Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 1 of 35 Page ID #:1
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Paul A. Traina, Esq. (SBN 155805)
[email protected]
Ian P. Samson, Esq. (SBN 279393)
[email protected]
ENGSTROM, LIPSCOMB & LACK
A Professional Corporation
10100 Santa Monica Boulevard, 12th Floor
Los Angeles, California 90067-4113
Tel: (310) 552-3800 / Fax: (310) 552-9434
Dylan Ruga, Esq. (SBN 235969)
[email protected]
Ji-In Lee Houck, Esq. (SBN 280088)
[email protected]
STALWART LAW GROUP
1100 Glendon Avenue, 17th Floor
Los Angeles, California 90024
Tel: (310) 954-2000
Attorneys for Plaintiff and the Proposed Class
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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LUIS LOMELI, individually and on behalf
of a class of similarly situated individuals,
Plaintiff,
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v.
JACKSON HEWITT, INC.; TAX
SERVICES OF AMERICA, INC. d/b/a
JACKSON HEWITT TAX SERVICE;
CIVISTA BANCSHARES, INC.;
CIVISTA BANK, N.A.; SANTA
BARBARA TAX PRODUCTS GROUP,
LLC; JJF & AC, INC. d/b/a Guanajuato
Insurance Agency and Jackson Hewitt Tax
Service; JUAN FLORES, an individual;
and DOES 1-50, inclusive,
Defendants.
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Case No.: 2:17-cv-2899
CLASS ACTION COMPLAINT
(1)
(2)
(3)
(4)
(5)
RICO (18 U.S.C. § 1962(c))
RICO (18 U.S.C. § 1962(d))
NEGLIGENCE
FRAUD
CAL. BUS. & PROF. CODE §
17200, ET SEQ.
(6) CAL. BUS. & PROF. CODE §
17530.5
(7) CAL. CIVIL CODE § 1750
ET SEQ.
(8) CAL. CIVIL CODE § 1798.80
ET SEQ.
DEMAND FOR JURY TRIAL
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CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 2 of 35 Page ID #:2
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Plaintiff Luis Lomeli brings this class action complaint against Defendants
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Jackson Hewitt, Inc., Tax Services of America, Inc., Civista Banchares, Inc., Civista
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Bank, Santa Barbara Tax Products Group, LLC, JJF & AC, Inc., Juan Flores, to stop
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Defendants’ unlawful conduct and to obtain redress for all persons injured by
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Defendants’ conduct. For his class action complaint, Plaintiff alleges as follows based
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upon his personal knowledge and upon information and belief, including investigation
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conducted by his attorneys.
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PRELIMINARY STATEMENT
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1.
Tax preparation is big business: By one count, revenue in 2018 is
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estimated to be $11 billion industry-wide.
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industry—for instance, Jackson Hewitt and its affiliated entities prepare federal and
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state tax returns for millions of Americans each year. Central to that business is a
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simple act of trust: That the tax return Jackson Hewitt represents will be filed will in
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fact be filed with the authorities in that form, and that a consumer’s personal
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information will not be used for anything other than filing an accurate tax return.
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Undoubtedly aware that trust is central to their business model, Jackson Hewitt
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repeatedly and systematically represented its trustworthiness to the public, assuring
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consumers that, if they used Jackson Hewitt to prepare their tax returns, they could
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count on “100% accuracy” and the protection of their private information.
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2.
Defendants are participants in that
As alleged below, Defendants repeatedly and systematically violated that
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trust and used Plaintiff’s identity to fraudulently obtain thousands of dollars from the
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Internal Revenue Service in Plaintiff’s name. As evidenced by the IRS’s transcripts of
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the returns, which are different from the copy Defendants informed Plaintiff would be
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filed, Defendants altered Plaintiff’s tax returns in several years in order to artificially
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decrease Plaintiff’s tax liability. That artificial deflation permitted Defendants to
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create the appearance that Plaintiff was owed a refund, which Defendants instructed
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the IRS (ostensibly on Plaintiff’s behalf) to deposit into a bank account Defendants
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had created without Plaintiff’s knowledge. After extracting fees, Defendants caused
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CLASS ACTION COMPLAINT
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the issuance of a cashier’s check for the balance of the ill-gotten refund, which was
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cashed without Plaintiff’s knowledge or involvement.
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3.
Plaintiff was kept in the dark for years, completely unaware that the tax
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returns he had authorized to be filed, and which Defendants represented would be
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filed, were instead replaced by doctored returns.
