throbber
Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 1 of 27
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`
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`Eric H. Gibbs (SBN 178658)
`GIBBS LAW GROUP LLP
`505 14th Street, Suite 1110
`Oakland, CA 94612
`(510) 350-9700 (tel.)
`(510) 350-9701 (fax)
`ehg@classlawgroup.com
`Norman E. Siegel (pro hac vice forthcoming)
`STUEVE SIEGEL HANSON LLP
`460 Nichols Road, Suite 200
`Kansas City, MO 64112
`(816) 714-7100 (tel.)
`(816) 714-7101 (fax.)
`siegel@stuevesiegel.com
`[Additional Counsel on Signature Page]
`
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`Case No. ______________
`
`BRIANNA SINOHUI, MICHELE ARENA,
`JOSEPH BROUGHER, individually and on
`behalf of all others similarly situated,
`
`
`
`
`INTUIT INC.,
`
`
`
`
`v.
`
`
`
`Plaintiffs,
`
`Defendant.
`
`
`
`
`
`CLASS ACTION COMPLAINT AND
`DEMAND FOR JURY TRIAL
`
`1. Breach of Contract
`2. Violation of California’s Consumer Legal
`Remedies Act
`3. Violation of California’s Unfair
`Competition Law
`4. Violation of New York’s General Business
`Law
`5. Violation of Pennsylvania’s Unfair Trade
`Practices and Consumer Protection Law
`
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 2 of 27
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`Plaintiffs Brianna Sinohui, Michele Arena, and Joseph Brougher, individually and on behalf of
`
`the classes defined below, make the following allegations based upon information and belief, except as
`to allegations specifically pertaining to them, which are based on personal knowledge.
`INTRODUCTION
`1.
`TurboTax is a tax preparation software, owned and manufactured by Intuit, that is utilized
`to file more than 35 million tax returns for American taxpayers every year when filing their income tax
`returns with both the United States Internal Revenue Service (“IRS”) and individual states. One of the
`main benefits of using TurboTax is the ability to electronically file tax returns. This not only results in
`convenience at the time of filing, but refunds for electronic filings are processed more quickly than for
`hard copy filings.
`2.
`Pursuant to an agreement with the IRS, TurboTax and 11 other tax preparation providers
`are required to cumulatively offer 70% of U.S. taxpayers the option to file their taxes for free. For the
`2018 tax season, any taxpayer whose adjusted gross income is $66,000 or less is eligible to use tax
`preparation software from one of these providers to prepare and file their tax returns for free.
`3.
`TurboTax violated its agreement with the IRS by intentionally diverting qualified
`taxpayers away from its “free filing” program in favor of its paid product offerings. It did this by
`segregating its “free file” webpage from its primary website and then altering the website’s code in order
`to keep it hidden from search engines like Google so that it would not be easily accessible to qualified
`taxpayers.
`4.
`TurboTax also marketed its paid offerings as “Free Guaranteed”—so that qualified
`taxpayers believed they were filing their taxes pursuant to the free-filing program, only to be hit with
`unexpected charges after they already spent hours entering information and were getting ready to file.
`5.
`As a result of this scheme, TurboTax breached its agreement with the government, took
`advantage of the U.S. public, and generated millions of dollars of ill-gotten gains from persons who least
`can afford it.
`
`PARTIES
`6.
`Plaintiff Brianna Sinohui is a resident and citizen of Redlands, California who paid to file
`her 2018 tax returns using TurboTax despite qualifying for the IRS free filing program.
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`1
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`

