Hunt v. Meta Platforms, Inc.

Background

Justin Hunt brought a proposed consumer class action against HRB Tax Group, Inc. and HRB Digital LLC, together called H&R Block, as well as Meta Platforms, Inc. and Google, LLC. He alleged that H&R Block transmitted sensitive tax-return information to Meta and Google through tracking tools installed on H&R Block’s website while he used H&R Block’s online tax-filing service from 2018 through 2023.

Hunt’s agreement with H&R Block required him and H&R Block to resolve their disputes through individual arbitration. Hunt did not dispute agreeing to that provision, did not claim that he opted out, and did not challenge the provision’s enforceability in this proceeding. The court had previously granted H&R Block’s motion to compel arbitration of Hunt’s claims against H&R Block.

Google and Meta did not claim that they had entered into separate arbitration agreements directly with Hunt. They nevertheless asked the court to compel arbitration based on Hunt’s agreement with H&R Block. Hunt’s operative complaint asserted claims under the Racketeer Influenced and Corrupt Organizations Act, a federal law addressing certain organized patterns of unlawful activity, against H&R Block, Google, and Meta.

Analysis

The Federal Arbitration Act generally enforces written arbitration agreements, but arbitration ordinarily depends on the parties’ consent. Under California law, however, a person who signed an arbitration agreement may be equitably estopped—prevented from taking an inconsistent position—from pursuing claims in court against a nonsignatory in certain circumstances.

The court identified two potentially relevant circumstances. The first applies when claims against the nonsignatory are closely connected to the underlying contract. The second applies when the complaint alleges substantially interdependent and coordinated misconduct by the signatory and nonsignatory, and that misconduct is closely connected to the contract’s obligations.

The court found that the first circumstance clearly applied. Hunt’s claims against Google and Meta alleged that the defendants engaged in a pattern of racketeering activity that included fraudulent communications and misrepresentations about H&R Block’s privacy and data-security policies. Those allegations depended on the H&R Block agreement and the privacy notice incorporated into it, including whether those documents misrepresented or omitted information about sharing tax-return data with companies such as Google and Meta.

The court also found that Hunt alleged coordinated misconduct by H&R Block, Google, and Meta. It did not need to make a final decision about whether that misconduct independently satisfied the second circumstance because the first circumstance was enough to require arbitration.

Ruling

The court granted Google’s and Meta’s motions to compel arbitration. It held that Hunt was equitably estopped under California law from pursuing his claims against those companies in court instead of arbitration.

The court stayed the case until any arbitration of Hunt’s claims against Google and Meta concluded. It ordered the defendants to notify the court within 14 days after arbitration ended and to submit one-page status reports on the schedule stated in the order until then.

Because Hunt was required to pursue his claims against Google and Meta in arbitration, the court denied Google’s and Meta’s pending motions to dismiss those claims without prejudice.