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Defendants’ other conduct until, in 2017, he investigated a discrepancy in the refund
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Defendants represented he was owed and the amount he actually received. The
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discrepancy turned out to be Defendants’ undisclosed and improper collection of fees
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from Plaintiff’s refund amount, including double-dipping on a preparation fee
Plaintiff was also unaware of
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Defendants had already charged Plaintiff.
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processed cashier’s checks Plaintiff had never seen or endorsed in amounts he was
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unaware he had “received.” Only then did Plaintiff understand that Defendants had
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appropriated his identity for several months to fraudulently obtain refunds from the
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IRS.
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4.
But the investigation also unearthed
On behalf of himself and the proposed class (as defined below), Plaintiff
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seeks an injunction requiring Defendants to cease the unlawful activities alleged
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herein and an award of damages to himself and all members of the class, together with
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the costs of suit and reasonable attorneys’ fees.
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JURISDICTION AND VENUE
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5.
This Court has subject matter jurisdiction. Pursuant to 28 U.S.C. § 1331,
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at least one cause of action arises from a federal statute. Pursuant to 28 U.S.C. §
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1332, as amended by the Class Action Fairness Act of 2005, this Court has
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jurisdiction because at least one class member is of diverse citizenship from one
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defendant, there are 100 or more class members nationwide, and the aggregate amount
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in controversy exceeds $5,000,000. Finally, pursuant to 28 U.S.C. § 1367, this Court
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has supplemental jurisdiction to all other claims because they are part of the same case
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or controversy.
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CLASS ACTION COMPLAINT
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6.
This Court has personal jurisdiction over Defendants because Defendants
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do business in this District and a substantial number of the events giving rise to the
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claims alleged herein took place in California.
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7.
Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) because
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Defendants do business in this District and a substantial number of the events giving
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rise to the claims alleged herein took place in this District.
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PARTIES
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8.
Plaintiff Luis Lomeli is a citizen and resident of California who resides in
Los Angeles County. Like millions of other Americans, Plaintiff is obligated to file
federal income tax returns each year.
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9.
Defendant Jackson Hewitt, Inc., is a Virginia corporation with its
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principal place of business located in Jersey City, New Jersey. Defendant Jackson
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Hewitt, Inc., operates a tax preparation business. Defendant Jackson Hewitt, Inc.,
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conducts business nationwide and is registered to do business in the State of
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California.
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10.
Defendant Tax Services of America, Inc. is a Delaware corporation with
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its principal place of business located in Jersey City, New Jersey. Defendant Tax
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Services of America, Inc., operates a tax preparation business and is one of Defendant
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Jackson Hewitt, Inc.’s subsidiaries.
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conducts business nationwide and is registered to do business in the State of
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California.
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11.
Defendant Tax Services of America, Inc.
Defendant Civista Bancshares, Inc. is an Ohio financial holding company
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with its principal place of business in Sandusky, Ohio. Defendant Civista Bancshares,
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Inc., operates through its subsidiary bank, Defendant Civista Bank.
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12.
Defendant Civista Bank is a commercial bank organized under the laws
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of the State of Ohio with its principal place of business in Sandusky, Ohio. On
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information and belief, Defendant Civista Bank was formerly known as “Citizens
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CLASS ACTION COMPLAINT
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Bank.”
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“Assisted Refund” program and collects fees from consumers as a result.
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13.
Defendant Civista Bank maintains bank accounts for Jackson Hewitt’s
Defendant Santa Barbara Tax Products Group, LLC, is a Delaware
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limited liability company with its principal place of business in La Jolla, California.
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Defendant Santa Barbara Tax Products Group, LLC processes claims under Jackson
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Hewitt’s “Assisted Refund” program and collects fees from consumers as a result.
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Defendant Santa Barbara Tax Products Group, LLC conducts business nationwide and
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is registered to do business in the State of California.
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14.
Defendant JJF & AC, Inc., is a California corporation with its principal
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place of business in South Gate, California. Defendant JJF & AC, Inc., in conjunction
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with other Defendants, operates the Jackson Hewitt location at 9212 California
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Avenue in South Gate, California.
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15.
Defendant Juan Flores is, on information and belief, a citizen and
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resident of California.
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controls JJF & AC, Inc., and operates the Jackson Hewitt location at 9212 California
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Avenue in South Gate, California.
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Defendant Flores, in conjunction with other Defendants,
Plaintiff is unaware of the names, identities, or capacities of the
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defendants sued as Does 1-50, but is informed and believes and thereon alleges that
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each such fictitiously-named defendant is responsible in some manner for the damages
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and abridgement of rights described in this Complaint. Plaintiff will amend his
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Complaint to state the true names, identities or capacities of such fictitiously-named
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defendants when ascertained.
