HR Block 2014 Annual Report Download - page 84

76 2014 Form 10-K | H&R Block, Inc.
Funding Corporation case discussed above) and has not had control of this litigation or any settlements thereof, SCC
does not have precise information about the amount of damages or other remedies being asserted, the defenses to
the claims in such lawsuits or the terms of any settlements of such lawsuits. SCC therefore cannot reasonably estimate
the amount of potential losses or associated fees and expenses that may be incurred in connection with such lawsuits,
which may be material. Additional lawsuits against the underwriters or depositors may be filed in the future, and SCC
may receive additional notices of claims for indemnification from underwriters or depositors with respect to existing
or new lawsuits or settlements of such lawsuits. Certain of the notices received included, and future notices may
include, a reservation of rights that encompasses a right of contribution which may become operative if indemnification
is unavailable or insufficient to cover all of the losses and expenses involved. We have not concluded that a loss related
to any of these indemnification claims is probable, nor have we accrued a liability related to any of these claims.
LITIGATION, CLAIMS OR OTHER LOSS CONTINGENCIES PERTAINING TO CONTINUING OPERATIONS –
Employment-Related Claims and Litigation. On January 25, 2010, a wage and hour class action lawsuit was filed
against us in the United States District Court for the Western District of Missouri styled Barbara Petroski, et al. v. H&R
Block Eastern Enterprises, Inc., et al., (Case No. 10-00075-CV-W-DW). The plaintiffs generally allege failure to
compensate tax professionals nationwide for training that is required to be eligible for rehire the following tax season,
and seek compensatory damages, liquidated damages, statutory penalties, pre-judgment interest, attorneys' fees and
costs. A conditional class was certified under the Fair Labor Standards Act in March 2011 (consisting of tax professionals
nationwide who worked in company-owned offices and who were not compensated for such training on or after April
15, 2007). Two classes were also certified under state laws in California and New York (consisting of tax professionals
who worked in company-owned offices in California and New York and who were not compensated for such training
on or after March 4, 2006 and on or after March 4, 2004, respectively). We filed a motion to decertify the classes,
along with a motion for summary judgment on all claims. On April 8, 2013, the court granted summary judgment in
our favor on all claims. The plaintiffs filed an appeal. On May 1, 2014, the Eighth Circuit Court of Appeals affirmed the
order of the trial court in our favor. We have not concluded that a loss related to this matter is probable, nor have we
accrued a loss contingency related to this matter.
RAL and RAC Litigation. A series of putative class action lawsuits were filed against us in various federal courts
beginning on November 17, 2011 concerning the refund anticipation loan (RAL) and refund anticipation check (RAC)
products. The plaintiffs generally allege we engaged in unfair, deceptive or fraudulent acts in violation of various state
consumer protection laws by facilitating RALs that were accompanied by allegedly inaccurate TILA disclosures, and
by offering RACs without any TILA disclosures. Certain plaintiffs also allege violation of disclosure requirements of
various state statutes expressly governing RALs and provisions of those statutes prohibiting tax preparers from charging
or retaining certain fees. Collectively, the plaintiffs seek to represent clients who purchased RAL or RAC products in
up to forty-two states and the District of Columbia during timeframes ranging from 2007 to the present. The plaintiffs
seek equitable relief, disgorgement of profits, compensatory and statutory damages, restitution, civil penalties,
attorneys' fees and costs. These cases were consolidated by the Judicial Panel on Multidistrict Litigation into a single
proceeding in the United States District Court for the Northern District of Illinois for coordinated pretrial proceedings,
styled IN RE: H&R Block Refund Anticipation Loan Litigation (MDL No. 2373/No: 1:12-CV-02973-JBG ). We filed a motion
to compel arbitration, which remains pending. We have not concluded that a loss related to this matter is probable,
nor have we accrued a loss contingency related to this matter.
Compliance Fee Litigation. On April 16, 2012, a putative class action lawsuit was filed against us in the Circuit Court
of Jackson County, Missouri styled Manuel H. Lopez III v. H&R Block, Inc., et al. (Case # 1216CV12290) concerning a
compliance fee charged to retail tax clients in the 2011 and 2012 tax seasons. The plaintiff seeks to represent all
Missouri citizens who were charged the compliance fee, and asserts claims of violation of the Missouri Merchandising
Practices Act, money had and received, and unjust enrichment. We filed a motion to compel arbitration of the 2011
claims. The court denied the motion. We filed an appeal. On May 6, 2014, the Missouri Court of Appeals, Western
District, reversed the ruling of the trial court and remanded the case for further consideration of the motion. We have
not concluded that a loss related to this matter is probable, nor have we accrued a loss contingency related to this
matter.
On April 19, 2012, a putative class action lawsuit was filed against us in the United States District Court for the
Western District of Missouri styled Ronald Perras v. H&R Block, Inc., et al. (Case No. 4:12-cv-00450-DGK) concerning
a compliance fee charged to retail tax clients in the 2011 and 2012 tax seasons. The plaintiff seeks to represent all