Court Opinion

ID: 9554859
Source: CourtListenerOpinion
Date Created: 2023-08-10 14:00:44.761377+00
Date Added: 2024-06-11T15:37:09.465396
License: Public Domain

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                                                        [PUBLISH]
                                 In the
                 United States Court of Appeals
                        For the Eleventh Circuit

                         ____________________

                               No. 22-10669
                         ____________________

        In re: JANUARY 2021 SHORT SQUEEZE TRADING
        LITIGATION,
        ___________________________________________________
        ANDREA JUNCADELLA,
        EDWARD GOODAN,
        WILLIAM MAKEHAM,
        MARK SANDERS,
        JAIME RODRIGUEZ, et al.,
                                                  Plaintiﬀs-Appellants,
        versus
        ROBINHOOD FINANCIAL LLC,
        ROBINHOOD SECURITIES, LLC,
        ROBINHOOD MARKETS, INC.,
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        2                       Opinion of the Court              22-10669

                                                    Defendants-Appellees.

                            ____________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                    D.C. Docket Nos. 1:21-md-02989-CMA,
                              1:21-cv-20414-CMA
                           ____________________

        Before JILL PRYOR and GRANT, Circuit Judges, and MAZE,* District
        Judge.

        GRANT, Circuit Judge:
               Like so many other industries, retail investing has been
        transformed by the internet. Once upon a time, a person who
        wanted to trade stocks needed a flesh-and-blood stockbroker.
        Now, most anyone with a smartphone and a bank account can
        trade stocks from the comfort of their own home.
              Sometimes that goes well; other times not. In January
        2021, many customers of the online financial services company
        Robinhood were aggressively buying specific stocks known as
        “meme stocks” in a frenzy that generated widespread attention.
        This phenomenon brought Robinhood additional revenue and a

        * The Honorable Corey L. Maze, United States District Judge for the
        Northern District of Alabama, sitting by designation.
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        22-10669               Opinion of the Court                        3

        huge number of new customers, but it also exposed the company
        to unprecedented regulatory compliance risk. Robinhood then
        made a high-profile and controversial decision: it suddenly
        restricted its customers’ ability to buy these meme stocks (but not
        their ability to sell them). Some Robinhood customers who
        could not buy the restricted stocks brought this putative class
        action, seeking to represent both Robinhood customers and all
        other holders of the restricted meme stocks nationwide who sold
        the stocks during a certain period. As Robinhood customers, they
        allege that they lost money because Robinhood stopped them from
        acquiring an asset that would have continued to increase in value.
        And as stockholders, they allege that Robinhood’s restriction on
        purchasing the meme stocks caused the price of their stocks to fall.
                The plaintiffs fail to state a claim—their contract with
        Robinhood gives the company the specific right to restrict its
        customers’ ability to trade securities and to refuse to accept any of
        their transactions. Because Robinhood had the right to do exactly
        what it did, the plaintiffs’ claims in agency and contract cannot
        stand. And under basic principles of tort law, Robinhood had no
        tort duty to avoid causing purely economic loss. We thus affirm
        the district court’s dismissal of the claims.
                                         I.
                                         A.
               The company known as “Robinhood” is a collection of
        distinct entities, three of which are relevant here: Robinhood
        Markets, Inc., Robinhood Financial LLC, and Robinhood
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        4                           Opinion of the Court                 22-10669

        Securities, LLC. 1 Robinhood Markets is the parent corporation,
        with its principal place of business in California. Robinhood
        Financial is an “introducing broker-dealer,” with its principal place
        of business in California, and is the company that Robinhood’s
        customers actually interface with whenever they use the
        Robinhood app. It “introduces” its customers to the market by
        showing them financial products that they can buy and processing
        trade requests. The last of the three companies is Robinhood
        Securities, a “clearing broker-dealer,” with its principal place of
        business in Florida. 2 When Robinhood Financial accepts one of
        its customers’ requests to buy a stock, it forwards that request to
        Robinhood Securities. Robinhood Securities then finds a “market
        maker” who is willing to sell the stock and submits the trade to the
        National Securities Clearing Corporation to clear the transaction.
        The trade is finalized two days after that submission.
              Robinhood’s popularity reached new heights in January
        2021.     That’s when several “meme stocks” became a
        phenomenon in the retail investment community—especially
        among young, relatively new investors who followed investing
        trends online.   Take for example the stock of GameStop
        Corporation, which became the most prominent of the meme

        1 When the distinction between these entities does not matter, we simply
        refer to “Robinhood” for ease of reading, even when describing actions that
        were formally taken by only one or two of these Robinhood entities.
        2   All three entities are incorporated in Delaware.
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        22-10669                Opinion of the Court                          5

        stocks.3 Sec. Exch. Comm’n, Staff Report on Equity and Options
        Market Structure Conditions in Early 2021 2 (Oct. 14, 2021).
        Several institutional investors were shorting GameStop stock
        (which means, in effect, that they were betting that its price would
        go down). Id. at 21. And social media platforms, most notably
        the subreddit WallStreetBets, soon hosted vigorous discussions
        about GameStop. Id. at 17. Some of this discussion pushed
        GameStop as a wise investment because of potential
        improvements in the company. Id. Other chatter emphasized
        the possibility of a “short squeeze.” Id. The theory behind a
        short squeeze is that, if coordinated purchases of a stock drive its
        price up, those shorting the stock will be forced to cover their
        position by buying the very stock they are shorting, creating a
        positive feedback loop in which the price continues to rise,
        affecting increasing numbers of short sellers, who then buy even
        more of the affected stock, and so on. Id. at 25.
                Whatever the exact motivations, purchases of GameStop
        shares surged. Id. at 21, 26–27. As a result, the closing price of
        the stock rose more than 700% between January 21 and January 27.
        In re: Jan. 2021 Short Squeeze Trading Litig., 584 F. Supp. 3d 1161,
        1174 (S.D. Fla. 2022). And similar (though less drastic) price

