District Court (Wash.) Finds that Text Messages Received by Referred Non-Customers from Robin Hood’s “Refer-a-Friend” Program Stated a Claim under Washington’s State-Equivalent of the TCPA

In Moore v. Robinhood Fin. LLC, No. 2:21-cv-01571-BJR, 2022 U.S. Dist. LEXIS 138392, at *2-5 (W.D. Wash. Aug. 3, 2022), Judge Rothstein allowed a CEMA claim to proceed against Robin Hood under its “Refer-a-Friend” program. The facts alleged are as follows:

Robinhood is an online investments brokerage service firm that, through its free mobile application (the “Robinhood App”) and website, offers services that enable its users to invest in stocks and other securities. AC ¶ 1. While Robinhood does not directly charge its users commissions on trades executed through its brokerage service, it earns revenue through “Payment for Order Flow” incentive fees paid to Robinhood by principal trading firms to which Robinhood routes its users’ securities orders. Id. ¶¶ 1, 25. Plaintiffs allege that, in 2020, the Securities and Exchange Commission found that this trading model results in inflated trade execution prices for Robinhood users relative to the prices they would have received from Robinhood’s competitors. Id. ¶ 25. Robinhood also offers its users a premium subscription-based service, “Robinhood Gold,” which, for a $5 monthly fee, provides subscribing users with a suite of financial tools, data, and market research, and permits them to borrow money from Robinhood in order to purchase securities on its platform. Id. ¶ 24.  Robinhood promotes its services in part through its “Refer a Friend” program, by which users are able to use the Robinhood App to generate and send text messages to their phone contacts inviting them to join Robinhood’s platform. AC ¶¶ 2-3, 21. To do so, a user must click “Rewards” or “Earn Rewards” in the Robinhood App homepage, which prompts the user to click “Invite Contacts” or “Share Link,” which then prompts the user to select the individuals from his or her phone’s contact list to which the invitation will be sent. Id. ¶¶ 3, 31-32. Upon doing so, the user’s phone’s native text messaging application automatically opens with a pre-composed message – inviting the non-user to join Robinhood, and containing a unique referral link – which the user can send as any ordinary text message. Id. ¶¶ 33-35.  To incentivize referrals, Robinhood compensates its users once their invited contacts join the platform and link their bank accounts to it. AC ¶ 2. Specifically, Robinhood credits both the referring user and the referred contact with either $5 or a randomly selected stock that can be worth anywhere from $2.50 and $225. Id. ¶¶ 2, 27. Robinhood includes a promise of free stock in the invitational text messages generated by the Robinhood App, and also displays alerts to users within the Robinhood App reminding them to “Invite Friends” to earn free stock. Id. ¶¶ 3, 45, 54.  On March 14, 2018, Moore received a text message from a prior contact inviting him to join Robinhood’s platform. AC ¶¶ 44-45. The message contained a link to Robinhood’s website and stated: “Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link.” Id. On March 4, 2020, Gillette receive a similar text message from a prior contact containing a link to Robinhood’s website and stating: “You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link.” Id. ¶¶ 53-54.  On August 9, 2021, Moore filed this lawsuit as a class action “on behalf of persons who also received Robinhood’s illegal spam texts.” Dkt. 1. In the Amended Complaint, which adds Gillette as a plaintiff, Plaintiffs claim that Defendant, through its Refer a Friend program, violated CEMA and the CPA. Defendant moved to dismiss Plaintiffs’ claims, Plaintiffs opposed the Motion (“Opp.,” Dkt. 56), and Plaintiffs replied (“Rep.,” Dkt. 57).

The District Court allowed the CEMA claim to proceed.