`

`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 3 of 27
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`
`
`7.
`Plaintiff Michele Arena is a resident and citizen of Selden, New York who paid to file her
`2018 tax returns using TurboTax despite qualifying for the IRS free filing program.
`8.
`Plaintiff Joseph Brougher is a resident and citizen of West Mifflin, Pennsylvania who paid
`to file his 2018 tax returns using TurboTax despite qualifying for the IRS free filing program.
`9.
`Defendant Intuit Inc. (“Intuit” or “TurboTax”) is headquartered in Mountain View,
`California, and incorporated under the laws of the State of Delaware. Intuit markets, sells and operates
`TurboTax, a tax preparation and filing software product and service.
`JURISDICTION AND VENUE
`10.
`This Court has subject matter jurisdiction over this action under 28 U.S.C. § 1332 of the
`Class Action Fairness Act of 2005 because: (i) there are 100 or more class members, (ii) there is an
`aggregate amount in controversy exceeding $5,000,000, exclusive of interest and costs, and (iii) there is
`minimal diversity because at least one plaintiff and one defendant are citizens of different States. This
`court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367.
`11.
`Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because Defendant resides
`in this District, transacts business in this District, and its principal place of business is located in this
`District. Likewise, Defendant’s terms of service contain a venue provision stating that “you and Intuit
`agree to the exclusive jurisdiction of state courts in Santa Clara County, California U.S.A. or federal
`court for the Northern District of California.”
`12.
`This court has personal jurisdiction over Defendant because it has conducted substantial
`business in this District, and intentionally and purposefully placed its tax preparation software into the
`stream of commerce within the Districts of California and throughout the United States. Additionally,
`Defendant’s corporate headquarters are located within this District in Mountain View, California.
`INTRADISTRICT ASSIGNMENT
`13.
`Assignment is proper to the San Jose division of this District under Local Rule 3-2(c)-(e)
`as a substantial part of the events or omissions which give rise this claim occurred in Santa Clara County.
`ALLEGATIONS
`14.
`Intuit Inc. is a business and financial software company that develops and sells financial,
`accounting, and tax preparation software including TurboTax, QuickBooks, and Mint. Its flagship
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`

`

`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 4 of 27
`
`
`
`product, TurboTax, is a leading tax preparation software that provides step-by-step guidance for filling
`out state and federal tax returns and permits users to electronically file their tax returns using a computer
`or other mobile device. Intuit had revenues of more than $6.2 billion for the 12-month period ending on
`January 31, 2019.
`15.
`In October 2002, a consortium of tax preparation providers led by TurboTax known as the
`“Free File Alliance” entered into a three-year agreement with the IRS to offer free online tax preparation
`and filing services to taxpayers “least able to afford the electronic filing of their tax returns.”
`16.
`That agreement was entered into for the express benefit of low-income taxpayers. It has
`been extended multiple times through the years, most recently in October 2018. It is entitled the “Eighth
`Memorandum of Understanding on Service Standards and Disputes between the Internal Revenue
`Service and Free File, Incorporated” and extends the parties’ agreement through October 31, 2021 (the
`“IRS Free-Filing Agreement”).1
`17.
`In exchange for a commitment to provide free filing options “to economically
`disadvantaged and underserved populations”—the federal government “pledged to not enter the tax
`preparation software and e-filing services marketplace.” This commitment from the government protects
`the viability of the commercial tax preparers’ business model by ensuring they can always charge a
`significant portion of the U.S. population fees for their services.
`18.
`In fact, TurboTax and its competitors have spent millions of dollars lobbying against the
`IRS creating its own free tax filing system, as well as pushing Congress to codify the IRS Free-Filing
`Agreement to ensure that a free government-sponsored program cannot ever threaten the industry’s
`profits.
`19.
`The IRS Free-Filing Agreement provides that members of the Free File Alliance2 must
`cumulatively offer 70% of U.S. taxpayers – or approximately 100 million people – the option to file
`
`
`
` 1
`
` IRS Free-Filing Agreement, https://www.irs.gov/pub/irs-utl/Eight%20Free%20File%20MOU.pdf (last
`accessed May 11, 2019).
`2 The tax preparation companies currently participating in the Free File Alliance and bound by the IRS
`Free-Filing Agreement include: TurboTax, H&R Block, TaxAct, eSmart, 1040NOW.net,
`FileYourTax.com, FreeTaxReturns.com, FreeTaxUSA, OLT.com, TaxSlayer, exTaxReturn.com, and
`1040.com.
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`

