Plaintiffs slam Robinhood for attempt to dismiss lawsuit over spam messages
Less than a month after Robinhood pushed for the dismissal of an action concerning its its “refer-a-friend” marketing campaign, the plaintiffs have responded to Robinhood’s arguments.
The plaintiffs in this case are individuals who got sent messages by their friends under a marketing program devised by Robinhood inviting them to trade with Robinhood. According to the plaintiffs, Robinhood Financial LLC invented the scheme to pay and enable its users to spam their contacts with text message advertisements asking those contacts to “join Robinhood.”
On March 15, 2022, the plaintiffs filed their response to Robinhood’s motion to dismiss at the Washington Western District Court. One of the key claims in the complaint is that Robinhood has violated the Washington Consumer Electronic Mail Act (“CEMA”).
According to the plaintiffs, Robinhood violated Washington law by substantially assisting and supporting its users in sending text messages marketing Robinhood. CEMA defines “substantial assistance or support” to include that which enables any person to formulate, compose, send, originate, initiate, or transmit commercial text messages.
Robinhood provides substantial assistance by (a) encouraging and incentivizing its users to send referral messages by compensating them with free stock; (b) technologically enabling its users to initiate referral messages through the Robinhood App; (c) suggesting which contacts should receive referral text messages when the user uses the “Share Contacts” method; (d) composing the text messages; (e) composing and providing unique user-specific referral links that the text recipient can use to sign up for Robinhood’s services; and (f) formulating text and images to be sent as part of the Refer-a-Friend text messages.
The plaintiffs argue that these allegations more than suffice to state a claim under the CEMA.
Second, the text initiators are not required to themselves violate the statute or to “conduct business” in Washington in order for Robinhood to be liable, the plaintiffs say. All that is required is that Robinhood conduct business in Washington, substantially assist in the transmission of the texts, and “know or consciously avoid knowing” that the initiators are sending such texts without obtaining recipients’ clear and affirmative consent in advance.
Third, the plaintiffs argue that the texts are commercial in nature because they promote Robinhood’s for-profit products and services. Courts have concluded that a message can be “commercial” under CEMA without explicitly mentioning the defendant’s products or services. The statute also does not require that the message promote a transaction that results in a direct exchange of cash between the defendant and the recipient of the message. Robinhood generates revenue by soliciting consumers to “join Robinhood” and download Robinhood’s mobile application. Once a consumer “joins Robinhood,” Robinhood sells those users a variety of products and services and earns money on the trades they make.
Indeed, Robinhood does not even allow text recipients to redeem the free stock offers until they link a bank account to their Robinhood account. The texts are clearly commercial in nature, the plaintiffs say, concluding that Robinhood’s motion to dismiss should be denied.