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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Electronically FILED by Superior Court of California, County of Los Angeles on 10/01/2020 05:28 PM Sherri R. Carter, Executive Officer/Clerk of Court, by C. Monroe,Deputy Clerk 20STCV37714 Assigned for all purposes to: Stanley Mosk Courthouse, Judicial Officer: Stephanie Bowick 1 Warren Postman (#330869) Keith A. Custis (#218818) 2 [email protected] [email protected] 3 KELLER LENKNER LLC CUSTIS LAW, P.C. 1300 I Street, N.W., Suite 400E 1999 Avenue of the Stars 4 Washington, D.C. 20005 Suite 1100 (202) 749-8334 Los Angeles, California 90067 5 (213) 863-4276 Sean Duddy (pro hac vice forthcoming) 6 [email protected] 7 KELLER LENKNER LLC 150 N. Riverside Plaza, Suite 4270 8 Chicago, Illinois 60606 (312) 741-5220 9 10 Attorneys for Plaintiffs 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA IN THE COUNTY OF LOS ANGELES 12 31,011 INDIVIDUALS, ) Case No: 13 ) 14 Plaintiffs, ) COMPLAINT FOR ) DECLARATORY AND 15 vs. ) INJUNCTIVE RELIEF ) 16 INTUIT INC. and ) INTUIT CONSUMER GROUP LLC, ) 17 ) 18 Defendants. ) ) 19 20 21 22 23 24 25 26 27 28 COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1 Plaintiffs seek an order protecting their right to individually arbitrate claims against Intuit, 2 in accordance with the terms of Intuit’s arbitration agreement. They allege as follows, on personal 3 knowledge as to their own acts, and on information and belief as to all other acts: 4 INTRODUCTION 5 1. Plaintiffs are customers of Intuit Inc. who are attempting to individually arbitrate 6 state consumer fraud and federal antitrust claims against Intuit, arising from their use of Intuit’s 7 online tax filing product, TurboTax. 8 2. Before using TurboTax’s online tax filing services, each Intuit customer must click 9 a button acknowledging that he or she accepts Intuit’s Terms of Service (“Terms”). Those Terms 10 include an arbitration agreement. 11 3. Each Plaintiff used TurboTax to prepare and file his or her taxes in at least one year 12 between tax years 2014 and 2018, and therefore each Plaintiff clicked through Intuit’s Terms. 13 Invoking the Terms, each Plaintiff filed an arbitration demand against Intuit with the American 14 Arbitration Association (“AAA”), seeking to arbitrate consumer fraud and antitrust claims. 15 4. The Terms require that each Plaintiff’s claims be resolved in individual arbitration. 16 The Terms prohibit both Intuit and its customers from resolving their claims through a class action 17 in court. Each Plaintiff therefore has a contractual right to avoid the complexity and complications 18 involved in class-action litigation. 19 5. On information and belief, Intuit is attempting to reach a class-action settlement 20 with other Intuit customers in an attempt to secure a release of Plaintiffs’ claims absent their 21 affirmative consent. Any attempt by Intuit and its subsidiaries to circumvent their liability to 22 Plaintiffs by entering into such a settlement violates the plain terms of Intuit’s arbitration agreement 23 by undermining Plaintiffs’ right to avoid class proceedings without Plaintiffs’ affirmative consent. 24 6. Plaintiffs hereby seek a declaration that the Terms prevent Intuit from attempting to 25 resolve, through a class-action settlement, the claims of customers who have filed demands for 26 individual arbitration. Plaintiffs further request that this Court enjoin Intuit from entering into a 27 class-action settlement that could potentially settle the claims of such customers without their 28 affirmative consent. COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1 PARTIES 2 7. Each Plaintiff is a current or former Intuit customer who has filed a demand for 3 arbitration against Intuit, asserting consumer fraud and antitrust claims arising from his or her use 4 of TurboTax online. Each Plaintiff’s name, city, and state is listed on Exhibit A. 5 8. Defendant Intuit Inc. is a Delaware corporation with its principal place of business 6 in Mountain View, California. 7 9. Defendant Intuit Consumer Group LLC is a limited liability, California corporation 8 with its principal place of business in San Diego, California. It is a wholly owned subsidiary of 9 Intuit Inc. 10 JURISDICTION AND VENUE 11 10. This Court has subject matter jurisdiction over this action pursuant to Article VI, 12 Section 10 of the California Constitution and California Code of Civil Procedure Section 410.10, 13 because Defendants’ acts alleged herein were committed in California, because the amount in 14 controversy in this action exceeds the sum or value of $25,000, and because this action involves 15 claims not given by statute to other trial courts. 16 11. This Court has personal jurisdiction over Defendants because they are domiciled in 17 California. 18 12. Venue is proper in this Court because some Plaintiffs reside in Los Angeles County 19 and the transactions underlying their claims, including the execution of the arbitration agreement 20 at issue, occurred in this county. See Cal. Code Civ. Proc. § 395. Further, Defendants recently 21 sued these same Plaintiffs in a related action in this Court. 