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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 5 of 27
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`
`their taxes for free. For the 2018 tax season, any taxpayer whose adjusted gross income is $66,000 or
`less is eligible to use tax preparation software from one of these providers to prepare and file tax forms
`for free, although each provider sets its own eligibility requirements.
`20.
`Because TurboTax is the market leader and has more volume than its competitors, its
`eligibility requirements are more stringent. Accordingly, TurboTax permits free state and federal filings
`for any U.S. taxpayer who (a) has an adjusted gross income under $34,000; (b) is eligible for the Earned
`Income Tax Credit; or (c) is an active military member with an adjusted gross income of $66,000 or
`less.3
`
`21.
`But while 70% of U.S. taxpayers are eligible to file for free, less than 2.5% of eligible
`taxpayers actually utilize the program. The reason for this stark discrepancy is due in no small part to
`an array of deceptive practices employed by TurboTax (and its competitors) to prevent lower-income
`taxpayers from utilizing the program in favor of its paid product offerings.
`22.
`For example, TurboTax’s actual free product is referred to as TurboTax “Freedom
`Edition” – which enables users eligible to complete and e-file their federal tax returns for free in
`accordance with the IRS Free File program, no matter how many state or federal forms are required to
`file. Yet – and as but one example of TurboTax’s deceptive practices – TurboTax also offers a different
`“free” online tax product bearing a similar name: TurboTax “Free Edition.” Despite being heavily
`marketed, the TurboTax Free Edition is not associated with the IRS Free File program and is a basic
`software offering that supports only the simplest of tax returns, wherein most users (who would
`otherwise be eligible for free filing under the IRS Free-Filing Agreement) are forced to pay to file their
`returns.
`23.
`On April 22, 2019, ProPublica, a non-profit organization focused on investigative
`journalism, released its first in a series of articles about the effect of TurboTax’s deceptive business
`practices entitled “Here’s How TurboTax Just Tricked You Into Paying to File Your Taxes.”4
`
`
`
` 3
`
` IRS Free File Software Offers, https://apps.irs.gov/app/freeFile/ (last accessed May 11, 2019).
`4 Justin Elliott and Lucas Waldron, Here’s How TurboTax Just Tricked You Into Paying to File Your
`Taxes, PROPUBLICA (April 22, 2019), https://www.propublica.org/article/turbotax-just-tricked-you-into-
`paying-to-file-your-taxes (last accessed May 11, 2019).
`4
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 6 of 27
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`24.
`The authors first searched “irs free file taxes” on Google and the first four hits directed
`them to websites operated by members of the Free File Alliance.
`
`25.
`The very first link was an ad paid for by TurboTax that used the word “free” five times
`and linked to TurboTax’s homepage where TurboTax represented that customers’ filings would be free
`guaranteed: “$0 Fed. $0 State. $0 To File. Easily and accurately file your simple tax returns for FREE.”
`
`5
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 7 of 27
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`26.
`The authors then clicked on the link and began the process of filing returns for U.S.
`taxpayers who made under $34,000 and would have otherwise qualified for the IRS free filing program
`and satisfied TurboTax’s eligibility requirements.5
`27.
`For example, the authors created a profile for a house cleaner who made $29,000. After
`entering information and answering more than a dozen questions about her finances, the house cleaner
`was informed that he would have to pay $119.99 to file because his income was derived as an
`independent contractor.6
`
`28.
`The authors then attempted a second scenario whereby they returned to TurboTax.com
`and clicked on “Free Guaranteed”—again going through the process as a pharmacy cashier without
`health insurance. After entering sensitive personal information, the cashier was informed that he would
`
`
`6
`CLASS ACTION COMPLAINT
`CASE NO. _____________
`
` 5
`
` Id.
`6 Id.
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 8 of 27
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`have to pay $59.99 to file his taxes because there is an extra form if the taxpayer does not have health
`insurance.
`
`29.
`As recognized by the authors, the IRS Free-Filing Agreement does not parse qualifying
`participants based on what forms they have to submit, meaning these taxpayers should not have been
`charged anything to complete the process.
`30.
`In further examining this issue, the authors noted: “So how did we end up with a product
`that would make us pay? We took a close look at the source code of the TurboTax website and noticed
`something strange. Even though we clicked on the ‘FREE Guaranteed’ option and met all the
`requirements to file for free, the company had tagged us as a potential paying customer. In the source
`code, TurboTax had branded us as ‘NONFFA.’ That stands for ‘Non Free File Alliance.’ In other words,
`we were not on track to file for free after all. Here’s what it looks like behind the curtain”7:
`
`7
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`
`
` Id.
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 9 of 27
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`31.
`Consequently, even though TurboTax knew these taxpayers qualified for free filing, they
`were never on track to file for free. The reason for this is that TurboTax’s actual free filing version (the
`“Freedom Edition”) is not even available through its primary website – a fact TurboTax itself admits
`(highlighting added):
`
`32.
`Indeed, on TurboTax’s main website, under its “Products & Pricing Page,” only “Free
`Edition,” “Deluxe,” “Premier,” and “Self-Employed” products are listed,8 but “Freedom Edition” is
`nowhere to be found.
`33.
`Following publication of the initial article, ProPublica published a follow-up article
`entitled “Here Are Your Stories of Being Tricked Into Paying by TurboTax. You Often Need the Money”
`describing the stories of dozens of individuals who could not file their taxes for free via TurboTax even
`though they were eligible to do so.9
`
`
`
` 8
`
` Intuit TurboTax Products and Pricing, https://turbotax.intuit.com/personal-taxes/online/ (last accessed
`May 11, 2019).
`9 Ariana Tobin, Justin Elliott and Meg Marco, Here Are Your Stories of Being Tricked Into Paying by
`TurboTax. You Often Need the Money, PROPUBLICA (April 26, 2019),
`https://www.propublica.org/article/here-are-your-stories-of-being-tricked-into-paying-by-turbotax-you-
`often-need-the-money (last accessed May 11, 2019).
`
`
`
`