        3 The specific “meme stocks” identified by the plaintiffs are GameStop
        (GME), Blackberry Ltd. (BB); Nokia (NOK); AMC Entertainment Holdings,
        Inc. (AMC); American Airlines Group, Inc. (AAL); Bed Bath & Beyond, Inc.
        (BBBY); Castor Maritime, Inc. (CTRM); Express, Inc. (EXPR); Koss
        Corporation (KOSS); Naked Brand Group Ltd. (NAKD); Sundial Growers, Inc.
        (SDNL); Tootsie Roll Industries, Inc. (TR); and Trivago NV (TRVG).
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        6                      Opinion of the Court                 22-10669

        increases occurred for other meme stocks. See Staff Report on
        Equity and Options Market at 2, 32, 43. Naturally, more than just
        a few online retail investors started paying attention. And that led
        to a large increase in Robinhood users, as more than 3 million
        people downloaded the app in January, at one point making it the
        top app in the Apple App Store. Id. at 16 n.53; In re: Jan. 2021 Short
        Squeeze Trading Litig., 584 F. Supp. at 1174.
                While this volume of trading was good for Robinhood’s
        business, it also raised serious regulatory compliance challenges.
        Because of the two-day lag between a trade agreement and its
        clearing by the National Securities Clearing Corporation, the
        market maker (who sells the stock) has a two-day wait between
        when it agrees to sell the stock to Robinhood (who facilitates the
        transaction) and when it actually gets the money from the
        individual Robinhood customer (who is the ultimate purchaser).
        That delay introduces risk for the market makers in the
        transaction—the person who bought the stock might not have the
        money two days later. To guard against that risk, clearing
        brokers like Robinhood Securities are required to post their own
        money (not their customers’ money) as collateral every day with
        the National Securities Clearing Corporation, with severe penalties
        for a failure to do so. The amount of collateral, broadly speaking,
        depends on the amount of risk that the market maker faces. And
        the amount of risk depends on both the volume of trading and the
        volatility of the stock price. The upshot is that, if a stockbroker
        experiences a sudden surge of demand for stocks with rapidly
        changing prices, it is going to need a lot of cash as collateral. See
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        22-10669               Opinion of the Court                        7

        generally Matt Levine, Meme Stocks Were Too Good to Robinhood,
        Bloomberg        (June      27,     2022,      2:24      PM),
        https://www.bloomberg.com/opinion/articles/2022-06-
        27/matt-levine-s-money-stuff-meme-week-was-too-good-to-
        robinhood [https://perma.cc/PSV3-A43M].
               When Robinhood had unprecedented trading volumes in
        extremely volatile stocks, the market makers faced an
        unprecedented amount of risk in the two-day clearing process.
        The National Securities Clearing Corporation, in response,
        required Robinhood Securities to meet unprecedented collateral
        requirements. Just past 5 a.m. on January 28, Robinhood learned
        that it needed to deposit more than $3 billion of additional
        collateral by 10 a.m.; its total collateral requirement had been $282
        million the previous morning, and $125 million three days earlier.
        The National Securities Clearing Corporation soon reduced
        Robinhood’s $3 billion collateral deficit to about $734 million, but
        even that amount was large enough that Robinhood Securities
        needed to borrow money from its parent, Robinhood Markets.
        And the very next day, Robinhood’s deposit requirement leapt
        back to over $1 billion; it covered the amount thanks to fundraising
        from investors.
               The continuing market volatility and high trading volume
        meant Robinhood’s high collateral requirements were also likely
        to continue. So, beginning on January 28, Robinhood placed
        “position closing only” restrictions on certain meme stocks and
        related options. That meant that Robinhood customers could
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        8                       Opinion of the Court                    22-10669

        still sell any shares of the stock that they had already purchased on
        the platform, but they could not buy any new shares. Over the
        next week, Robinhood imposed a variety of restrictions on
        purchasing the meme stocks, which the plaintiffs claim affected the
        entire market for the stocks, driving down prices by artificially
        restricting demand and spooking holders into selling their shares.
                                           B.
                Robinhood’s decision to suspend purchases of meme stocks
        was controversial, and a lawsuit was filed against Robinhood in
        federal district court less than 24 hours after the first restrictions.
        Similar lawsuits followed across the country—primarily against
        Robinhood, but also against other brokers who implemented
        restrictions on trading during the meme stock surge. The Judicial
        Panel on Multidistrict Litigation consolidated federal cases
        involving shared factual questions about brokers’ restrictions on
        the trading of meme stocks in the Southern District of Florida for
        pretrial proceedings. The MDL court then divided the MDL into
        “tranches” depending on the defendant and the type of claim and
        ordered all plaintiffs bringing state-law claims against Robinhood
        to file a single master complaint. The parties stipulated that the
        consolidated master complaint would supersede the original
        individual complaints.
               The plaintiffs’ amended master complaint brings seven
        counts against varying combinations of Robinhood’s corporate
        entities: (I) negligence; (II) gross negligence; (III) breach of fiduciary
        duty; (IV) breach of the implied duty of care; (V) breach of the
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        22-10669               Opinion of the Court                          9

        implied covenant of good faith and fair dealing; (VI) tortious
        interference with contract and business relationship; and (VII) civil
        conspiracy. The plaintiffs sought to represent two nationwide
        classes: one of Robinhood customers who were in some way
        affected by the restriction (the Robinhood class), and another of all
        persons in the United States who sold any meme stocks during a
        particular period, whether or not they personally traded on
        Robinhood (the nationwide investor class). The plaintiffs sought
        to bring their two negligence claims on behalf of both classes and
        their other five claims on behalf of only the Robinhood class. The
        plaintiffs also argued that California law should apply to their
        implied contract claims, but that Florida law should apply to the
        rest.
               Robinhood moved to dismiss all seven counts. It argued
        that California law applied to all seven claims. And on the merits,
        it made three primary arguments. First, it argued that it owed no
        duties at all to the putative nationwide investor class. Second, for
        the negligence claims brought by the putative Robinhood class, it
        argued that it had no tort duty to avoid causing economic loss to
        its customers. Third, for the other claims by the putative
        Robinhood class, Robinhood pointed to the text of its customer
        agreement, arguing that its language granting Robinhood the right
        to refuse to execute specific trade requests foreclosed the plaintiffs’
        claims.
              That agreement was signed by all Robinhood customers
        before they used the company’s app, and both Robinhood
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        10                     Opinion of the Court                 22-10669

