HR Block 2015 Annual Report Download - page 81

74 2015 Form 10-K | H&R Block, Inc.
that a loss related to any of these indemnification claims or reserved contribution rights is probable, nor have we
accrued a liability related to any of these claims or rights.
LITIGATION, CLAIMS OR OTHER LOSS CONTINGENCIES PERTAINING TO CONTINUING OPERATIONS –
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 in the United
States District Court for the Northern District of Illinois for coordinated pretrial proceedings, in a matter styled IN RE:
H&R Block Refund Anticipation Loan Litigation (MDL No. 2373/No: 1:12-CV-02973-JBG ). On July 23, 2014, the MDL
court granted our motion to compel arbitration of the claims of the named plaintiffs and stayed the cases pending
arbitration. The MDL court certified its arbitration order for interlocutory appeal. Plaintiffs filed a petition for
permission to appeal with the Seventh Circuit Court of Appeals, which was denied on January 30, 2015. The parties
subsequently reached an agreement to settle the claims for an immaterial amount.
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. On March
12, 2015, the trial court denied the motion on remand. We filed an appeal, 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.
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
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. In November 2013, the
court compelled arbitration of the 2011 claims and stayed all proceedings with respect to those claims. On June 20,
2014, the court denied class certification of the remaining 2012 claims. Plaintiff filed an appeal of the denial of class
certification to the Eighth Circuit Court of Appeals, 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.
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 desktop 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. The Judicial Panel on Multidistrict Litigation subsequently 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). On July 11, 2014, the MDL court granted our motion to compel arbitration for those
named plaintiffs who agreed to arbitrate their claims. Plaintiffs filed a consolidated class action complaint in October
2014. We filed a motion to strike the class allegations relating to those clients who agreed to arbitration, which the
court granted on January 7, 2015. The cases remain stayed with respect to the individual plaintiffs who agreed to