`8
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 10 of 27
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`34.
`For example, one taxpayer was unemployed and recovering from chemotherapy, while her
`husband was diagnosed with Parkinson’s disease and only works part time. She was charged almost
`$200 by TurboTax while earning less than $33,000—money that could have helped pay the rent.
`Numerous others had similar stories.10
`35.
`On April 26, 2019, ProPublica published an additional article entitled “TurboTax
`Deliberately Hid Its Free File Page From Search Engines” that walked through how TurboTax
`deliberately hid its truly free “Freedom Edition” product from search engine results.11 Specifically, Intuit
`altered the code on its website to tell search engines like Google not to list its free filing webpage.
`36.
`From at least January through April 27, 2019, TurboTax’s Free File site included in its
`coding the phrase “noindex,nofollow” which instructed the website not to show up in search engine
`results.
`
`37.
`By contrast, the website with TurboTax’s paid offerings, TurboTax.com, included the
`coding “index,follow” – ensuring it would be picked up by search engines like Google.
`
`
`
`
`10 See id.
`11 Justin Elliott, TurboTax Deliberately Hid Its Free File Page From Search Engines, PROPUBLICA
`(April 26, 2019), https://www.propublica.org/article/turbotax-deliberately-hides-its-free-file-page-from-
`search-engines (last accessed May 11, 2019).
`
`
`
`
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 11 of 27
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`38.
`The ProPublica authors also discovered that TurboTax’s primary competitor, H&R Block,
`engaged in similar tactics to hide its free filing website from search engines,12 and published internal
`guidance from H&R Block explicitly instructing its customer service staff to direct customers to its paid
`offerings, regardless of whether they qualify for the free filing program. “Do not send clients to this Web
`Site unless they are specifically calling about the Free File program,” the guidance states, referring to
`the website with H&R Block’s free option. “We want to send users to our paid products before the free
`product, if at all possible.”13
`39.
`As a result of these deceptive tactics by industry participants, only a tiny fraction of
`eligible taxpayers have taken advantage of the IRS Free File program. While more than 100 million
`taxpayers were eligible to file for free through the Free File program in fiscal year 2018, fewer than 2.5
`million—less than 2.5% of eligible taxpayers—actually did so. Given this abysmal participation rate,
`the national taxpayer advocate recently said that the IRS free filing program “is failing to achieve its
`objectives and should be substantially improved or eliminated.”14
`40.
`Equally troubling, TurboTax has refused to take responsibility for its actions. On May 9,
`2019, ProPublica published another follow-up article entitled “Listen to TurboTax Lie to Get Out of
`Refunding Overcharged Customers” tracking how 16 qualified free-file taxpayers sought refunds from
`TurboTax but were told by TurboTax representatives that the truly free version – Freedom Edition – is
`a government product that is not run by TurboTax.15 Ten other people reported being told by TurboTax
`representatives that ProPublica’s stories were inaccurate, or that its coverage is “fake news” or
`“fictitious.”
`
`
`
`
`12 Id.
`13 Justin Elliott and Paul Kiel, TurboTax and H&R Block Saw Free Tax Filing as a Threat — and
`Gutted It, PROPUBLICA (May 2, 2019), https://www.propublica.org/article/intuit-turbotax-h-r-block-
`gutted-free-tax-filing-internal-memo (last accessed May 11, 2019).
`14 Justin Elliott and Lucas Waldron, Here’s How TurboTax Just Tricked You Into Paying to File Your
`Taxes, PROPUBLICA (April 22, 2019), https://www.propublica.org/article/turbotax-just-tricked-you-into-
`paying-to-file-your-taxes (last accessed May 11, 2019).
`15 Justin Elliott and Meg Marco, Listen to TurboTax Lie to Get Out of Refunding Overcharged
`Customers, PROPUBLICA (May 9, 2019), https://www.propublica.org/article/listen-to-turbotax-lie-to-
`get-out-of-refunding-overcharged-customers (last accessed May 11, 2019).
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 12 of 27
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`
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`41.
`TurboTax’s representations are completely inconsistent with its obligations under the IRS
`Free-Filing Agreement. Section 2 of the Agreement states that “the IRS and FFI (previously Free File
`Alliance or Alliance) agree that to serve the greater good and ensure the long-term stability of FFI, the
`scope of this program is focused on covering the taxpayers least able to afford e-filing their returns on
`their own.” It further provides that “the federal government has pledged to not enter the tax preparation
`software and e-filing services marketplace” in consideration for the FFI’s agreement to “cover[] the
`taxpayers least able to afford e-filing their returns on their own.”
`42.
`Pursuant to the IRS Free-Filing Agreement, TurboTax had numerous obligations in
`furtherance of its duties, a selection of which include:
`
` §
`
` 2. [Free File] Members shall work in concert with the IRS to increase electronic filing
`of tax returns, which includes extending the benefits of online federal tax preparation and
`electronic filing to economically disadvantaged and underserved populations at no cost to
`either the individual user or to the public treasury. Further, the IRS and FFI (previously
`Free File Alliance or Alliance) agree that to serve the greater good and ensure the long-
`term stability of FFI, the scope of this program is focused on covering the taxpayers least
`able to afford e-filing their returns on their own. In recognition of this commitment, the
`federal government has pledged to not enter the tax preparation software and e-filing
`services marketplace. Members shall also:
`
` §
`
` 2.1. Make tax return preparation easier and reduce the burden on individual taxpayers,
`particularly the economically disadvantaged and underserved populations[.]
`
`[…]
`
` §
`
` §
`
` 2.3. Provide greater service and access to the Services to taxpayers[.]
`
` 4.15.14. [Free File] Members must clearly list their free customer service options. This
`disclosure must be available on the Member’s Free File Landing Page (or such page must
`have a clear and prominent link to such disclosures directly from this page). [Free File]
`Members must provide taxpayers a free electronic method to obtain a copy and learn the
`status of their electronically filed tax return.
`
` §
`
` 4.19.2. Ineligibility Notification. Free File Member programs must unequivocally
`inform taxpayers who are ineligible for the free offer at the earliest feasible point:
`
`
`(i)
`
`
`
`(ii)
`