        Financial and Robinhood Securities (but not Robinhood Markets)
        are parties to it. Section 5A of the agreement established that
        Robinhood accounts are “self-directed”—Robinhood did not
        “provide investment advice,” “recommend any security,
        transaction or order,” or “make discretionary trades.” And parts
        of two sections of the agreement granted Robinhood a
        discretionary right to refuse to execute trades:
               § 5F: I understand Robinhood may at any time, in its
               sole discretion and without prior notice to Me,
               prohibit or restrict My ability to trade securities.
              § 16: I understand that Robinhood may, in its
              discretion, prohibit or restrict the trading of
              securities, or the substitution of securities, in any of
              My Accounts. . . . I understand that Robinhood may
              at any time, at its sole discretion and without prior
              notice to Me: (i) prohibit or restrict My access to the
              use of the App or the Website or related services and
              My ability to trade, (ii) refuse to accept any of My
              transactions, (iii) refuse to execute any of My
              transactions, or (iv) terminate My Account.
                The MDL court granted Robinhood’s motion to dismiss.
        For the five claims where the parties disputed whether California
        or Florida law applied, it declined to decide the issue, concluding
        that all five counts failed to state a claim under both California and
        Florida law. And it held that the two implied contract counts
        failed to state a claim under California law. It also determined
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        22-10669               Opinion of the Court                         11

        that giving the plaintiffs leave to amend the complaint would be
        futile. The plaintiffs appealed to this Court.
                                          II.
               Taking all the plaintiffs’ factual allegations as true, we
        review de novo both a district court’s dismissal for failure to state
        a claim and its determination that amendment of a complaint
        would be futile. Lamirand v. Fay Servicing, LLC, 38 F.4th 976, 979
        (11th Cir. 2022); SFM Holdings, Ltd. v. Banc of Am. Sec., LLC, 600 F.3d
        1334, 1336 (11th Cir. 2010).
                                         III.
                Like the district court, we decline to resolve the parties’
        choice-of-law dispute. Because the master complaint superseded
        the original complaints, the Southern District of Florida was the
        forum for pretrial purposes. Cf. Gelboim v. Bank of Am. Corp., 574
        U.S. 405, 413 n.3 (2015). As a federal district court sitting in
        diversity in Florida, the MDL court correctly applied Florida
        choice-of-law rules. Grupo Televisa, S.A. v. Telemundo Commc’ns
        Grp., Inc., 485 F.3d 1233, 1240 (11th Cir. 2007). And under Florida
        choice-of-law rules, a court need not resolve a choice-of-law
        dispute if there is a “false conflict,” such that the different laws
        point to the same outcome under the facts of the case. See Tune
        v. Philip Morris Inc., 766 So. 2d 350, 352–53 (Fla. Dist. Ct. App.
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        12                        Opinion of the Court                       22-10669

        2000). 4 Like the district court, we think that California and
        Florida law point to the same outcome.
                                              IV.
               We begin our analysis with Count III: the putative
        Robinhood class’s claim for breach of fiduciary duty. 5 The
        plaintiffs argue that Robinhood owed its customers fiduciary
        duties, including to refrain from putting its own interests in front
        of those of its customers, plus a specific fiduciary duty to provide
        those customers with “an open trading platform free of self-
        imposed trading restrictions.”        They say that Robinhood
        breached these duties by restricting their ability to buy shares of
        the meme stocks on Robinhood. We disagree. 6
              Under both California and Florida law, a plaintiff alleging a
        breach of fiduciary duty must show that a fiduciary duty exists, that
        a breach of that duty occurred, and that the breach proximately
        caused harm. See Brown v. Cal. Pension Adm’rs & Consultants Inc.,
        52 Cal. Rptr. 2d. 788, 796 (Ct. App. 1996); Gracey v. Eaker, 837 So.

        4 In the absence of a directly on-point state Supreme Court decision, this
        Court treats state intermediate appellate courts as the authoritative statement
        of state law unless there is persuasive reason to believe that the state Supreme
        Court would decide the question differently. United States v. Hill, 799 F.3d
        1318, 1322 (11th Cir. 2015).
        5We address the plaintiffs’ claims in the following order: Count III, Count V,
        Count IV, Counts I and II, Count VI, Count VII.
        6 The plaintiffs do not argue that the customer agreement is unconscionable,
        void against public policy, or otherwise unenforceable. We thus assume that
        the agreement is enforceable.
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        22-10669               Opinion of the Court                         13

        2d 348, 353 (Fla. 2002). The parties disagree on the first prong,
        duty—whether Robinhood had a fiduciary obligation to execute
        the requested trades.
               A fiduciary duty is the duty of one person to act in the best
        interest of another. Restatement (Second) of Agency § 13 cmt. a
        (Am. L. Inst. 1958). Fiduciary relationships are generally between
        a principal and an agent; a lawyer’s relationship with her client is
        one example. Id. § 1 & cmt. e. But such duties are not
        unlimited; an agent is a fiduciary only “with respect to matters
        within the scope of his agency.” Id. § 13; cf. also, e.g., Van de Kamp
        v. Bank of Am. Nat’l Tr. & Sav. Ass’n, 251 Cal. Rptr. 530, 551 (Ct.
        App. 1988); Bldg. Educ. Corp. v. Ocean Bank, 982 So. 2d 37, 40–41 (Fla.
        Dist. Ct. App. 2008). In other words, when someone agrees to
        serve as someone else’s agent, the agent then must act in the best
        interests of the principal—but only when performing the tasks for
        which they agreed to be an agent. Absent a general relationship
        of confidentiality between a principal and agent, an agent can still
        act in his own best interest when acting outside of the scope of
        agency, even if it comes at the expense of the principal.
        Restatement (Second) of Agency § 389 cmt. f.
                The scope of the principal-agent relationship is defined by
        the agreement that creates that relationship; the “existence and
        extent of the duties of the agent to the principal are determined by
        the terms of the agreement between the parties.” Id. § 376; see
        also id. §§ 1, 15. The California Court of Appeal has even applied
        this principle to say that “where the agreement between an agent
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        14                       Opinion of the Court                    22-10669