22 13. Plaintiffs are properly joined in this action because their right to relief arises “out of 23 the same transaction, occurrence, or series of transactions or occurrences”—each Plaintiff’s 24 execution of the arbitration agreement and Intuit’s attempts to resolve their claims through a class- 25 action settlement—and their claims raise questions of law and fact common to all Plaintiffs. Cal. 26 Code Civ. Proc. § 378. 27 14. Defendants are properly joined in this action because Plaintiffs assert against them 28 2 COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1 a right to relief “arising out of the same transaction, occurrence, or series of transactions or 2 occurrences,” and because Plaintiffs’ claims raise questions of law or fact common to all 3 Defendants. Cal. Code. Civ. Proc. § 379. 4 15. This Court may grant declaratory relief pursuant to California Code of Civil 5 Procedure Section 1060 because Plaintiffs’ allegations present a real, substantial, and immediate 6 controversy regarding the rights, duties, and liabilities of the parties. 7 16. This Court may enjoin Intuit’s conduct under California Code of Civil Procedure 8 Section 526(a) and California Civil Code 3368 because Intuit imminently seeks to take action 9 prohibited by its contract with Plaintiffs, causing Plaintiffs irreparable injury. 10 FACTS 11 17. Each Plaintiff filed his or her taxes using TurboTax Online, an Intuit product, in at 12 least one year between tax years 2014 and 2018. 13 18. Before using TurboTax’s online tax filing services, each Plaintiff was required to 14 acknowledge that he or she accepted an arbitration agreement, attached as Exhibit B.1 15 19. The arbitration agreement provides that “[a]ny dispute or claim relating in any way 16 to the services or this agreement will be resolved by binding arbitration, rather than in court, except 17 that you may assert claims in small claims court if your claims qualify.” Ex. B § 14 (emphasis 18 added). The agreement makes no allowance for either Intuit or its customers to resolve claims 19 through a class action in court. 20 20. Each Plaintiff has filed a demand for arbitration with AAA against Intuit, invoking 21 Intuit’s arbitration agreement and seeking to arbitrate consumer fraud and antitrust claims. 22 21. Specifically, Plaintiffs’ arbitration demands assert that, when Plaintiffs filed their 23 taxes using TurboTax Online, they were eligible for free tax filing services through the IRS’s Free 24 File Program. Intuit and a consortium of other private tax preparation companies had agreed to 25 offer Plaintiffs and other low- and middle-income U.S. taxpayers Free File services, in return for 26 27 1 The agreements governing Plaintiffs’ claims were materially similar across all relevant 28 tax years. For convenience, Plaintiffs will cite and quote the agreement applicable to tax year 2018. 3 COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF 1 the IRS agreeing not to develop its own tax filing software to compete with the private companies. 2 However, Intuit did not adequately disclose its Free File offering to Plaintiffs or provide a path for 3 them to utilize its free tax filing services. Instead, Intuit steered Plaintiffs to its own “Free Edition” 4 tax filing program which, despite its title, required Plaintiffs to pay fees that they would not have 5 paid under the Free File program. 6 22. Plaintiffs’ arbitration demands allege that Intuit’s conduct was not only deceptive, 7 but also anticompetitive. Intuit preserved its dominant market position by preventing a formidable 8 potential competitor—the United States government—from entering the market for online tax 9 preparation and filing services. And Intuit colluded with the other members of the taxing filing 10 consortium to steer taxpayers away from free filing products and to the members’ respective paid 11 products, thereby preserving their profits. 12 23. Plaintiffs assert they were harmed by Intuit’s deceptive and anticompetitive conduct 13 because Intuit’s misrepresentations and material omissions caused Plaintiffs to pay for tax filing 14 services that they otherwise would have received for free. Plaintiffs seek relief in individual 15 arbitration for Intuit’s practices under California’s state consumer protection laws targeting unfair 16 and deceptive acts and practices (or similar laws from dozens of other states), and under the federal 17 Sherman Act, 15 U.S.C. §§ 1, 2, which prohibits Intuit’s anticompetitive conduct. 18 24. AAA reviewed the arbitration agreement, applied its rules, and determined that each 19 Plaintiff’s demand for arbitration met the filing requirements to proceed with arbitration. 20 25. Intuit has consistently represented that Plaintiffs’ “arbitrations are moving forward, 21 and that Intuit is cooperating fully in the arbitral process.” Intuit’s Opp’n to Mot.
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