`
`That they are ineligible for the Free File offer, and
`
`The reason that they are not eligible for the offer, and
`
`11
`CLASS ACTION COMPLAINT
`CASE NO. _____________
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`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 13 of 27
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`(iii) The taxpayer shall be directed back to the IRS Free File Landing Page as the first
`and most prominent alternative action so that they may immediately consider
`other Free File offers available from the Free File Program, and
`
`(iv)
`
`(v)
`
`(vi)
`
`The disqualification practice of each Member must adhere to the standard
`messaging, language and formatting guidance to be provided by FFI in
`consultation with the IRS.
`
`The taxpayer next may be offered a free alternative for completion of their return,
`provided that the taxpayer is covered by the Program limit of being among the
`lowest 70 percent of taxpayers.
`
`The taxpayer would next be offered the option to continue on the Free File
`Member’s site and pay a fee - which is fully disclosed - to file their federal and/or
`state return.
`
`43.
`TurboTax breached these provisions and others by engaging in the deceptive and
`misleading practices described herein. Indeed, TurboTax has gone to great lengths to protect the viability
`of its business by eliminating the threat of a free government-sponsored program that would drastically
`threaten the industry’s profits, while at the same time actively disclaiming its obligations under the IRS
`Free-Filing Agreement in order to maximize its own profits at the expense of the country’s most
`vulnerable citizens.
`
`FACTS AS TO PLAINTIFFS
`44.
`Plaintiff Sinohui is a mother who in 2018 had an adjusted gross income of less than
`$34,000. She therefore qualified for the IRS free file program and is an intended beneficiary of the IRS
`Free-Filing Agreement. After preparing her taxes using a purportedly free version of TurboTax, the
`website did not allow Plaintiff Sinohui to file for free but required that she pay $179 in order to file her
`taxes after entering a significant amount of sensitive personal information.
`45.
`Plaintiff Arena is a retiree with a 2018 adjusted gross income of less than $22,000. She
`therefore qualified for the IRS free file program and is an intended beneficiary of the IRS Free-Filing
`Agreement. After preparing her taxes using a purportedly free version of TurboTax, the website did not
`allow Plaintiff Arena to file for free but required her to pay $86.88 in order to file her taxes after entering
`a significant amount of sensitive personal information.
`
`
`
`
`
`
`
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`12
`CLASS ACTION COMPLAINT
`CASE NO. _____________
`
`