        and the principal expressly authorizes the agent to engage in
        certain conduct, the agent’s engagement in that conduct cannot
        constitute a breach of the agent’s duty to the principal.” Chen v.
        PayPal, Inc., 275 Cal. Rptr. 3d 767, 780 (Ct. App. 2021).
               Under both California and Florida law, these general
        principles apply to stockbrokers. Stockbrokers are agents of their
        clients and thus owe them certain fiduciary duties. See, e.g., Duffy
        v. Cavalier, 264 Cal. Rptr. 740, 751–52 (Ct. App. 1989); Ward v. Atl.
        Sec. Bank, 777 So. 2d 1144, 1147 (Fla. Dist. Ct. App. 2001). But, as
        with other fiduciary relationships, the stockbroker’s duty to act in
        its customers’ best interests extends only to tasks where the
        stockbroker is acting as its customers’ agent. As the California
        Court of Appeal has said, “the scope of the broker’s fiduciary duty
        depends on the nature of the broker/customer relationship.”
        Apollo Cap. Fund, LLC v. Roth Cap. Partners, LLC, 70 Cal. Rptr. 3d
        199, 214 (Ct. App. 2007); see also, e.g., Petersen v. Sec. Settlement Corp.,
        277 Cal. Rptr. 468, 473 (Ct. App. 1991). And, while applying
        Florida law, this Court has said that the existence of a fiduciary duty
        between a broker and customer is “determined by the substantive
        agreement of the parties.” SFM Holdings, 600 F.3d at 1339.
               The parties mostly argue a different point—the generally
        understood fiduciary duties of non-discretionary brokers.
        Robinhood claims that it could never have had a fiduciary duty to
        accept trade requests from its customers because it is a non-
        discretionary broker. The plaintiffs disagree, contending that
        even non-discretionary brokers have general duties of loyalty, good
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        22-10669                Opinion of the Court                          15

        care, and good faith, and that those duties required Robinhood to
        execute their trade requests.
                But this generalized debate is a distraction; we do not think
        it is helpful to dwell on the fiduciary duties of “non-discretionary
        brokers” in the abstract. The scope of agency between any given
        broker and customer is an inherently fact-intensive inquiry. See,
        e.g., Ward, 777 So. 2d at 1145, 1147 (finding broader fiduciary duties
        for a non-discretionary broker who called client and urged him to
        cancel a particular requested order). Instead, we need to look at
        the nature of the relationship between Robinhood and its
        customers.
               The customer agreement shows that Robinhood did not
        assume a duty to act in its customers’ best interests in determining
        whether to accept their trade requests. The parties repeatedly
        contemplated that Robinhood had the right to decline to execute
        trade requests for any reason. As customers, all of the named
        plaintiffs granted Robinhood independent authority in this area:
        (1) the right to “at any time, in its sole discretion and without prior
        notice to Me, prohibit or restrict My ability to trade securities”;
        (2) the right to “in its discretion, prohibit or restrict the trading of
        securities” in “any of My Accounts” and (3) the right to “at any
        time, at its sole discretion and without prior notice to Me: (i)
        prohibit or restrict . . . My ability to trade, (ii) refuse to accept any
        of My transactions,” and “(iii) refuse to execute any of My
        transactions.”       The Agreement narrowed the relationship:
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        16                    Opinion of the Court                22-10669

        Robinhood retained discretion to decline the plaintiffs’ trade
        requests.
                The plaintiffs try to rebuff this contractual language by
        arguing that Robinhood agreed to serve as their “agent for the
        purpose of carrying out [their] directions” and to take such “steps
        as are reasonable to carry out [their] directions.” They claim that
        this language extends far enough to show that Robinhood assumed
        a duty to act in their interests when deciding whether to accept
        their trade requests. But they omit one key line from this section
        of the contract: “in accordance with the terms and conditions of
        this Agreement.”         As a matter of ordinary contractual
        interpretation, Robinhood’s promise to serve as the plaintiffs’
        agent was limited by the other terms of the agreement—including
        the terms granting it continued discretion to decline to execute its
        customers’ requested trades.
               Indeed, even the plaintiffs concede that stockbrokers “can
        limit their agency to certain functions and thus avoid fiduciary
        duties as to functions not undertaken.”           That is all that
        Robinhood did here—it limited its “function” to executing trade
        requests after it decided to accept them. Nothing in the contract
        suggested that Robinhood would accept all trade requests. We
        fail to see how we could imply a fiduciary obligation to allow
        unfettered access to Robinhood’s trading platform from this
        relationship. See Chen, 275 Cal. Rptr. 3d at 780; SFM Holdings, 600
        F.3d at 1339. So Robinhood did not agree to act as its customers’
        agent when deciding whether to accept their trade requests, and
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        22-10669              Opinion of the Court                       17

        the MDL court correctly dismissed the plaintiffs’ claim for breach
        of fiduciary duty.
                                        V.
               We now turn to the putative Robinhood class’s contract
        claims: Count V, for breach of the implied covenant of good faith
        and fair dealing, and Count IV, for breach of the implied duty of
        care. The parties agree that California law applies to both counts.
        These claims fail for the same basic reason as the breach of
        ﬁduciary duty claim: Robinhood had the express contractual right
        to do exactly what it did, and California courts will not read an
        implied contractual term to override an express one.
                                        A.
               We ﬁrst address Count V.          The plaintiﬀs argue that
        Robinhood’s ability to exercise its discretionary right to refuse to
        execute trades was limited by an implied covenant of good faith
        and fair dealing. And they argue that Robinhood exercised that
        right in bad faith, undermining the agreement and enriching itself
        at their expense.
               California courts have sought to resolve the “apparent
        inconsistency” between two points of law: “that the covenant of
        good faith should be applied to restrict exercise of a discretionary
        power” and “that an implied covenant must never vary the express
        terms of the parties’ agreement.” Third Story Music, Inc. v. Waits,
        48 Cal. Rptr. 2d 747, 750 (Ct. App. 1995). In Third Story Music, the
        California Court of Appeal clariﬁed that “courts are not at liberty
        to imply a covenant directly at odds with a contract’s express grant
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        18                       Opinion of the Court                    22-10669

