LAW. ...................................... 18
`THE CUSTOMER AGREEMENT’S LIMITATION OF LIABILITY
`PROVISIONS BAR PLAINTIFFS’ CLAIMS. .................................................................. 18
`THE RECORD EVIDENCE DOES NOT SUPPORT DECLARATORY AND
`INJUNCTIVE RELIEF. ...................................................................................................... 20
`CONCLUSION ............................................................................................................................... 22
`
`IV.
`V.
`
`VI.
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`DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT – 20-cv-01626-JD
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`B.
`
`II.
`
`III.
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`Case 3:20-cv-01626-JD Document 160 Filed 02/18/22 Page 3 of 28
`
`CASES
`
`TABLE OF AUTHORITIES
`
`Aas v. Superior Ct.,
`
`24 Cal. 4th 627 (2000) ............................................................................................................. 13
`
`Abuelhawa v. Santa Clara Univ.,
`529 F. Supp. 3d 1059 (N.D. Cal. 2021) .................................................................................. 12
`
`Apollo Capital Fund, LLC v. Roth Capital Partners, LLC,
`
`158 Cal. App. 4th 226 (2007) .................................................................................................. 17
`
`Archer v. Coinbase, Inc.,
`
`53 Cal. App. 5th 266 (2020) .................................................................................................... 13
`
`Berger v. Home Depot U.S.A., Inc.,
`
`476 F. Supp. 2d 1174 (C.D. Cal. 2007) ................................................................................... 12
`
`Brown v. Cal. Pension Adm’rs & Consultants, Inc.,
`
`45 Cal. App. 4th 333 (1996) .............................................................................................. 16, 17
`
`Cal. Med. Ass’n, Inc. v. Aetna U.S. Healthcare of Cal., Inc.,
`
`94 Cal. App. 4th 151 (2001) .................................................................................................... 13
`
`CAZA Drilling (Cal.), Inc. v. TEG Oil & Gas U.S.A., Inc.,
`
`142 Cal. App. 4th 453 (2006) .................................................................................................. 20
`
`Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
`
`20 Cal. 4th 163 (1999) ............................................................................................................. 18
`
`City of L.A. v. Lyons,
`
`461 U.S. 95 (1983) ............................................................................................................ 20, 21
`
`City of Shasta Lake v. Cnty. of Shasta,
`
`75 Cal. App. 4th 1 (1999) ........................................................................................................ 12
`
`Clapper v. Amnesty Int’l USA,
`
`568 U.S. 398 (2013) ................................................................................................................ 21
`
`Darnaa, LLC v. Google Inc.,
`
`236 F. Supp. 3d 1116 (N.D. Cal. 2017) .................................................................................. 19
`
`De Havilland v. FX Networks, LLC,
`
`21 Cal. App. 5th 845 (2018) .................................................................................................... 12
`
`Digital Envoy, Inc. v. Google, Inc.,
`
`2006 WL 8442984 (N.D. Cal. Jan. 24, 2006) ......................................................................... 19
`
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`Durell v. Sharp Healthcare,
`
`183 Cal. App. 4th 1350 (2010) ................................................................................................ 13
`
`Encompass Holdings, Inc. v. Daly,
`
`2011 WL 5024450 (N.D. Cal. Oct. 21, 2011) ......................................................................... 11
`
`Endo Labs., Inc. v. Hartford Ins. Grp.,
`
`747 F.2d 1264 (9th Cir. 1984) ................................................................................................. 12
`
`Farnham v. Superior Ct. (Sequoia Holdings, Inc.),
`
`60 Cal. App. 4th 69 (1997) ...................................................................................................... 20
`
`Guz v. Bechtel Nat’l, Inc.,
`
`24 Cal. 4th 317 (2000) ............................................................................................................. 11
`
`Guzman v. Polaris Indus. Inc.,
`
`2021 WL 2021454 (C.D. Cal. May 12, 2021) ......................................................................... 18
`
`In re Anthem, Inc. Data Breach Litig.,
`
`162 F. Supp. 3d 953 (N.D. Cal. 2016) .................................................................................... 12
`
`In re January 2021 Short Squeeze Trading Litigation (“Robinhood MDL Decision”),
`
`2022 WL 255350 (S.D. Fla. Jan. 27, 2022) ..................................................................... passim
`
`J’Aire Corp. v. Gregory,
`
