HRB Tax Group v. Snarr

HRB Tax Group and HRB Digital, affiliates of H&R Block, participated in the IRS’s “Free File” program to provide taxpayers with free on-line filing. When taxpayers were lured to HRB’s website by the promise of free filing, HRB steered them to fee-for-service e-filing products. Derek Snarr filed this action in a federal district court in California under California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law, seeking injunctive relief against HRB’s bait-and-switch practices. HRB moved to compel arbitration under an agreement that purported to bar Snarr from seeking “public injunctive relief.” The California Supreme Court had held in McGill v. Citibank, however, that agreements that waive the right to obtain public injunctive relief are unenforceable, and the Ninth Circuit Court of Appeals had held in Blair v. Rent-A-Center that the McGill rule is not preempted by the Federal Arbitration Act (FAA). Accordingly, the district court held that the arbitration agreement was unenforceable with respect to the claims seeking public injunctive relief.

When HRB appealed, arguing that Blair was wrongly decided, the Ninth Circuit panel held that it was bound by Blair and affirmed. HRB then filed a petition for certiorari, asking the Supreme Court to review the correctness of Blair’s holding that the FAA does not preempt the McGill rule. Public Citizen served as co-counsel for the plaintiff in the U.S. Supreme Court. Our brief in opposition to the petition explained that the correctness of Blair’s holding did not merit review and that the procedural complexities of this case made it a poor candidate for review. Before the Court ruled, the parties jointly stipulated to dismissal of the petition.