        of discretionary power except in those relatively rare instances
        when reading the provision literally would, contrary to the parties’
        clear intention, result in an unenforceable, illusory agreement.”
        Id. at 753. Otherwise, “the express language is to govern, and no
        obligation can be implied which would result in the obliteration of
        a right expressly given under a written contract.” Id. (alterations
        adopted and quotation omitted). Indeed, “if the express purpose
        of the contract is to grant unfettered discretion, and the contract is
        otherwise supported by adequate consideration, then the conduct
        is, by deﬁnition, within the reasonable expectation of the parties
        and can never violate an implied covenant of good faith and fair
        dealing.” Wolf v. Walt Disney Pictures & Television, 76 Cal. Rptr. 3d
        585, 597 (Ct. App. 2008) (quotation omitted); see also, e.g., Storek &
        Storek, Inc. v. Citicorp Real Est. Inc., 122 Cal. Rptr. 2d 267, 277–78 (Ct.
        App. 2002).
               Applying these cases, the MDL court found that the implied
        covenant of good faith did not limit Robinhood’s discretion under
        the contract. It reasoned that the contract provided other
        beneﬁts to the plaintiﬀs besides the ability to execute trades, such
        as access to Robinhood’s cash management services and use of
        Robinhood’s ﬁnancial literacy tools. These beneﬁts were of real
        value, and they meant that the contract was not “illusory” even
        when Robinhood declined to let the plaintiﬀs execute some trades.
               On appeal, the plaintiﬀs do not directly challenge the MDL
        court’s conclusion that the contract provided beneﬁts to the
        plaintiﬀs that retained their value even if Robinhood refused to
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        22-10669               Opinion of the Court                         19

        execute trades. Instead, they argue that the MDL court wrongly
        applied these cases for two separate reasons.
               First, the plaintiﬀs say that California courts do not apply the
        covenant of good faith to terms that give a party unilateral
        discretion about whether to fulﬁl an obligation, but that they still do
        apply the covenant to clauses that give a party unilateral discretion
        in how to fulﬁl an obligation. See, e.g., Best Buy Stores, L.P. v.
        Manteca Lifestyle Ctr., LLC, 859 F. Supp. 2d 1138, 1152 (E.D. Cal.
        2012); Locke v. Warner Bros., Inc., 66 Cal. Rptr. 2d 921, 927 (Ct. App.
        1997). According to the plaintiﬀs, the agreement must be read to
        give Robinhood discretion in how to execute trades, because if
        Robinhood could decide whether to execute trades, it would cease
        to be a non-discretionary broker.
               This argument ignores the plain text of the agreement,
        which, again, gives Robinhood the right to “refuse to accept” any
        of the customers’ transactions. That is unambiguously a right to
        decide whether to do something, not discretion in how to do it.
        Nor is there any tension between this right and Robinhood’s status
        as a non-discretionary broker. Declining to execute a particular
        trade is different in kind from actively managing a client’s
        investments. So the line of cases about clauses that grant a party
        discretion about whether to perform a specific task applies—and
        that line of cases forbids applying the implied covenant of good
        faith and fair dealing to Robinhood’s right to refuse to execute
        trades.
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        20                        Opinion of the Court                      22-10669

               Second, the plaintiﬀs argue that the implied covenant limits
        the scope of unilateral discretionary terms whenever that
        discretion would make any express promise in the contract
        “illusory.” They note that Robinhood promised to allow “the
        purchase, sale or carrying of securities or contracts” as the
        fundamental premise of the agreement. But, the plaintiﬀs say, if
        the discretionary right to refuse to execute trades is not limited by
        implied covenants, then Robinhood would have the right to break
        that basic promise.
                This argument does not move the ball. As we understand
        it, all the plaintiﬀs are really saying is that Robinhood cannot
        exercise its discretionary right in a way that breaches a diﬀerent
        express term of the agreement. If so, they are not really making
        an argument about the “implied covenant of good faith”— they are
        arguing that Robinhood breached an express term of the
        agreement. But the plaintiﬀs did not bring a claim for breach of
        an express term of the contract, and for good reason; Robinhood
        did not expressly promise to execute every trade request. 7 Count
        V of the plaintiﬀs’ complaint therefore fails to state a claim.
                                              B.
                Count IV, the claim for breach of the implied duty of care,
        fails for the same reasons as Count V. Robinhood’s express right

        7 In deciding that implied covenants do not limit Robinhood’s discretionary
        right to refuse to execute trades, we do not decide whether some hypothetical
        exercise of that right could still constitute a breach of an express promise of
        the contract.
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        22-10669                  Opinion of the Court                               21

        to refuse to execute trades cannot be overridden by an implied duty.
        “Implied terms are justiﬁed only when they are not inconsistent
        with some express term of the contract and, in the absence of such
        implied terms, the contract could not be eﬀectively performed. . . .
        The courts will not imply a better agreement for parties than they
        themselves have been satisﬁed to enter into, or rewrite contracts
        whenever they operate harshly.” Series AGI W. Linn of Appian Grp.
        Invs. DE LLC v. Eves, 158 Cal. Rptr. 3d 193, 203–04 (Ct. App. 2013)
        (quotations omitted).
                                              VI.
               We now turn to the plaintiﬀ’s negligence claims, Counts I
        and II. 8 These claims fail because, under both California and
        Florida law, Robinhood had no duty not to cause economic loss to
        either the putative Robinhood class or the putative nationwide
        investor class.9