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AGENCY ALLEGATIONS
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17.
At all times relevant hereto, Defendants Jackson Hewitt, Inc. and/or Tax
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Services of America, Inc. (“Jackson Hewitt”) had the right to and did control its
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franchised locations, including that operated by Defendant JJF & AC, Inc. at 9212
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California Avenue in South Gate, California, as well as those locations’ employees.
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CLASS ACTION COMPLAINT
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18.
Jackson Hewitt’s franchise agreement provides Jackson Hewitt with the
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right to control all activities of any franchisees, including Defendant JJF & AC, Inc.
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For instance, the agreement provides that any Jackson Hewitt franchise “is governed
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by a Franchise Agreement and must be operated in accordance with our plan and
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system for preparing, checking and electronically filing income tax returns using our
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software, accounting methods, merchandising, equipment selection, advertising,
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promotional techniques, personnel training and quality standards…” (emphasis
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added).
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19.
Jackson Hewitt’s right to control its franchisees is not limited solely to
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protection of its trademarks, but includes the right to control all operations of the
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franchisees. As alleged below, Jackson Hewitt controls nearly every aspect of its
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franchisees’ operations—from overall business operations down to mandating where
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franchisees list their telephone numbers (they must “maintain both white and yellow
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page listings”).
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20.
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Evidence demonstrating Jackson Hewitt’s right to control its franchisee’s
operations includes, but is not limited to, the following:
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a. Jackson Hewitt mandates that franchisees “operate [their] business in
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full compliance with all our rules, specifications, standards and
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procedures, including, but not limited to, the Operating System,
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Operating Standards, Technology Standards and Marks Standards and
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any other requirements found in the Manual and any other materials
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[Jackson Hewitt] provide[s].”
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b. Jackson Hewitt is entitled to coerce compliance with its right to
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control franchisees’ activities by imposing “fines.”
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c. Jackson Hewitt mandates that franchisees “furnish, equip and upgrade
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[their] offices in accordance with the rules, specifications, and
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standards contained in the Manual” as developed by Jackson Hewitt.
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CLASS ACTION COMPLAINT
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d. No franchisee may conduct any “advertising, promotional, and
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marketing activities” without Jackson Hewitt’s “prior written
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approval,” and any application to use such materials to which Jackson
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Hewitt does not respond within 15 days shall be “deemed
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disapproved.” Further, even if Jackson Hewitt approves a particular
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advertisement, it can revoke that approval at any time, in which case a
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franchisee “must discontinue their use promptly.”
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e. Jackson Hewitt possesses an “absolute right” to use any marketing
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material developed by any franchisee for any purpose Jackson Hewitt
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wishes “without payment to [a franchisee] of any kind.”
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f. Jackson Hewitt must “review and approve” the location of any
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franchisee’s business.
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g. Jackson Hewitt mandates that franchisees attend required trainings,
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including initiation training and “update training.”
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h. Jackson Hewitt provides each franchisee with a “Confidential
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Operating Manual” containing “the required policies, procedures, and
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rules for the operation” of a Jackson Hewitt franchise. Jackson Hewitt
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reserves the right to change this Manual at any time, thereby forcing a
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change in the manner in which franchisees operate their business.
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i. Jackson Hewitt requires that all franchisees must use their tax
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preparation software, and that use of any other software is forbidden
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absent Jackson Hewitt’s “prior written consent.”
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j. Jackson Hewitt mandates the type of some electronic equipment
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franchisees must buy.
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k. Jackson Hewitt restricts franchisees’ operations to their designated
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territories.
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l. Jackson Hewitt requires that franchisees “must offer” all of the
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products and services designated by Jackson Hewitt, and forbids
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franchisees from offering any other financial product or service absent
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Jackson Hewitt’s approval. Further, franchisees may no longer offer a
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product if Jackson Hewitt discontinues it or revokes its approval.
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m. Jackson Hewitt is permitted to set prices for products and services.
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FACTUAL ALLEGATIONS
Plaintiff’s 2014 Tax Return
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In or about April 2015, Plaintiff visited the Jackson Hewitt location at
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9212 California Avenue in South Gate, California for the purpose of preparing his
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income tax returns. That Jackson Hewitt location owned, operated, and/or controlled
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by Defendants Jackson Hewitt, Inc., Tax Services of America, Inc., JJF & AC, Inc.,
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and Juan Flores (collectively referred to hereafter as “Jackson Hewitt”). Jackson
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Hewitt charged Plaintiff an advance fee for preparation of the returns, and assigned
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Defendant Juan Flores to prepare Plaintiff’s tax return.
