Intuit Inc. v. H&R Block, Inc.

Background

HRB Digital LLC, which the opinion refers to as Block, asserted four counterclaims against Intuit Inc.: a claim under the federal Lanham Act, claims under California’s Unfair Competition Law and False Advertising Law, and a Missouri common-law unfair-competition claim based on false advertising. The claims concerned Intuit’s advertising for TurboTax Live Assisted’s “expert final review” feature.

Block alleged that Intuit’s advertising represented that a live tax expert would automatically review the consumer’s entire tax return before submission and provide a comprehensive, line-by-line review. Block alleged that consumers instead had to take affirmative steps to request a review and that the review was often limited to answering final questions rather than reviewing the entire return.

Standing

Intuit argued under Federal Rule of Civil Procedure 12(b)(1) that Block lacked Article III standing. The court rejected that argument. It held that Block adequately alleged a connection between Intuit’s advertising and a possible business injury: Block and Intuit competed in the online tax-preparation market, and the challenged advertising could cause consumers to choose Intuit’s product instead of Block’s product.

The court explained that standing required a plausible allegation of injury traceable to the challenged conduct, but did not require Block to prove at the pleading stage that the alleged deception violated the law. The court therefore concluded that Block’s allegations were sufficient to survive the standing challenge.

False-Advertising Allegations

The parties agreed that all four counterclaims relied on the same five-part false-advertising standard: a false statement of fact in a commercial advertisement; actual or likely deception of a substantial segment of the audience; materiality to purchasing decisions; entry into interstate commerce; and injury or likely injury to the plaintiff.

The court held that Block adequately pleaded falsity. Block identified the challenged advertisements, including an advertisement that appeared on Intuit’s website in March 2024, and explained why the advertisement allegedly suggested that the review would be automatic and comprehensive. The court concluded that the allegations were barely sufficient under the requirement that fraud be pleaded with particularity. It also declined to treat statements by Block’s counsel and executives as binding judicial admissions at the motion-to-dismiss stage.

Materiality and Disposition

The court held that Block failed to adequately plead materiality. Although Block plausibly alleged that the availability of an expert final review could influence consumers, the alleged deception concerned the narrower question of whether the review would be automatic and comprehensive. The court found that Block did not provide sufficient facts showing that consumers made purchasing decisions based on those specific features.

The court also rejected Block’s argument that the alleged deception concerned an inherent quality or characteristic of the product. It reasoned that the online tax forms were the core of the product, while review by a tax professional was a benefit that might improve the consumer’s experience but did not change the product’s fundamental nature. The court further found that the cited consumer reviews did not establish that the alleged deception was material to a reasonable consumer.

Because materiality was required for all four counterclaims, the court granted Intuit’s motion to dismiss and dismissed Block’s Amended Counterclaims. The dismissal was with leave to amend the materiality allegations only. The court stated that no other sections of the counterclaims could be altered, imposed page limits for any further motion to dismiss, and ordered Block to file its Second Amended Counterclaims within 14 days.