        8 As is standard across common-law jurisdictions, the elements of negligence
        in both California and Florida are duty, breach, injury, and causation. See
        Jackson Hewitt, Inc. v. Kaman, 100 So. 3d 19, 27–28 (Fla. Dist. Ct. App. 2011);
        Brown v. USA Taekwondo, 276 Cal. Rptr. 3d 434, 440 (2021). At this motion-
        to-dismiss stage, the parties contest only the question of duty. At no point in
        their opening brief do the plaintiffs distinguish the question of duty for their
        negligence and gross negligence claims, so we analyze them together.
        9 The putative nationwide investor class raises separate choice-of-law issues
        that were not briefed before this Court or addressed by the court below. Any
        harm to the named plaintiffs from the decrease in the price of the stock was
        experienced not in their capacity as Robinhood customers who could not
        execute trades, but in their capacity as shareholders of the meme stocks.
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        22                        Opinion of the Court                       22-10669

                                              A.
                We start by applying California law to the putative
        Robinhood class. In California, the “economic loss rule” means
        that “[i]n general, there is no recovery in tort for negligently
        inﬂicted purely economic losses, meaning ﬁnancial harm
        unaccompanied by physical or property damage.” Sheen v. Wells
        Fargo Bank, N.A., 290 Cal. Rptr. 3d 834, 842 (2022) (quotation
        omitted). A subset of this rule known as the “contractual
        economic loss rule” bars “claims in negligence for pure economic
        losses in deference to a contract between litigating parties.” Id. at
        842–43. The rationale behind both rules is that contract law,
        rather than tort law, best allows parties with an economic
        relationship to “make dependable allocations of ﬁnancial risk
        without fear that tort law will be used to undo them later.” Id. at
        843 (quoting Restatement (Third) of Torts, Liability for Economic

        That impacts the argument that the customer agreement’s choice-of-law
        clause applies to this claim, and it also affects the application of Florida’s
        choice-of-law rules. Furthermore, many absent class members in the
        putative nationwide investor class were not Robinhood customers at all, and
        therefore did not sign the customer agreement. So for both named and
        absent class members, it is not obvious that Florida’s choice-of-law rules
        would point to the application of either Florida or California law for these
        claims. Because the plaintiffs do not identify any other possible jurisdictions
        where their claims would succeed, we consider any argument that another
        jurisdiction’s law might lead to a different outcome to be forfeited and apply
        only California and Florida law. See Sapuppo v. Allstate Floridian Ins. Co., 739
        F.3d 678, 681 (11th Cir. 2014). But we do not decide what law applies to any
        named plaintiff or absent class member for any claim (except for Counts IV
        and V).
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        22-10669               Opinion of the Court                         23

        Harm § 3 cmt. b (Am. L. Inst. 2020)). “If every negligent breach
        of a contract gives rise to tort damages the limitation would be
        meaningless, as would the statutory distinction between tort and
        contract remedies.” Erlich v. Menezes, 87 Cal. Rptr. 2d 886, 893
        (1999).
               California’s contractual economic loss rule squarely applies
        to these facts. The plaintiﬀs had a contractual relationship with
        Robinhood, and they allege that Robinhood was negligent in its
        execution of that contract. So the claim for “negligent breach of
        contract” is barred by the rule.
               The plaintiﬀs argue that their claim stands under both of
        two exceptions to the economic loss rule: (1) the professional
        services exception, which allows recovery for negligent economic
        loss in “some cases involving insurance policies and contracts for
        professional services”; and (2) the independent tort exception,
        which allows recovery for torts between two contracting parties
        that do not actually arise out of the contractual relationship.
        Sheen, 290 Cal. Rptr. 3d at 848, 843. Neither ﬁts here.
               Despite its name, the professional services exception does
        not apply to everything that seems like “professional services.”
        For example, it does not apply to mortgage lending. Id. at 848–
        51. This exception is a “major departure from traditional
        principles of contract law” that applies only in very limited
        circumstances in which one party to the contract has “specialized
        knowledge, labor, or skill” that is “predominantly mental or
        intellectual.” Id. at 848 (quotation omitted); N. Cntys. Eng’g, Inc. v.
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        24                     Opinion of the Court                 22-10669

        State Farm Gen. Ins. Co., 169 Cal. Rptr. 3d 726, 749 (Ct. App. 2014)
        (quotation omitted). In Sheen, the court rationalized this narrow
        exception by discussing an ordinary individual’s inability to “check
        the work” of the professional, which meant that there was no
        choice but to trust that the professional was correctly executing
        tasks within his area of expertise. See 290 Cal. Rptr. 3d at 851.
               Here, as a non-discretionary broker, Robinhood was simply
        executing (or, as the case may be, declining to execute) trade
        requests that its customers submitted. It was not oﬀering any
        special mental or intellectual skills that its customers had to depend
        on. California’s professional services exception simply does not
        ﬁt these facts.
               As for the independent tort exception, that applies only
        when the duty giving rise to tort liability either (1) is “completely
        independent of the contract” or (2) “arises from conduct which is
        both intentional and intended to harm.” Sheen, 290 Cal. Rptr. 3d
        at 843 (quoting Erlich, 87 Cal. Rptr. 2d at 891). It is obvious that
        the plaintiﬀs’ claims are not “completely independent” of the
        contract, so the plaintiﬀs argue that Robinhood’s conduct falls
        within the second bucket—that it was “intentional and intended to
        harm.” But it is not entirely clear from either their brieﬁng or
        their complaint why they think that Robinhood intended to cause
        them harm. The closest they get is in their complaint for gross
        negligence, where they say that Robinhood “took deliberate
        actions to hurt Plaintiﬀs and the Class by abruptly and unilaterally
        implementing one-way trading suspensions (halting of the buying,
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        22-10669                 Opinion of the Court                            25

        but not the selling) designed to and foreseeably impeding
        additional price appreciation.” But the plaintiﬀs did not support
        this statement with speciﬁc factual allegations. 10 Even at the
        motion-to-dismiss stage, where we take all of the plaintiﬀs’ factual
        allegations as true, we can only credit speciﬁc, plausible
        allegations—not vague and unsupported insinuations.              See
        Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plaintiﬀs do not
        adequately allege speciﬁc actions that are both “intentional and
        intended to harm.” Because neither exception to the economic
        loss rule applies, it bars the putative Robinhood class’s negligence
        claims under California law.11
                Moving to Florida law, the terminology is slightly diﬀerent,
        but the outcome is the same. Since 2013, Florida courts have used
        the term “economic loss rule” to refer to only a speciﬁc aﬃrmative
        defense in products liability cases. Tiara Condo. Ass’n, Inc. v. Marsh
        & McLennan Cos., 110 So. 3d 399, 400, 407 (Fla. 2013). That rule
        is irrelevant here. So, unlike under California law, Robinhood

