An appellate court rejected a financial software company’s request that it issue an injunction to stop consumer arbitrations en masse, according to media reports.
“In light of our analysis, we have no occasion to consider whether the balance of the harms warrants interim relief for Intuit,” wrote Associate Justice Brian Hoffstadt in the Second Appellate District's July 29 ruling.
Courthouse News reported that Intuit, which manufactures TurboTax, had sought to remove some 40,000 arbitration requests filed by Turbo Tax users to small claims court but both the state court and appellate court denied the action.
“This is one of a number of recent examples where companies that have forced their customers into arbitration later seek to back out of arbitration when too many people try to avail themselves of the arbitration,” said Mike Arias, immediate past-president of the Consumer Attorneys of California.
The plaintiffs who used TurboTax alleged they were deceived into buying the do-it-yourself tax service when in actuality they could have qualified for complimentary use due to being low-income or members of the military.
"They insist on arbitration because it is cheaper, faster, and more just," Arias told the Southern California Record. "All the while they assured consumers and the Courts that arbitration provisions didn't exist to preclude people from getting justice."
Judge Hoffstadt noted in the 23-page opinion that Intuit's terms and services agreement is ambiguous.
“We conclude that this ambiguity must be resolved in favor of reading the terms of service to permit only the consumer to transfer a claim to small claims court,” Hoffstadt wrote in the decision. “Because the terms of service only empower a consumer to elect whether to move an arbitration to small claims court, the trial court did not err in concluding that Intuit was unlikely to succeed in asserting a contrary construction of the terms of service.”
Each of the 40,000 individual arbitration requests has arbitration fees of a minimum of $3,200 attached that Intuit must pay, according to the opinion.
"These mass consumer arbitrations are becoming more and more common and will continue to do so because of technology," Arias said. "It is easier today for plaintiff firms to organize, locate and communicate with hundreds and thousands of plaintiffs. So, many of the things that were done under the class action mechanism can now be done privately by firms and individuals on the front end in order to overcome arbitration provisions and anti-class action clauses."