`

`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 14 of 27
`
`46.
`Plaintiff Brougher is a college student with a 2018 adjusted gross income of less than
`$6,000. He therefore qualified for the IRS free file program and is an intended beneficiary of the IRS
`Free-Filing Agreement. After preparing his taxes using a purportedly free version of TurboTax, the
`website did not allow Plaintiff Brougher to file for free but required that he pay $85.58 in order to file
`her taxes after entering a significant amount of sensitive personal information.
`CLASS ACTION ALLEGATIONS
`47.
`Description of the Class: Plaintiffs bring this class action on behalf of themselves and
`other similarly situated individuals. Pursuant to Federal Rules of Civil Procedure 23(b)(2), (b)(3) and
`(c)(4), as applicable, Plaintiffs seek certification of the following classes of individuals:
`
`All residents of the United States who qualified to file their taxes for free
`pursuant to the IRS Free-Filing Program for the 2018 tax season and
`satisfied TurboTax’s eligibility requirements but nevertheless were
`charged by TurboTax a sum of money to file their tax returns (the
`“Nationwide Class”).
`
`All residents of New York who qualified to file their taxes for free pursuant
`to the IRS Free-Filing Program for the 2018 tax season and satisfied
`TurboTax’s eligibility requirements but nevertheless were charged by
`TurboTax a sum of money to file their tax returns (the “New York
`Subclass”).
`
`All residents of Pennsylvania who qualified to file their taxes for free
`pursuant to the IRS Free-Filing Program for the 2018 tax season and
`satisfied TurboTax’s eligibility requirements but nevertheless were
`charged by TurboTax a sum of money to file their tax returns (the
`“Pennsylvania Subclass”).
`
`48.
`Excluded from the classes are Defendant’s officers, directors, affiliates, legal
`representatives, employees, successors, subsidiaries, and assigns. Also excluded from the classes are any
`judge, justice or judicial officer presiding over this matter and the members of their immediate families
`and judicial staff.
`49.
`Numerosity: The proposed classes are so numerous that individual joinder of all members
`is impracticable.
`
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
`
`