        10 This statement is part of a pattern throughout the plaintiffs’ complaint,
        appellate briefing, and oral argument. They repeatedly insinuate (but never
        quite allege) that Robinhood had a separate, ulterior motive for moving the
        meme stocks to position closing only: to protect the interests of the market
        makers, who are Robinhood’s primary source of revenue, and at least some of
        whom were losing money due to the surge in the meme stocks’ price. But
        these insinuations are just that—insinuations—so we do not credit them in
        our analysis.
        11Because the economic loss rule bars recovery in California, we need not
        address plaintiffs’ arguments that Robinhood otherwise owed the putative
        Robinhood class a duty of care under California law.
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        26                     Opinion of the Court                 22-10669

        cannot merely invoke the economic loss rule and have it be the end
        of the matter.
               Even so, the plaintiﬀs still need to establish that Robinhood
        had a duty not to cause them economic loss. The plaintiﬀs appear
        to argue that Tiara creates some sort of presumption in favor of
        such a duty, but that is incorrect. Prior to Tiara, in cases where
        the Florida Supreme Court rejected the applicability of the
        economic loss rule, that court still conducted an independent
        analysis to determine whether the defendant owed the plaintiﬀ a
        tort duty in the ﬁrst instance. See Curd v. Mosaic Fertilizer, LLC, 39
        So. 3d 1216, 1223, 1227–28 (Fla. 2010), receded from on other grounds
        by Lieupo v. Simon’s Trucking, Inc., 286 So. 3d 143, 147 (Fla. 2019).
        Tiara did not change that practice. As a concurrence joined by
        three of the ﬁve Justices in the Tiara majority clariﬁed, Tiara did
        “not undermine Florida’s contract law or provide for an expansion
        in viable tort claims” because “[b]asic common law principles
        already restrict the remedies available to parties who have
        speciﬁcally negotiated for those remedies” and “a party still must
        demonstrate that all of the required elements for the cause of
        action are satisﬁed, including that the tort is independent of any
        breach of contract claim.” 110 So. 3d at 408 (Pariente, J.,
        concurring). Even post-Tiara, Florida courts have been loath to
        ﬁnd duties not to cause economic loss. See, e.g., Tank Tech, Inc. v.
        Valley Tank Testing, L.L.C., 244 So. 3d 383, 393 (Fla. Dist. Ct. App.
        2018).
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        22-10669                 Opinion of the Court                           27

               So does some other part of Florida law impose a duty on
        Robinhood not to cause the plaintiﬀs economic loss through
        negligence? Under Florida law, a tort duty can arise from four
        sources: “(1) legislative enactments or administration regulations;
        (2) judicial interpretations of such enactments or regulations;
        (3) other judicial precedent; and (4) a duty arising from the general
        facts of the case.” Clay Elec. Coop., Inc. v. Johnson, 873 So. 2d 1182,
        1185 (Fla. 2003) (quotation omitted). In trying to ﬁnd a duty here,
        the plaintiﬀs point to three diﬀerent places: Florida precedent about
        the undertaker doctrine, Financial Industry Regulatory Authority
        (FINRA) rules, and “the facts of the case.”12 None of these create
        the kind of economic-loss negligence duty that the putative
        Robinhood class needs to state a claim.
               The undertaker doctrine states that, whenever someone
        “undertakes” to perform a service, she has a duty to perform that
        service carefully. See Clay, 873 So. 2d at 1186. The plaintiﬀs
        argue that this doctrine applies to Robinhood because it undertook
        to oﬀer brokerage services to its customers. But the common-
        law undertaker doctrine is limited to physical harms, not economic
        ones. Restatement (Second) of Torts §§ 323, 324A (Am. L. Inst.
        1965). And the Florida District Court of Appeal has explicitly
        incorporated this limit from the Restatement into Florida’s
        undertaker doctrine, calling the undertaker doctrine “inapplicable”

        12 FINRA is a private nonprofit corporation that oversees and regulates its
        member securities firms, including Robinhood Financial and Robinhood
        Securities. Turbeville v. FINRA, 874 F.3d 1268, 1270–71 (11th Cir. 2017).
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        28                       Opinion of the Court                    22-10669

        when a case did not involve “‘physical harm’ within the meaning
        of Section 323 of the Restatement (Second) of Torts (1965).”
        Casamassina v. U.S. Life Ins. Co. in City of N.Y., 958 So. 2d 1093, 1102
        (Fla. Dist. Ct. App. 2007); cf. also, e.g., Wallace v. Dean, 3 So. 3d 1035,
        1050–52 (Fla. 2009); Clay, 873 So. 2d at 1186 & n.3. The plaintiﬀs
        do not point to any evidence that Florida courts have expanded the
        undertaker doctrine beyond its common-law scope, so that
        doctrine established no duty here.
                Next, the plaintiﬀs claim that Robinhood violated FINRA’s
        rules by failing to take suﬃcient risk-mitigating actions to avoid
        placing its “mission critical systems” at risk. And they claim that
        this is enough to create a duty under Florida law.
               This argument overstates the extent to which Florida law
        borrows negligence duties from regulatory bodies. A “violation
        of a statute may be evidence of negligence, but such evidence only
        becomes relevant to a breach of a standard of care after the law has
        imposed a duty of care.” Est. of Johnson v. Badger Acquisition of
        Tampa LLC, 983 So. 2d 1175, 1182 (Fla. Dist. Ct. App. 2008). Not
        every violation of a regulation creates a privately enforceable
        negligence duty. See, e.g., id. at 1182–83 (a tort duty arising out of
        federal regulations would “invite an unusual federal encroachment
        into Florida common law”). Especially here, where the plaintiﬀs
        allege economic loss arising from a contractual relationship, more
        is necessary to show that a regulation creates a privately
        enforceable tort duty. But no Florida statute or regulation
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        22-10669               Opinion of the Court                         29