Defendant contends that the Amended Complaint alleges that Robinhood had only “nominal involvement in sending the referral text messages,” which is “insufficient to state a claim of ‘substantial assistance’ under CEMA.” Mot. at 5. Defendant’s contention is unavailing.  As noted above, CEMA’s definition of “assist the transmission” requires the plaintiff to establish that the defendant “provide[d] substantial assistance or support which enables any person to formulate, compose, send, originate, initiate, or transmit a commercial electronic mail message or a commercial electronic text message.” RCW § 19.190.010(1). Defendant urges this Court, in determining whether Plaintiffs adequately allege “substantial assistance or support,” to follow case law interpreting the federal Telephone Consumer Protection Act (“TCPA”) (see Mot. at 5-7), which makes it unlawful to “make” or “initiate” certain phone calls. 47 U.S.C. § 227(b)(1). Defendant points specifically to an inquiry courts have used in determining TCPA liability where the defendant did not physically make the call at issue. Applying the TCPA, courts have asked whether that defendant was “so involved with a communication as to be deemed to have made it.” See, e.g., De la Cabada v. Ytel, Inc., No. 19-cv-07178, 2020 U.S. Dist. LEXIS 41439, 2020 WL 1156909, at *3-5 (N.D. Cal. Mar. 10, 2020). The Court finds that this is the wrong inquiry for reviewing Plaintiffs’ CEMA claim. Unlike the TPCA, CEMA makes it unlawful not only to “initiate” a commercial text message, but also to “assist” in the transmission of one. RCW § 19.190.060(1) (emphasis added); see Wright v. LYFT, Inc., No. 2:14-cv-00421, 2016 U.S. Dist. LEXIS 195086, 2016 WL 7971290, *4 (W.D. Wash. Apr. 15, 2016) (“Unlike the TCPA, it makes no difference [under CEMA] if some other party ‘initiated’ the text message….”). As Plaintiffs do not claim that Robinhood “initiated” the messages at issue, but only “assisted” in their transmission, the Court is not required to determine whether Robinhood can be “deemed to have made” them.  The Court, instead, looks to case law that has examined the meaning of “substantial assistance or support” when specifically reviewing CEMA claims. In Frank v. Cannabis & Glass, LLC, No. 2:19-cv-00250, 2019 U.S. Dist. LEXIS 170871, 2019 WL 4855378 (E.D. Wash. Oct. 1, 2019), the court found that the defendant’s provision of a software application to a retail store, enabling it to send text messages to its customers, was “some form of assistance,” but insufficient to constitute “substantial assistance.” 2019 U.S. Dist. LEXIS 170871, [WL] at *2-3. On the other hand, in Wright, a court in this District found that the plaintiff had pled that Lyft, a ridesharing company, violated CEMA through its application’s “invite friends” feature, which prompted users to select phone contacts to which invitational messages that were pre-composed by Lyft would be sent on Lyft’s behalf by an Automatic Telephone Dialing System. 2016 U.S. Dist. LEXIS 195086, 2016 WL 7971290, at *1, 4. The Wright court found that the plaintiff had alleged “substantial assistance” because its “allegations establish[ed] a chain of events wherein [Lyft] ‘assisted’ with the transmission of the invitational text.” 2016 U.S. Dist. LEXIS 195086, [WL] at *4.  The facts alleged in the Amended Complaint resemble Wright rather than Frank, and demonstrate Robinhood’s “substantial assistance” in the invitational text messages received by Plaintiffs. Contrary to its claim of “nominal involvement,” Robinhood developed and ordered the entire “chain of events” leading to the messages’ formulation and transmission. See Wright, 2016 U.S. Dist. LEXIS 195086, 2016 WL 7971290, at *4. Specifically, the Robinhood App prompts users to refer contacts with the promise of free stocks, pre-composes the messages, and then automatically generates them within the users’ cell phone in such a way that enables them to be sent by the users with as few as four total clicks. See AC ¶¶ 3, 27, 31-35. Indeed, the messages received by Plaintiffs more closely resemble Robinhood advertisements than messages from friends. See id. ¶¶ 45 (Moore responding, “Please stop sending me ads.”), 54 (Gillette responding, “Is it spam?”). It is true that, unlike in Wright, the Robinhood users themselves ultimately send the messages, and are therefore able to edit them and dictate when they will be sent. Based on these facts, Defendant contends that it was the users, and not Robinhood, who had “full control” over the final messages’ content and timing. See Mot. at 7. However, whether or not the Robinhood users had full control over the final messages at the point of their transmission is of no moment insofar as Plaintiffs do not seek to establish that Robinhood “initiated” the messages. Plaintiffs, here, seek to prove only that Robinhood provided “substantial assistance or support” to its users in formulating, composing, sending, originating, initiating, or transmitting them. See RCW § 19.190.010(1). This Court finds that the Amended Complaint adequately alleges that Defendant did so.