`24 Cal. 3d 799 (1979) .............................................................................................................. 15
`
`Knowles v. TD Ameritrade Holding Corp.,
`
`427 F. Supp. 3d 1070 (D. Neb. 2019) ..................................................................................... 14
`
`Kristoffersen v. RVS110, LLC,
`2019 WL 1877183 (S.D. Cal. Apr. 26, 2019) ......................................................................... 20
`
`Levy v. N.Y. Life Ins. Co.,
`
`2016 WL 759118 (N.D. Cal. Feb. 26, 2016) ..................................................................... 12, 16
`
`Lewis v. YouTube, LLC,
`
`244 Cal. App. 4th 118 (2015) .................................................................................................. 19
`
`Lujan v. Defs. of Wildlife,
`
`504 U.S. 555 (1992) ................................................................................................................ 21
`
`McKell v. Washington Mut., Inc.,
`
`142 Cal. App. 4th 1457 (2006) ........................................................................................... 11-12
`
`Paracor Fin., Inc. v. Gen. Elec. Cap. Corp.,
`
`96 F.3d 1151 (9th Cir. 1996) ................................................................................................... 13
`
`Petersen v. Secs. Settlement Corp.,
`
`226 Cal. App. 3d 1445 (1991) ........................................................................................... 16, 17
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`Quelimane Co. v. Stewart Title Guar. Co.,
`
`19 Cal. 4th 26 (1998) ............................................................................................................... 13
`
`Robinson Helicopter Co. v. Dana Corp.,
`
`34 Cal. 4th 979 (2004) ............................................................................................................. 13
`
`S. Cal. Gas Leak Cases,
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`7 Cal. 5th 391 (2019) ......................................................................................................... 13, 15
`
`Sonner v. Premier Nutrition Corp.,
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`971 F.3d 834 (9th Cir. 2020) ................................................................................................... 18
`
`Sparta Surgical Corp. v. NASD,
`
`1997 WL 50223 (N.D. Cal. Jan. 30, 1997) ............................................................................. 16
`
`Spokane Indian Tribe v. United States,
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`972 F.2d 1090 (9th Cir. 1992) ................................................................................................. 20
`
`Updike v. Multnomah Cnty.,
`
`870 F.3d 939 (9th Cir. 2017) ................................................................................................... 20
`
`Valelly v. Merrill Lynch, Pierce, Fenner & Smith Inc.,
`
`464 F. Supp. 3d 634 (S.D.N.Y. 2020) ..................................................................................... 16
`
`Whitesides v. E*TRADE Sec., LLC (“Whitesides I”),
` No. 20-cv-05803-JSC, 2021 WL 930794 (N.D. Cal. Mar. 11, 2021) ......................... 14, 15, 16
`
`Whitesides v. E*TRADE Sec., LLC (“Whitesides II”),
` No. 20-cv-05803-JSC, 2021 WL 2590156 (N.D. Cal. June 24, 2021) ................................... 11
`
`Williams v. Scottrade, Inc.,
`
`2006 WL 2077588 (E.D. Mich. Jul. 24, 2006) ........................................................................ 14
`
`Wing v. Forest Lawn Cemetery Ass’n,
`
`15 Cal. 2d 472 (1940) .............................................................................................................. 12
`
`Withers v. eHarmony, Inc.,
`
`2011 WL 8156007 (C.D. Cal. Mar. 4, 2011) .......................................................................... 11
`
`Wright v. Charles Schwab & Co.,
` No. 20-cv-05281-LB, 2020 WL 6822887 (N.D. Cal. Nov. 20, 2020) .............................. 14, 15
`
`OTHER AUTHORITIES
`
`Federal Rule of Civil Procedure 56 ................................................................................................. 1
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`NOTICE OF MOTION AND MOTION
`PLEASE TAKE NOTICE that on May 12, 2022, at 10:00 a.m. or as soon thereafter as this
`matter may be heard, in Courtroom 11 of the United States Courthouse, 450 Golden Gate Avenue,
`San Francisco, California, before the Honorable James Donato, United States District Judge,
`Defendants Robinhood Financial LLC (“RHF”), Robinhood Markets, Inc. (“RHM”) and
`Robinhood Securities, LLC (“RHS”) (collectively, “Robinhood” or “Defendants”) will and hereby
`do move for summary judgment pursuant to Federal Rule of Civil Procedure 56. Defendants’
`motion is based on this Notice of Motion, the accompanying Memorandum of Points and
`Authorities, the Declaration of Brandon Fetzer and all pleadings and papers filed in this matter,
`and upon such other matters as may be presented to the Court at the time of hearing or otherwise.