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22.
Plaintiff brought relevant documents to prepare his tax returns, including
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1099s for his business and legitimate receipts for deductible expenses. Based upon
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Plaintiff’s legitimate reporting and preparation of the return, Jackson Hewitt
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determined that Plaintiff neither owed any further taxes nor was owed any refund.
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Plaintiff thereafter authorized the filing of the return in the form that was presented to
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him at the meeting.
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On April 15, 2015, Jackson Hewitt transmitted a letter to Plaintiff bearing
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Jackson Hewitt letterhead stating that Plaintiff’s 2014 income tax return “has been
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completed and filed electronically with the IRS at the IRS Submission Processing
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Center.”
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But the tax return Jackson Hewitt ultimately submitted to the IRS was
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materially different from the one Plaintiff authorized.
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transcripts for the return—which were based upon the content of the return submitted
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by Jackson Hewitt—the return Jackson Hewitt submitted contained inaccurate items
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unapproved by Plaintiff.
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According to the IRS’s
For example, although the return Plaintiff authorized
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CLASS ACTION COMPLAINT
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indicated that Plaintiff was not claiming any expenses for payment of wages during
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2014, the IRS’s transcripts indicate that the return Jackson Hewitt submitted claimed
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over $100,000 in wage-related expenses.
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fraudulent conduct in 2017, Plaintiff was wholly unaware of the material differences
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in the return he had authorized and that which was submitted to the IRS.
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25.
Until he discovered Jackson Hewitt’s
The effect of Jackson Hewitt’s inaccurate return was to artificially reduce
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Plaintiff’s tax liability by tens of thousands of dollars. As a result, and based solely
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on the misrepresentations made by Jackson Hewitt, the IRS determined that Plaintiff
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was due a refund of $5,393.
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26.
Plaintiff did not collect this refund; he was not even aware it was issued.
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Instead, unbeknownst to Plaintiff, Jackson Hewitt enrolled Plaintiff in its “Assisted
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Refund” program. Under that program, Jackson Hewitt created a bank account for
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Plaintiff and directed the IRS (ostensibly on Plaintiff’s behalf) to deposit the refund
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into that account. Jackson Hewitt and Defendants Civista Banchares, Inc., Civista
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Bank, Santa Barbara Tax Products Group, LLC then collected further fees from the
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refund amount and, on or about May 5, 2015, caused a cashier’s check to be issued to
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Plaintiff in the amount of $5,074.05.
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Plaintiff never received the cashier’s check nor was aware of its
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existence. Instead, Plaintiff’s signature was forged as an endorsement on the check
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and the money taken without Plaintiff’s knowledge.
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Defendants, including any presently-unknown Doe defendant, forged Plaintiff’s
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signature on the check and cashed it. Plaintiff never received, endorsed, or collected
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any amount from this cashier’s check.
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Plaintiff’s 2015 Tax Return
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28.
On information and belief,
Unaware of Defendants’ fraudulent activities with respect to his 2014
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taxes, on or about April 14, 2016, Plaintiff returned to the Jackson Hewitt location at
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9212 California Avenue in South Gate, California to prepare his 2015 tax returns.
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Jackson Hewitt charged Plaintiff an advance fee of $390 for preparation of the returns,
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CLASS ACTION COMPLAINT
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which Plaintiff paid by cash, and again assigned Juan Flores to prepare Plaintiff’s tax
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return.
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Plaintiff again presented with relevant documents to prepare his tax
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return, including 1099s for his business and legitimate receipts for deductible
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expenses. Based upon Plaintiff’s legitimate reporting and preparation of the return,
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Jackson Hewitt determined that Plaintiff was owed a refund of $56, but advised
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Plaintiff that he would not receive that refund because of additional fees. Plaintiff
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thereafter authorized the filing of the return in the form that was presented to him at
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the meeting.
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30.
But the tax return Jackson Hewitt ultimately submitted to the IRS was
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again materially different from the one Plaintiff authorized. According to the IRS’s
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transcripts for the return—which were based upon the content of the return submitted
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by Jackson Hewitt—the return Jackson Hewitt submitted contained inaccurate items
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unapproved by Plaintiff. For example, as with Plaintiff’s 2014 return, the IRS’s
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transcripts indicate that the return Jackson Hewitt submitted claimed over $100,000 in
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wage-related expenses even though the return Plaintiff authorized to be filed indicated
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that Plaintiff had incurred no wage-related expenses. Until he discovered Jackson
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Hewitt’s fraudulent conduct in 2017, Plaintiff was wholly unaware of the material
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differences in the return he had authorized and that which was submitted to the IRS.