        purports to turn those rules into a speciﬁc duty to customers that
        is enforceable by a private right of action.
               Finally, the plaintiﬀs point to a general principle of Florida
        negligence law that if, on the facts of the case, an activity
        foreseeably placed another person in the “zone of risk,” then there
        is a tort law duty to exercise reasonable care to avoid foreseeable
        harm from the risk. See McCain v. Fla. Power Corp., 593 So. 2d 500,
        503 & n.2 (Fla. 1992). Plaintiﬀs argue that, because Robinhood
        courted novice investors and knew of the risks inherent in its
        capital requirements, it had a duty to avoid causing economic loss
        to those customers.
               In general, Florida courts limit the zone-of-risk doctrine to
        non-economic injuries. See, e.g., Virgilio v. Ryland Grp., Inc., 680
        F.3d 1329, 1339–40 (11th Cir. 2012); Monroe v. Sarasota Cnty. Sch. Bd.,
        746 So. 2d 530, 538 (Fla. Dist. Ct. App. 1999). To be sure, in one
        case (uncited by the parties), the Florida Supreme Court applied
        the zone-of-risk doctrine to hold a defendant liable for purely
        economic loss. But the facts there were quite diﬀerent. In Curd
        v. Mosaic Fertilizer, LLC, the Florida Supreme Court held that the
        owner of a fertilizer storage facility was liable to commercial
        ﬁshermen after a dramatic release of pollutants into the Bay where
        they were licensed to ﬁsh. 39 So. 3d at 1218–19, 1227–28. We
        have read Curd very narrowly, noting that the plaintiﬀs there had a
        “special interest” in physical property that was damaged, and we
        have held that, even after Curd, Florida law still has a strong
        presumption against a negligence duty to cause economic loss.
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        30                     Opinion of the Court                 22-10669

        Virgilio, 680 F.3d at 1339–40, 1339 n.31. Here, as in Virgilio, the
        plaintiﬀs “do not allege that any real or personal property was
        damaged.” Id. at 1339 n.31.
                We highly doubt that Florida courts would expand a zone-
        of-risk negligence duty to facts like these, with no connection to
        the negligent damage of physical property. Such an expansion
        would dramatically disrupt day-to-day economic activity. One
        person’s pursuit of economic opportunity is often another’s
        foreseeable economic loss. Indeed, the very meme stock trading
        that led to this litigation was an eﬀort by some to acquire an
        economic beneﬁt at an economic cost to others. If liability arose
        anytime an activity created a foreseeable risk of economic harm to
        another, it would be endless. The putative Robinhood class has
        failed to state a negligence claim under Florida law.
                                         B.
               Robinhood also had no tort duty to avoid causing the
        putative nationwide investor class an economic loss. Under
        California law, the economic loss rule functions in part to avoid
        “imposing liability in an indeterminate amount for an
        indeterminate time to an indeterminate class.” Sheen, 290 Cal.
        Rptr. 3d at 842 (quotation omitted). If Robinhood were liable to
        all holders of a stock any time it made a decision that caused a stock
        price to go down, it would have eﬀectively limitless liability to all
        investors. That untenable result is straightforwardly foreclosed
        by California’s economic loss rule.
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        22-10669               Opinion of the Court                         31

                As for Florida law, the plaintiﬀs make no eﬀort to show what
        could have created a general duty for Robinhood to not cause any
        stock price to go down. And all three of their attempts to identify
        duties for the putative Robinhood class would even more clearly
        fail for the putative nationwide investor class.
                                         VII.
               We can quickly resolve the plaintiﬀs’ remaining claims.
        Count VI, the tortious interference with contract claim, was
        brought against the parent company, Robinhood Markets, for
        allegedly having “procured the breaches of implied contractual
        duties” by Robinhood Financial and Robinhood Securities. The
        plaintiﬀs’ only argument on this point depends on their arguments
        for Counts IV and V. Because neither Robinhood Financial nor
        Robinhood Securities breached an implied contractual duty (or an
        express one for that matter), this claim too necessarily fails.
                As for Count VII, the claim for civil conspiracy, the plaintiﬀs
        did not raise the MDL court’s dismissal of that claim on appeal and
        have therefore abandoned any challenge to it. See Sapuppo v.
        Allstate Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014).
                                        VIII.
               Finally, the plaintiﬀs argue that they should be allowed to
        allege additional facts to the extent that they are necessary to state
        a claim. The plaintiﬀs did not ﬁle a separate motion to amend.
        Instead, they included in their response to Robinhood’s motion to
        dismiss a request that they be allowed to amend their complaint if
        the court thought it was deﬁcient. If a motion for leave to amend
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        32                     Opinion of the Court                 22-10669

        “simply is imbedded within an opposition memorandum” then it
        “has not been raised properly” and has “no legal eﬀect.” Newton
        v. Duke Energy Fla., LLC, 895 F.3d 1270, 1277 (11th Cir. 2018)
        (quotation omitted). Additionally, both here and below, the
        plaintiﬀs failed to explain what additional facts they would allege if
        they were allowed to amend their complaint. A motion for leave
        to amend must “state with particularity the grounds” justifying
        amendment of the complaint. Id. (quoting Fed. R. Civ. P. 7(b)(1)).
        For both of these independent reasons, the plaintiﬀs were not
        entitled to amend their complaint.
                                   *      *      *
              When Robinhood restricted its customers’ ability to buy
        meme stocks, it took a sizable—and perhaps justifiable—hit in the
        court of public opinion. But in this Court, Robinhood is only
        accountable for specific legal duties.       Whether in agency,
        contract, or tort, the plaintiffs’ amended master complaint did not
        adequately allege that Robinhood breached a state common-law
        duty. We AFFIRM the judgment of dismissal.