`STATEMENT OF RELIEF SOUGHT
`Robinhood seeks an order granting summary judgment in its favor.
`MEMORANDUM OF POINTS AND AUTHORITIES
`Defendants submit this memorandum in support of their motion for summary judgment
`pursuant to Federal Rule of Civil Procedure 56 as to all claims asserted by Plaintiffs in the Second
`Amended Consolidated Class Action Complaint (“SAC”).
`STATEMENT OF ISSUES TO BE DECIDED
`The following issues are before the Court in this motion:
`(1) Whether summary judgment should be granted to Defendants RHF and RHS on
`Plaintiffs’ breach of contract and breach of the implied covenant of good faith and fair dealing
`claims where Defendants did not breach or frustrate any provision of the Customer Agreement.
`(2) Whether summary judgment should be granted to Defendants on Plaintiffs’ unjust
`enrichment claim where no such claim exists under California law and the parties’ relationship is
`governed by contract.
`(3) Whether summary judgment should be granted to Defendants on Plaintiffs’ negligence
`and gross negligence claims because they are barred by the economic loss rule.
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`(4) Whether summary judgment should be granted to Defendants on Plaintiffs’ breach of
`fiduciary duty claim where RHF, as a non-discretionary broker-dealer, does not owe customers
`any general fiduciary duties as a matter of law.
`(5) Whether summary judgment should be granted to Defendants on Plaintiffs’ California
`Unfair Competition Law claim where Plaintiffs have adequate remedies at law.
`(6) Whether summary judgment should be granted to Defendants on Plaintiffs’ claim for
`prospective injunctive and declaratory relief where there is no evidence of any ongoing harm or
`threat of impending harm.
`(7) Whether summary judgment should be granted to Defendants on all of Plaintiffs’
`claims in light of the Customer Agreement’s limitations of liability provisions.
`PRELIMINARY STATEMENT
`This case arises from outages suffered by Robinhood’s securities trading platform in
`March 2020 (the “Outages”). Robinhood strives to prevent outages and is committed to offering a
`stable service that scales with its customer growth. In the digital era, however, outages are
`inevitable for all online services, and online securities trading platforms are no exception. Indeed,
`when Plaintiffs opened their self-directed, commission-free Robinhood accounts, they expressly
`acknowledged in the Customer Agreement that service interruptions may occur, and they agreed
`that Robinhood would not be liable for any trading losses or lost profits. Notwithstanding the
`clear and unambiguous terms of the Customer Agreement, after the Outages, Robinhood promptly
`expressed regret to customers, voluntarily paid over $3.5 million in payments to customers who
`claimed to have been impacted, and provided all Robinhood “Gold” customers with three free
`months of that service. And Robinhood continues to stand ready to consider any valid claims
`from its customers.
`The Outages, however, do not give rise to the sweeping liability Plaintiffs seek to impose.
`Plaintiffs’ claims fail for numerous reasons – chief among them that Robinhood does not have a
`legal duty, contractual or otherwise, to operate its platform free from interruptions or technological
`failures.
