HR Block 2014 Annual Report Download - page 85

H&R Block, Inc. | 2014 Form 10-K 77
persons nationwide (excluding citizens of Missouri) who were charged the compliance fee, and asserts claims of
violation of various state consumer laws, money had and received, and unjust enrichment. The plaintiff filed a motion
for class certification in September 2013. The court subsequently granted our motion to compel arbitration of the
2011 claims and stayed all proceedings with respect to the 2011 claims. The case is continuing to proceed on the 2012
claims. We have not concluded that a loss related to this matter is probable, nor have we accrued a loss contingency
related to this matter.
Form 8863 Litigation. A series of putative class action lawsuits were filed against us in various federal courts and
one state court beginning on March 13, 2013. Taken together, the plaintiffs in these lawsuits purport to represent
certain clients nationwide who filed Form 8863 during tax season 2013 through an H&R Block office or using H&R
Block At Home® online tax services or tax preparation software, and allege breach of contract, negligence and violation
of state consumer laws in connection with transmission of the form. The plaintiffs seek damages, pre-judgment interest,
attorneys' fees and costs. In August 2013, the plaintiff in the state court action voluntarily dismissed her case without
prejudice. On October 10, 2013, the Judicial Panel on Multidistrict Litigation granted our petition to consolidate the
remaining federal lawsuits for coordinated pretrial proceedings in the United States District Court for the Western
District of Missouri in a proceeding styled IN RE: H&R BLOCK IRS FORM 8863 LITIGATION (MDL No. 2474/Case No.
4:13-MD-02474-FJG). We filed a motion to compel arbitration and to strike class allegations relating to clients who
agreed to arbitrate their claims, which remains pending. We have not concluded that a loss related to these lawsuits
is probable, nor have we accrued a liability related to these lawsuits.
LITIGATION, CLAIMS AND OTHER LOSS CONTINGENCIES PERTAINING TO OTHER DISCONTINUED OPERATIONS –
Express IRA Litigation. On January 2, 2008, the Mississippi Attorney General in the Chancery Court of Hinds County,
Mississippi First Judicial District (Case No. G 2008 6 S 2) filed a lawsuit regarding our former Express IRA product that
is styled Jim Hood, Attorney for the State of Mississippi v. H&R Block, Inc., H&R Block Financial Advisors, Inc., et al. The
complaint alleges fraudulent business practices, deceptive acts and practices, common law fraud and breach of
fiduciary duty with respect to the sale of the product in Mississippi and seeks equitable relief, disgorgement of profits,
damages and restitution, civil penalties and punitive damages.
Although we sold H&R Block Financial Advisors, Inc. (HRBFA) effective November 1, 2008, we remain responsible
for any liabilities relating to the Express IRA litigation, among other things, through an indemnification agreement. A
portion of our accrual is related to these indemnity obligations.
RSM McGladrey and Related Businesses. On April 17, 2009, a shareholder derivative complaint was filed by Brian
Menezes, derivatively and on behalf of nominal defendant International Textile Group, Inc. against MCM and others
in the Court of Common Pleas, Greenville County, South Carolina (C.A. No. 2009-CP-23-3346) styled Brian P. Menezes,
Derivatively on Behalf of Nominal Defendant, International Textile Group, Inc. (f/k/a Safety Components International,
Inc.) v. McGladrey Capital Markets, LLC (f/k/a RSM EquiCo Capital Markets, LLC), et al. The plaintiffs filed an amended
complaint in October 2011 styled In re International Textile Group Merger Litigation, adding a putative class action
claim. The plaintiffs allege claims of aiding and abetting, civil conspiracy, gross negligence and breach of fiduciary duty
against MCM in connection with a fairness opinion MCM provided to the Special Committee of Safety Components
International, Inc. (SCI) in 2006 regarding the merger between International Textile Group, Inc. and SCI. The plaintiffs
seek actual and punitive damages, pre-judgment interest, attorneys' fees and costs. On February 8, 2012, the court
dismissed the plaintiffs' civil conspiracy claim against all defendants. A class was certified on the remaining claims on
November 20, 2012. The court granted summary judgment in favor of MCM on June 3, 2013 on the breach of fiduciary
duty claim. To avoid the cost and inherent risk associated with litigation, the parties signed a memorandum of
understanding to resolve the case, which is subject to approval by the court. The court granted preliminary approval
of the settlement on February 19, 2014. A final approval hearing is set for June 26, 2014. A portion of our loss
contingency accrual is related to this lawsuit for the amount of loss that we consider probable and reasonably
estimable.
In connection with the sale of RSM and MCM, we indemnified the buyers against certain litigation matters. The
indemnities are not subject to a stated term or limit. A portion of our accrual is related to these indemnity obligations.
OTHER – We are from time to time a party to litigation, claims and other loss contingencies not discussed herein
arising out of our business operations. These matters may include actions by state attorneys general, other state