TurboTax Class Action Should Be Arbitrated, Intuit Argues

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Intuit Inc. is asking a federal court to dismiss a couple’s TurboTax class action allegations and to send their remaining individual claims to arbitration.

The California-based provider of TurboTax tax preparation software argues that plaintiffs Fay and Aaron Rubin of New Jersey agreed to the terms of service that waive their right to bring a class action lawsuit against Intuit.

The same terms of service also require the Rubins to bring any dispute they may have against Intuit to arbitration or small claims court, waiving their right to bring their current TurboTax class action lawsuit, Intuit argues.

Intuit says the Rubins “necessarily and expressly” accepted the TurboTax terms of service every time they used TurboTax from tax years 2012 through 2015.

The Rubins filed their TurboTax class action lawsuit in April. They claimed that the TurboTax website’s terms of service contained a waiver of liability so broad that it violates New Jersey consumer protection laws.

Under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, language in consumer contracts that requires consumers to give up certain rights to seek legal recourse against businesses is forbidden, the plaintiffs say. They say the TCCWNA provides for statutory damage awards of $100 for each such violation.

But Intuit argues that the Federal Arbitration Act preempts application of the New Jersey TCCWNA, as far as the arbitration provisions are concerned. According to Intuit, the FAA is a federal law that supports the enforcement of binding arbitration agreements in contracts involving interstate commerce.

And under a particular U.S. Supreme Court opinion, Intuit argues, the FAA preempts state laws that attempt “to discriminate against arbitration agreements and the enforceability of class action waivers in arbitration agreements” – laws like New Jersey’s TCCWNA, the company claims.

Intuit further argues that the question of whether it has a valid agreement with the Rubins should be governed by California law, not New Jersey law. The TurboTax terms of service include a provision invoking California law as the law governing the agreement, Intuit says.

As for the Rubins’ attempt to bring their claims as a TurboTax class action lawsuit, Intuit says the arbitration language in the terms of service forbids them from bringing any dispute against Intuit other than as individuals. Intuit argues that the FAA supports enforcement of this language as well, since it is part of the arbitration agreement in the terms of service.

If the Rubins can keep their TurboTax class action lawsuit in federal court, they will continue  to seek certification for a plaintiff Class consisting of all persons in New Jersey who purchased TurboTax services within the past six years.

They seek a court order removing the controversial language from the TurboTax terms of service, plus a damage award of at least $100 for each TCCWNA violation for themselves and the Class Members.

Plaintiffs’ counsel is Fred M. Zemel and Daniel Zemel of The Zemel Law Firm PC.

The TurboTax Consumer Rights Class Action Lawsuit is Rubin v. Intuit Inc., Case No. 3:16-CV-02029, in the U.S. District Court for the District of New Jersey.