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31.
The effect of Jackson Hewitt’s inaccurate return was to artificially reduce
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Plaintiff’s tax liability by tens of thousands of dollars. As a result, and based solely
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on the misrepresentations made by Jackson Hewitt, the IRS determined that Plaintiff
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was due a refund of $6,514.
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32.
Plaintiff did not collect this refund; he was not even aware it was issued.
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Instead, unbeknownst to Plaintiff, Jackson Hewitt again used Plaintiff’s unwitting
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enrollment in their “Assisted Refund” program to collect the refund they artificially
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created for Plaintiff. After receiving the refund in that account, Jackson Hewitt and
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Defendants Civista Banchares, Inc., Civista Bank, Santa Barbara Tax Products Group,
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CLASS ACTION COMPLAINT
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LLC collected further fees from the refund amount and, on or about May 3, 2016,
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caused a cashier’s check to be issued to Plaintiff in the amount of $6,210.05.
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33.
Plaintiff never received the cashier’s check nor was aware of its
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existence. Instead, Plaintiff’s signature was forged as an endorsement on the check
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and the money taken without Plaintiff’s knowledge.
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Defendants, including any presently-unknown Doe defendant, forged Plaintiff’s
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signature on the check and cashed it. Plaintiff never received, endorsed, or collected
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any amount from this cashier’s check.
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Plaintiff’s 2016 Tax Return
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34.
On information and belief,
Once again unaware of the Defendants’ conduct, on or about February
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13, 2017, Plaintiff returned to the Jackson Hewitt location at 9212 California Avenue
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in South Gate, California to prepare his 2016 tax returns. Jackson Hewitt charged
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Plaintiff an advance fee of $470 for preparation of the returns, which Plaintiff paid by
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debit card, and Juan Flores again prepared Plaintiff’s returns.
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35.
Plaintiff again presented with relevant documents to prepare his tax
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return, including 1099s for his business and legitimate receipts for deductible
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expenses. Based upon Plaintiff’s legitimate reporting and preparation of the return,
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Jackson Hewitt determined that Plaintiff was owed a refund of $4,523. Jackson
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Hewitt did not advise Plaintiff, however, that he would receive his refund through
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Jackson Hewitt’s “Assisted Refund” program, or that fees would be deducted from the
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return.
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36.
On or about March 1, 2017, Plaintiff received a cashier’s check from
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Civista Bank in the amount of $4,228.05—nearly $300 less than the refund amount
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Jackson Hewitt informed Plaintiff was due. This was the first time Plaintiff learned
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that an account had been opened for him at Civista Bank.
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37.
Seeking to determine the discrepancy in the refund, Plaintiff contacted
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the bank. For the first time, Plaintiff learned that Defendants had withdrawn several
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fees from his refund amount: a $32.95 “account handler fee”; a $17 “transmittal fee”;
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CLASS ACTION COMPLAINT
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and a $330 “amount paid to tax preparer.” Further, Plaintiff’s refund amount was
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listed at $4,608, which was $85 more than Plaintiff had been advised. (It was not until
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Plaintiff obtained his transcripts from the IRS that he discovered that Jackson Hewitt
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had again modified his return before filing it.)
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38.
Although Defendants charged Plaintiff nearly $400 in fees for their
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“service,” the “Assisted Refund” program was wholly worthless to Plaintiff. The IRS
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provides direct deposit to any bank account, not just those set up by tax preparers.
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And since Jackson Hewitt charged Plaintiff in advance for preparation of his tax
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returns, their imposition of an additional, undisclosed, and unearned $330 fee was
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improper.
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39.
Plaintiff’s investigation also uncovered cashier’s checks from tax years
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2014 and 2015—described above—of which Plaintiff was previously unaware.
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Further, Plaintiff learned that the checks had been endorsed purportedly by him, and
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that they had been cashed in his name. That was the first time Plaintiff learned of the
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cashier’s checks or the refunds from the IRS in tax years 2014 and 2015.
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Jackson Hewitt’s Representations to Plaintiff and Class Members
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40.
Throughout the relevant period, Jackson Hewitt repeatedly and
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systematically represented to the general public, including Plaintiff and class
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members, that could be counted upon to accurately prepare tax returns.
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41.
For instance, Jackson Hewitt purported to hold its representatives to the
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“Preparer’s Pledge,” including a “guarantee” that tax returns prepared by Jackson
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Hewitt would be “100% accurate”:
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42.