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`First, Plaintiffs’ breach of contract and breach of the implied covenant of good faith and
`fair dealing claims fail because Plaintiffs do not – and cannot – identify any provision of the
`Customer Agreement that Robinhood breached or frustrated in connection with the Outages. To
`the contrary, the Customer Agreement specifically states that the services were provided on an “as
`available” basis, without any warranty of “freedom from interruption,” and Plaintiffs
`acknowledged that use of the Robinhood platform “entails risks, such as interruption or delays of
`service.” (Ex. A, “Cust. Agr.,” § 17.)1 And, because the parties’ relationship is governed by
`contract, Plaintiffs’ unjust enrichment claim also fails.
`Second, Plaintiffs’ negligence and gross negligence claims are barred by the economic loss
`rule, which prohibits Plaintiffs from seeking to recover in tort for purely economic losses. Courts
`have consistently dismissed negligence and gross negligence claims asserted against broker-
`dealers on this basis, including most recently in a multidistrict litigation filed against Robinhood.
`See In re January 2021 Short Squeeze Trading Litigation, 2022 WL 255350, at *22 (S.D. Fla. Jan.
`27, 2022) (the “Robinhood MDL Decision”).
`Third, Plaintiffs’ breach of fiduciary duty claim fails because RHF is a non-discretionary
`broker-dealer and therefore does not owe general fiduciary duties to its customers, as explained in
`the Robinhood MDL Decision. The relevant Customer Agreement makes clear that Robinhood
`accounts are entirely “self-directed,” and that Robinhood does not “provide investment advice,”
`“recommend any security, transaction or order,” “solicit orders,” or “make discretionary trades.”
`(Cust. Agr. § 5(A).) Plaintiffs’ suggestion that Robinhood has a fiduciary obligation to prevent
`technological failures is also belied by the Customer Agreement, in which Plaintiffs acknowledged
`that outages and technological failures may occur and agreed that Robinhood would have no
`liability in those circumstances.
`Fourth, Plaintiffs’ California Unfair Competition Law claim, which is equitable in nature,
`fails because Plaintiffs have adequate remedies at law.
`
`1
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`Citations to “Ex. __” refer to the exhibits attached to the accompanying Declaration of
`Brandon Fetzer.
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`Fifth, even if Plaintiffs’ claims did not fail on other grounds, they are all barred by the
`clear and unambiguous terms of the Customer Agreement, which expressly acknowledges that
`outages may occur and limits Robinhood’s liability. Plaintiffs – like all Robinhood customers –
`agreed that their use of the Robinhood trading platform was at their own “sole risk.” (Cust. Agr.
`§ 17.) In particular, Plaintiffs agreed that Robinhood “shall not be liable by reason of delays or
`interruptions of the service or transmissions, or failures of performance of their respective
`systems, regardless of cause, including those caused by . . . software or hardware malfunctions” –
`as were the Outages at issue in this lawsuit. (Id. (original in all-caps).) More broadly, Plaintiffs
`agreed that Robinhood will not be liable for any losses or damages pertaining to their Robinhood
`accounts, other than actual losses that are determined to be the result of gross negligence or
`intentional misconduct by Robinhood, and that in no circumstances whatsoever would Robinhood
`be liable for punitive or consequential damages, including “trading losses” or “lost profits.” (Id.)
`In light of the express terms of the Customer Agreement, which are not disputed or controverted
`by any evidence in the record, Plaintiffs’ claims fail as a matter of law.
`Sixth, Plaintiffs are not entitled to declaratory or injunctive relief because there is no
`evidence in the record demonstrating a real and immediate threat of repeated injury. To the
`contrary, the evidence shows that Robinhood has made considerable efforts, with appropriate
`regulatory oversight, to strengthen its systems and contingency planning since the March 2020
`Outages. Indeed, there is no evidence in the record showing that any Plaintiff has suffered any
`harm from any outage since that time.
`The Court should grant Defendants’ motion for summary judgment.
`BACKGROUND
`
`I.
`
`ROBINHOOD.
