HR Block 2016 Annual Report Download - page 71

H&R Block, Inc. | 2016 Form 10-K 63
indemnification with respect to existing or new lawsuits or settlements of such lawsuits in its capacity as originator,
depositor, or servicer. We have not concluded that a loss related to any indemnification claims by securitization trustees
is probable, nor have we accrued a liability for such claims.
LITIGATION, CLAIMS OR OTHER LOSS CONTINGENCIES PERTAINING TO CONTINUING OPERATIONS –
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 additional appeal. On March 8, 2016, the appellate
court affirmed the decision of the trial court. We filed an application for transfer of the appeal in the Supreme Court
of Missouri, 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 originally sought to
represent all persons nationwide (excluding citizens of Missouri) who were charged the compliance fee, and asserted
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. In
June 2014, the court denied class certification of the remaining 2012 claims. The plaintiff filed an appeal with the
Eighth Circuit Court of Appeals, which was denied on June 18, 2015. In January 2016, the plaintiff filed an amended
complaint asserting claims of violation of Missouri and California state consumer laws, money had and received, and
unjust enrichment, along with a motion to certify a class of all persons (excluding citizens of Missouri) who were
charged the compliance fee in the state of California. We subsequently filed a motion for summary judgment on all
claims. On April 29, 2016, the court granted our motion for summary judgment on all claims and denied the plaintiff's
motion for class certification as moot. The plaintiff filed an appeal with 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 parties subsequently reached an agreement to settle the remaining claims,
subject to court approval. The court granted preliminary approval of the settlement on January 12, 2016 and final
approval on May 23, 2016. A portion of our loss contingency accrual is related to this matter for the amount of loss
that we consider probable and reasonably estimable.
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