Similarly, in or around 2015, Jackson Hewitt’s CEO, David Prokupek,
stated the following about Jackson Hewitt’s services:
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We know our stuff. We’ve seen it all, and you can trust us to get
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your taxes done right—from the simple to the complex with 100%
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accuracy guaranteed.
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43.
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containing the same statements concerning “trust” and “100% accuracy.”
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Jackson Hewitt created marketing materials for placement in its locations
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Jackson Hewitt’s website contains other “promises” and “pledges” to
consumers about the accuracy of tax returns entrusted to Jackson Hewitt for
preparation and filing.
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Jackson Hewitt’s website contains a similar representation from Mr.
Prokupek, stating that Jackson Hewitt will “make the tax code work” for consumers:
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46.
Jackson Hewitt ran advertisements during the relevant time period stating
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that its employees were “certified tax pros” who “certifiably know [their] stuff” when
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it came to preparing tax returns.
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Hewitt’s “100% accuracy” pledge.
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47.
These same advertisement reiterated Jackson
However, during the relevant time period, Jackson Hewitt received
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thousands of complaints that tax returns it had prepared were inaccurate.
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information and belief, at least some of those complaints were premised upon the
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manipulation of tax returns in the manner described herein.
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48.
On
Another Jackson Hewitt advertisement contains a “real tax pro”
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discussing the company’s purported commitment to “privacy” for consumers’
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information as follows:
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The complexity of the IRS and the changing tax codes and issues…
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the security of people’s information, and their privacy—that aspect is
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very, very important to Jackson Hewitt. Although a lot of companies
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in this industry do not take that privacy as their number one priority,
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so we’re happy to separate ourselves from the “mom and pops” who
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store people’s sensitive information in their garage and they go to
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Hawaii… Well, you want to get connected with our website,
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JacksonHewitt.com; that site will direct you to a main office…
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CLASS ACTION ALLEGATIONS
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49.
As noted above, Plaintiff brings this action on behalf of himself and
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nationwide classes, defined as indicated below. The foregoing classes are designed to
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be:
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The “Manipulated Return” Class: All persons in the United States
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and its territories who had their tax returns prepared by Jackson
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Hewitt in which Defendants artificially created a refund by
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manipulating the tax return without the taxpayer’s consent.
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CLASS ACTION COMPLAINT
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The “Undisclosed Fees” Class: All persons in the United States
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and its territories who had their tax returns prepared by Jackson
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Hewitt and from whom Defendants charged undisclosed fees as part
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of the “Assisted Refund” program.
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6
50.
Upon information and belief, there are hundreds, if not thousands, of
members of each class. Joinder of all members is therefore impracticable.
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51.
Common questions of law and fact exist as to all members of each class
8
such that those questions predominate over questions affecting Plaintiff or individual
9
class members.
10
These common questions include, but are not limited to, the
following:
11
a.
12
Did Defendants manipulate Plaintiff and class members’ tax
returns?
13
b.
14
Did Defendants file manipulated tax returns with the IRS on behalf
of Plaintiff and class members?
15
c.
Did Defendants generate an artificial, undisclosed refund for
16
Plaintiff and class members as a result of their manipulation of
17
Plaintiff’s and class members’ tax returns?
18
d.
19
Did Defendants open bank accounts for the collection of tax
refunds on behalf of Plaintiff and class members?
20
e.
Did Defendants oversee the deposit of tax refund amounts
21
purportedly due to Plaintiff and class members into those
22
accounts?
23
f.
24
Did Defendants extract fees from refund amounts deposited into
the “Assisted Refund” accounts?
25
g.
26
Did Defendants disclose the fees they charged from “Assisted
Refund” accounts?
27
h.
28
Did Defendants double-charge participants in the “Assisted
Refund” program by collecting “tax preparation” fees prior to
419455
15
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 16 of 35 Page ID #:16
1
preparing the tax return and from the refund amount deposited in
2
the “Assisted Refund” account?
3
i.
4
Should the Court enjoin Defendants from engaging in such
conduct in the future?
5
j.
6
Are Plaintiff and class members entitled to other relief, including
all available damages, disgorgement, or equitable relief?
7
52.
In engaging in the conduct described herein, Defendants have acted and
8
failed to act on grounds generally applicable to Plaintiff and other class members.
9
Such conduct requires the Court’s imposition of uniform relief to ensure compatible
10
standards of conduct toward class members and to make injunctive or corresponding
11
declaratory relief appropriate for all class members.
12
53.
The factual and legal bases of Defendants’ liability to Plaintiff and each
13
class member are substantially similar, resulting in injury to Plaintiff and each class
14
member as a result of Defendants’ actions as described herein.
15
54.