`

`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 15 of 27
`
`d.
`
`e.
`
`f.
`
`50.
`Common Questions of Law and Fact Predominate: There are many questions of law and
`fact common to Plaintiffs and members of the classes, and those questions substantially predominate
`over any questions that may affect individual class members. Common questions of law and fact include:
`a.
`Whether Plaintiffs are third party beneficiaries to the IRS Free-Filing Agreement;
`b.
`Whether TurboTax breached its obligations under the IRS Free-Filing Agreement;
`c.
`Whether Plaintiffs and members of the classes suffered injury, including
`ascertainable losses, as a result of TurboTax’s breach of the IRS Free-Filing
`Agreement;
`Whether TurboTax’s conduct constituted unfair and deceptive trade practices
`actionable under applicable consumer protection laws;
`Whether Plaintiffs and members of the classes are entitled to recover actual
`damages and/or statutory damages; and
`Whether Plaintiffs and members of the classes are entitled to equitable relief,
`including injunctive relief and restitution.
`51.
`All members of the proposed classes are ascertainable by objective criteria. TurboTax has
`access to addresses and other contact information for members of the classes, which can be used for
`providing notice to many class members.
`52.
`Typicality: Plaintiffs’ claims are typical of the claims of the members of the proposed
`classes. Plaintiffs and all members of the classes have been similarly affected by the actions of
`Defendant.
`53.
`Adequacy of Representation: Plaintiffs will fairly and adequately represent and protect the
`interests of members of the classes. Plaintiffs have retained counsel with substantial experience in
`prosecuting complex and class action litigation. Plaintiffs and counsel are committed to vigorously
`prosecuting this action on behalf of class members, and have the financial resources to do so.
`54.
`Superiority of Class Action: Plaintiffs and the members of the classes suffered, and will
`continue to suffer, harm as a result of Defendant’s conduct. A class action is superior to other available
`methods for the fair and efficient adjudication of the present controversy. Individual joinder of all
`members of the classes is impractical. Even if individual class members had the resources to pursue
`
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`CLASS ACTION COMPLAINT
`CASE NO. _____________
`
`

`

`Case 3:19-cv-02546-CRB Document 1 Filed 05/12/19 Page 16 of 27
`
`individual litigation, it would be unduly burdensome to the courts in which the individual litigation
`would proceed. Individual litigation magnifies the delay and expense to all parties in the court system
`of resolving the controversies engendered by Defendant’s common course of conduct. The class action
`device allows a single court to provide the benefits of unitary adjudication, judicial economy, and the
`fair and equitable handling of all class members’ claims in a single forum. The conduct of this action as
`a class action conserves the resources of the parties and of the judicial system, and protects the rights of
`the class members.
`
`CHOICE OF LAW ALLEGATIONS
`55.
`Under either a contractual choice-of-law or governmental interests analysis, California
`law applies to the claims of the Nationwide Class.
`56.
`Defendant’s terms of service include a contractual choice-of-law provision stating that:
`“California state law governs this Agreement without regard to its conflicts of law provisions.” Although
`such terms of service also include an arbitration provision and class action waiver provision, TurboTax’s
`enforcement of such provisions is against public policy as it would prohibit thousands of U.S. taxpayers
`from seeking relief they are entitled to as third-party ben

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