Hunt v. Meta Platforms, Inc.

Background

Justin Hunt used H&R Block’s online tax-filing service from 2018 through 2023. He alleged that H&R Block transmitted sensitive tax-return information to Meta Platforms, Inc. and Google, LLC through tracking tools installed on H&R Block’s website. His second amended complaint asserted claims against H&R Block, Meta, and Google under the Racketeer Influenced and Corrupt Organizations Act and the Internal Revenue Code.

H&R Block consists of HRB Tax Group, Inc. and HRB Digital LLC. H&R Block moved to compel arbitration under its Online Services Agreement. According to H&R Block, Hunt was required to accept that agreement when he used the service, and records showed that he accepted it on April 5, 2023. Hunt did not dispute that he accepted the agreement.

The agreement required disputes between Hunt and the H&R Block parties to be resolved through binding individual arbitration, subject to an opt-out process. It also required an informal resolution process before arbitration and provided for arbitration under the American Arbitration Association’s consumer rules. The agreement stated that courts, rather than arbitrators, would decide questions about the arbitration agreement’s validity, enforceability, scope, and whether a dispute could be arbitrated.

The court’s analysis

The court first considered whether the arbitration agreement was enforceable. Hunt argued that it was induced by fraud because language in the agreement about disclosure of confidential tax and account records led him to believe H&R Block would comply with applicable laws and would not share his tax information without consent. The court held that this argument challenged the Online Services Agreement as a whole, rather than the arbitration provision specifically. Under the Federal Arbitration Act, the court explained, a challenge to the entire contract based on fraudulent inducement must be decided by the arbitrator when the arbitration provision itself is otherwise valid. The court therefore held that Hunt’s fraud argument could not defeat the motion to compel arbitration.

Hunt also argued that the arbitration provision was unconscionable, meaning unfairly oppressive or one-sided under applicable contract law. Applying California law, the court stated that both procedural and substantive unconscionability generally must be shown. The court rejected Hunt’s procedural-unconscionability argument because he relied only on the agreement being a take-it-or-leave-it contract, while the agreement contained a clear opt-out provision and Hunt did not claim that he had tried to opt out. Because the court found no procedural unconscionability, it held that the arbitration agreement was enforceable regardless of whether its terms were substantively unconscionable.

The court next examined whether the agreement covered Hunt’s claims. The arbitration provision broadly covered “all disputes and claims” between Hunt and the H&R Block parties. The court was skeptical that another provision limited arbitration to disputes arising from use of H&R Block’s products and services. Even if that provision imposed such a limit, the court held, Hunt’s claims still related to his use of H&R Block’s services because the information allegedly sent to Meta and Google was information he provided to H&R Block while using those services.

Disposition

The court granted H&R Block’s motion to compel arbitration. It ordered Hunt and the H&R Block parties to proceed with arbitration as provided in their agreement and stayed Hunt’s claims against H&R Block until arbitration was complete. The opinion does not state a disposition of the claims against Meta Platforms, Inc. or Google, LLC.

Judge

The order was signed by P. Casey Pitts, United States District Judge.