Plaintiff will fairly and adequately represent and protect the interests of
16
other class members. Plaintiff has retained counsel with substantial experience in
17
litigating complex cases, including class actions. Both Plaintiff and his counsel will
18
vigorously prosecute this action on behalf of the class and have the financial ability to
19
do so. Neither Plaintiff nor counsel has any interest adverse to other class members.
20
55.
Most class members would find the costs of litigating their claims
21
prohibitive and therefore would have no effective remedy without a class action.
22
Further, class treatment of common questions of law and fact is superior to multiple,
23
individual litigation or piecemeal adjudication because it preserves the resources of
24
the courts and litigants as well as promotes consistent and efficiency of adjudication.
25
///
26
///
27
///
28
///
419455
16
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 17 of 35 Page ID #:17
1
FIRST CAUSE OF ACTION
2
On Behalf of the Manipulated Returns Class
3
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
4
JJF & AC, Inc.; and Juan Flores
5
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT
6
(18 U.S.C. § 1962(c))
7
8
56.
Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
9
57.
10
the class.
11
58.
Plaintiff asserts this cause of action on behalf of himself and members of
This Count is brought against Defendants Jackson Hewitt, Inc., Tax
12
Services of America, Inc., JJF & AC, Inc., and Juan Flores, who are referred to
13
collectively as the “RICO Defendants.”
14
59.
The RICO Defendants operated an “enterprise” within the meaning of
15
RICO to prepare federal and state income tax returns, activities which affected
16
interstate commerce. The RICO Defendants are employed by or associated with the
17
enterprise.
18
60.
The RICO Defendants agreed to and did conduct and participate in the
19
conduct of the enterprise’s affairs through a pattern of racketeering activity and for the
20
unlawful purpose of intentionally defrauded Plaintiff and others. As set forth above,
21
the RICO Defendants manipulated Plaintiff’s tax returns to artificially create a refund,
22
which the RICO Defendants thereafter remitted to themselves. Plaintiff is informed
23
and believes that the RICO Defendants undertook the same pattern of activity with
24
respect to members of the class.
25
61.
Pursuant to and in furtherance of their fraudulent scheme, the RICO
26
Defendants committed multiple, related acts of “racketeering” as defined by 18 U.S.C.
27
§ 1961(1), including mail fraud and wire fraud. The RICO Defendants had a plan or
28
scheme to defraud Plaintiff and class members by manipulating their tax returns,
419455
17
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 18 of 35 Page ID #:18
1
intended to use their tax returns as such, intended to use the mail and wires to
2
accomplish that scheme, and in fact used the mail and/or wires to accomplish the
3
scheme.
4
5
62.
The acts set forth above constitute a pattern of racketeering activity
pursuant to 18 U.S.C. § 1961(5).
6
63.
As a direct and proximate result of the RICO Defendants’ racketeering
7
activities and violations of 18 U.S.C. § 1962(c), Plaintiff and class members have
8
been injured, including the unauthorized appropriation of their identity to generate
9
false income tax refunds and the imposition of undisclosed fees.
10
64.
Accordingly, Plaintiff seeks, for both himself and class members, all
11
applicable damages provided by RICO, as well as payment of attorneys’ fees and
12
costs.
13
SECOND CAUSE OF ACTION
14
On Behalf of the Manipulated Returns Class
15
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
16
JJF & AC, Inc.; and Juan Flores
17
RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT
18
(18 U.S.C. § 1962(d))
19
20
65.
Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
21
66.
22
the class.
23
67.
Plaintiff asserts this cause of action on behalf of himself and members of
This Count is brought against Defendants Jackson Hewitt, Inc., Tax
24
Services of America, Inc., JJF & AC, Inc., and Juan Flores, who are referred to
25
collectively as the “RICO Defendants.”
26
68.
As set forth above, the RICO Defendants agreed and conspired to violate
27
18 U.S.C. § 1962(c). The RICO Defendants have intentionally conspired and agreed
28
to conduct and participate in the conduct of the affairs of the enterprise alleged herein
419455
18
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 19 of 35 Page ID #:19
1
through a pattern of racketeering activity. The RICO Defendants knew that their
2
predicate acts were part of a pattern of racketeering activity and agreed to the
3
commission of those acts to further the schemes described herein. That conduct
4
constitutes a conspiracy to violate 18 U.S.C. § 1962(c), in violation of 18 U.S.C. §
5
1962(d).
6
69.
As a direct and proximate result of the RICO Defendants’ racketeering
7
activities and violations of 18 U.S.C. § 1962(d), Plaintiff and class members have
8
been injured, including the unauthorized appropriation of their identity to generate
9
false income tax refunds and the imposition of undisclosed fees.
