Judge: TurboTax Users Who Claim They Were Eligible for Free Tax Filing Belong in Court, Not Arbitration
U.S. District Judge Charles Breyer also ruled that he will allow plaintiffs to pursue "time sensitive" injunctive relief during tax season despite the company's indications it will seek an interlocutory appeal of his ruling on the arbitration issue.
March 13, 2020 at 03:05 PM
4 minute read
The original version of this story was published on The Recorder
The company behind TurboTax has lost out on a bid to compel arbitration in a case brought on behalf of consumers who were eligible to file their taxes for free who claim they were fooled into paying for tax filing services.
In a ruling exploring the limits of so-called "sign-in wrap" agreements, U.S. District Judge Charles Breyer of the Northern District of California on Thursday found that the company's terms of service were not "reasonably conspicuous" and that consumers, therefore, didn't agree to arbitrate disputes with TurboTax maker Intuit. The terms of use were hyperlinked in blue text under the TurboTax sign-in button, but not underlined, falling short of what the judge called "the gold standard." Breyer also found that Intuit's sign-in and account recovery pages contained multiple, confusingly similar hyperlinks purportedly binding consumers to both the "Turbo Terms of Use" and the "Turbo Tax Terms of Use," only the latter of which contained the arbitration agreement the company was seeking to enforce.
"Because the terms were too inconspicuous to give plaintiffs constructive notice that they were agreeing to be bound by the arbitration agreement when they signed in to TurboTax, the court finds that plaintiffs did not agree to the arbitration provision," Breyer wrote.
Fenwick & West's Rodger Cole, who represents TurboTax maker Intuit in the litigation, said the company "has a long-standing policy of not commenting on pending litigation."
But with the tax filing deadline a little more than a month away, the ruling puts Intuit on a defensive footing. Cole had indicated at oral argument on the motion to compel arbitration that Intuit would seek an interlocutory appeal if Breyer were to deny the company's arbitration motion. Breyer in Thursday's order indicated that even in light of the impending appeal he plans to move forward with portions of the case, including to consider the plaintiffs' request for an injunction restricting the company's promotion of its free product. Co-lead counsel Daniel Girard of Girard Sharp and Norm Siegel at Stueve Siegel Hanson filed court papers in January seeking an injunction that would among other things bar Intuit from using "confusing" trade names including Free Edition and Freedom Edition and using software code or other means to prevent consumer from accessing to its actual free file website.
Breyer found that regardless of the appellate outcome on the arbitration issue, he will ultimately have to decide issues related to injunctive relief. Intuit's arbitration provision, the judge wrote, provides that any party can seek injunctions or equitable relief "from any court of competent jurisdiction." Plaintiffs, he noted, have indicated they would seek injunctive relief even if the case is ultimately pushed into arbitration.
"Tax season is well underway, making plaintiffs request for injunctive relief time sensitive," Breyer wrote. "It is therefore wiser to continue working to resolve those issues relevant to claims for injunctive and other equitable relief, even while the appeal is pending."
Girard and Siegel said in an email statement that they were pleased that Breyer "joined with several other courts in ruling that 'sign-in wrap' agreements like the one Intuit relied on must adequately present terms of use to bind consumers."
"We look forward to moving these claims forward and obtaining relief for the millions of low income Americans and active military who were victims of Intuit's scheme," they wrote.
Intuit and competitor H&R Block were hit with a string of lawsuits last year after a ProPublica investigation revealed the companies allegedly guided qualified users away from free services.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllAbout to Become a Partner? Here's What to Know About Your Newfound Wealth
10 minute readHolland & Knight Hires Chief Business Development and Marketing Officer From EY
2 minute readBankruptcy Filings Surged in First Half of 2024 Amid Uptick in Big Chapter 11 Cases
3 minute readLaw Firms Mentioned
Trending Stories
- 1Call for Nominations: Elite Trial Lawyers 2025
- 2Senate Judiciary Dems Release Report on Supreme Court Ethics
- 3Senate Confirms Last 2 of Biden's California Judicial Nominees
- 4Morrison & Foerster Doles Out Year-End and Special Bonuses, Raises Base Compensation for Associates
- 5Tom Girardi to Surrender to Federal Authorities on Jan. 7
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250