`Robinhood offers customers the ability to invest, commission-free and with no account
`minimums, in stocks, exchange-traded funds, and options through a self-directed trading platform,
`both on its website and through smartphone applications. (SAC ¶¶ 35-37; Answer ¶¶ 35-37.)
`Robinhood also offers customers the option of enrolling in a paid subscription product called
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`“Gold,” which provides increased access to instant deposits, access to third-party investment
`research and Level II market data, and the ability to invest on margin. (SAC ¶ 49; Answer ¶ 49.)
`RHF is a registered broker-dealer with the U.S. Securities and Exchange Commission.
`(SAC ¶ 27; Answer ¶ 27.) It acts as an introducing broker and has a clearing arrangement with
`RHS. (SAC ¶ 27; Answer ¶ 27.) RHM is the corporate parent of both RHF and RHS, and it
`provides technology services to them. (SAC ¶ 29; Answer ¶ 29.)
`II.
`ROBINHOOD’S CUSTOMER AGREEMENT.
`To have an account with Robinhood, all customers must enter into a customer agreement
`(the “Customer Agreement”) with RHF and RHS and agree to be bound by the terms of other
`agreements, such as the Margin and Short Account Agreement. (SAC ¶¶ 47, 200; Answer ¶¶ 47,
`200.) RHM is not a party to any of these agreements.
`During the relevant period, Robinhood accounts were entirely self-directed. The Customer
`Agreement, which is governed by California law, expressly states that customer accounts are
`“self-directed,” that each customer is “solely responsible for any and all orders” in his or her
`account, and that all orders are “unsolicited” and based on the customer’s “own investment
`decisions.” (Cust. Agr. § 5(A).) Customers agree that Robinhood does not “provide investment
`advice,” “recommend any security, transaction or order,” “solicit orders,” or “make discretionary
`trades.” (Id.) Customers also acknowledge that any “research materials or similar information”
`that Robinhood provides “are intended for informational and educational purposes only” and “do
`not constitute a recommendation to enter into any securities transactions.” (Id. §§ 5(A), 15.)
`The Customer Agreement makes clear that Robinhood’s services are provided on an “as
`available” basis, without any warranty of “freedom from interruption,” and Plaintiffs
`acknowledged that use of the Robinhood platform “entails risks, such as interruption or delays of
`service.” (Id. § 17.) The Customer Agreement further states that there is no guarantee that the
`Robinhood trading platform will be operational 24 hours a day, 7 days a week:
`Although considerable effort is expended to make the Website, App
`and other operational and communications channels available
`around the clock, Robinhood does not warrant that these channels
`will be available and error free every minute of the day.
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`(Id. (emphasis added).) Customers specifically consent to the use of “Automated Systems,”
`
`including “automated order entry and execution” services, and they acknowledge that they
`
`“understand that the use of Automated Systems entails risks, such as interruption or delays of
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`service, errors or omissions in the information provided, system failure and errors in the design or
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`functioning of such Automated Systems (collectively, a ‘System Failure’).” (Id. (emphasis
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`added).)
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`The Customer Agreement also includes broad limitations of liability. Customers agree that
`Robinhood will not be liable for any losses or damages pertaining to their Robinhood accounts,
`other than actual losses that are determined to be the result of gross negligence or intentional
`misconduct by Robinhood. (Id.) More broadly, customers agree that in no circumstances (not
`limited by type of claim) would Robinhood be liable for punitive or consequential damages, which
`are expressly defined to include “trading losses” or “lost profits.” (Id.) And, in particular, the
`Customer Agreement provides that Robinhood “shall not be liable by reasons of delay or
`interruptions of the service or transmissions, or failures of performance of their respective
`systems, regardless of cause,” and that customers “understand and agree that [Robinhood] will
`have no liability whatsoever for any [losses] arising out of or relating to a System Failure.” (Id.)
`III.
`THE MARCH 2020 OUTAGES.
`Robinhood’s trading platform experienced outages on March 2-3 and 9, 2020, during
`which time customers were unable to place orders to buy or sell securities. The March 2-3 Outage
`occurred when the system responsible for enabling communications between Robinhood’s internal
`systems, Kafka, unexpectedly shut down because it exceeded its “file descriptor limit,” which is a
`running tally of open connections on Robinhood’s internal systems. (See Ex. B at 2; Ex. C at
`82:25-85:2.) This limit was exceeded because Robinhood’s infrastructure was under
`unprecedented load due to multiple factors, including highly volatile and historic market
`conditions, record volume, and record new account sign-ups that increased the number of
`connections on Robinhood’s internal systems. (Ex. B at 2; Ex. C at 92:18-93:4.) Kafka’s failure
`caused a cascading effect, in which the systems attempting to communicate with it could not find
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`it and began querying Consul, Robinhood’s domain name service, which is akin to a phone book
`for IP addresses. (Ex. B at 2.) These requests overwhelmed Consul, causing it to become
`unresponsive and rendering Robinhood’s systems inoperable. (Ex. B at 2; Ex. C at 79:3-81:21.)
`The March 9 Outage was a separate, wholly unrelated, and much shorter incident that
`occurred because one of RHS’s third-party trade execution venues made an unanticipated update
`to the FIX Protocol, which is an industry-standard mechanism that Main Street, RHS’s centralized
`trade execution system, uses to receive messages and communicate with RHS’s trading venues.
`(Ex. B at 6; Ex. D at 208:8-23.) As a result of the change, Main Street was unable to interpret and
`process incoming messages from the execution venue. The volume of unprocessed messages
`eventually overwhelmed Main Street, which caused it to shut down. (Ex. B at 6.) As a result,
`RHS could not cancel existing orders, update customers on filled orders or route new orders, and
`customers could not submit new orders. (Id.)
`Within weeks of the Outages, Robinhood voluntarily offered payments to customers who
`claimed they were adversely affected by the Outages. Robinhood provided approximately 25,000
`customers with over $3 million in connection with the March 2-3 Outage. (See Ex. E at 3.) In
`addition, Robinhood provided approximately $350,000 to over 800 customers in connection with
`the March 9 Outage. (Id. at 4.) Robinhood also provided all customers who subscribed to
`Robinhood’s “Gold” service with three free months of that service. (See Ex. F at Interrog. Resp.
`13.)
`IV.
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`SUBSEQUENT CHANGES AT ROBINHOOD.
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`In the aftermath of the Outages, Robinhood promptly took steps to address the root causes
`of the Outages. Robinhood addressed the immediate cause of the March 2-3 Outage by increasing
`the file descriptor limit in Kafka, reducing inbound connections to Kafka, and improving Kafka
`alerts and logging. (Ex. F at Interrog. Resp. 2.) Robinhood also implemented Unbound, a domain
`name service caching application, to reduce the load on Consul and preserve systems functionality
`in the event of a Consul failure. (Id.) In response to the March 9 Outage, Robinhood
`implemented code that could handle unexpected changes made by execution venues to minimize
`the possibility that similar issues would recur. (Id.)
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`Over the nearly two years that have elapsed since the Outages, Robinhood has taken
`significant measures to prevent future outages. (Ex. F at Interrog. Resp. 4.) These changes have
`improved system resiliency and strengthened Robinhood’s systems infrastructure. (Id.) For
`example, Robinhood created a Load and Fault Testing Team (“LFT”), which works to identify
`critical systems and services, and to systematically stress test systems to locate and mitigate
`potential vulnerabilities. (Id.) The LFT uses a risk-based approach and prioritizes systems that
`process the highest volume of requests, or are otherwise believed to present the highest risk, e.g.,
`through unexpected system behavior identified in routine monitoring. (Id.) LFT members have
`also built a tool to allow engineers to better test critical services outside of market hours in order
`to assess how those services handle high load, and they have identified and mitigated potential
`issues associated both with record load at market open and with proposed systems changes. (Id.)
`In addition, Robinhood has dramatically expanded and enhanced its customer support
`(“CX”) services to enable it to serve its customers better. It has substantially increased the size of
`its CX workforce, opened new CX sites, and introduced live phone support to answer customers’
`questions 24 hours a day, seven