10
70.
Accordingly, Plaintiff seeks, for both himself and class members, all
11
applicable damages provided by RICO, as well as payment of attorneys’ fees and
12
costs.
13
THIRD CAUSE OF ACTION
14
On Behalf of the Manipulated Returns Class
15
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
16
JJF & AC, Inc.; and Juan Flores
17
NEGLIGENCE
18
19
71.
Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
20
72.
21
the class.
22
73.
Plaintiff asserts this cause of action on behalf of himself and members of
Defendants owed Plaintiff and class members a duty of reasonable care.
23
For instance, Defendants knew or should have known that Plaintiff and class members
24
were relying on Defendants to submit accurate income tax refunds.
25
74.
As described herein, Defendants breached that duty.
26
75.
Defendants’ breaches of duty proximately caused harm to Plaintiff and
27
class members.
28
///
419455
19
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 20 of 35 Page ID #:20
1
2
76.
Defendants, and each of them, are vicariously liable for each other’s
activities in furtherance of the unlawful scheme described herein.
3
77.
As a direct and proximate cause of Defendants’ negligence, carelessness,
4
and violation of law, Plaintiff and class members Plaintiff and class members suffered
5
and will continue to suffer damages.
6
FOURTH CAUSE OF ACTION
7
On Behalf of the Manipulated Returns Class
8
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
9
JJF & AC, Inc.; and Juan Flores
10
FRAUD
11
12
78.
Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
13
79.
14
the class.
15
80.
Plaintiff asserts this cause of action on behalf of himself and members of
Defendants made or caused one another to make false and misleading
16
representations to Plaintiffs and class members concerning their tax returns, including
17
that the returns would be and were filed as authorized by Plaintiff and class members.
18
81.
These representations were false when made because Defendants had or
19
intended to submit manipulated tax returns on behalf of Plaintiff and class members in
20
furtherance of Defendants’ scheme. These representations were material because they
21
induced Plaintiff and class members to entrust preparation and submission of their tax
22
returns to Defendants.
23
82.
Defendants failed to disclose that they had and intended to manipulate
24
Plaintiff’s and class members’ tax returns. Defendants had a legal duty to disclose
25
those facts because, inter alia, they had a position of influence and superiority over
26
Plaintiffs and class members.
27
28
83.
Defendants knew that their representations were false because they knew
that the tax returns they provided to Plaintiff and class members, and which Plaintiff
419455
20
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 21 of 35 Page ID #:21
1
and class members authorized to be filed, were not, in fact, the versions of the tax
2
returns Defendants intended to file, or the ones that were actually filed with the IRS.
3
84.
Plaintiff and class members acted in justifiable reliance on Defendants’
4
misrepresentations and omissions by permitting Defendants to prepare and file their
5
tax returns. Defendants held themselves out as tax preparation professionals and
6
represented to Plaintiff and class members that they would submit the version of the
7
return Plaintiff and class members authorized. Plaintiff and class members acted in
8
the manner that a reasonably prudent person would have acted under the
9
circumstances.
10
85.
Had Plaintiff and class members known that Defendants intended to
11
appropriate their identities to obtain fraudulent refunds, Plaintiff and class members
12
would not have permitted Defendants to prepare and submit their tax returns.
13
86.
As
a
direct
and
proximate
result
of
Defendants’
fraudulent
14
misrepresentations and failures to disclose, Plaintiff and class members suffered and
15
will continue to suffer damages.
16
FIFTH CAUSE OF ACTION
17
On Behalf of the Manipulated Returns Class
18
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
19
JJF & AC, Inc.; and Juan Flores
20
VIOLATION OF CALIFORNIA BUS. AND PROF. CODE SECTION 17200
21
22
87.
fully set forth herein.
23
24
Plaintiff hereby incorporates by reference the foregoing allegations as if
88.
Plaintiff asserts this cause of action on behalf of himself and members of
the Manipulated Returns Class.
25
89.
California’s Unfair Competition Law, codified at Business and
26
Professions Code section 17200, et seq., protects consumers by promoting fair
27
competition. As such, it is interpreted broadly and provides a cause of action for any
28
419455
21
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 22 of 35 Page ID #:22
1
unlawful, unfair, or fraudulent business act or practice that causes injury to
2
consumers.
3
90.
Defendants engage in substantial marketing and business in California.
4
91.
Defendants’ acts and practices, as described herein, constitute unlawful,
5
fraudulent, or unfair business practices, in that (1) Defendants’ conduct violated
6
numerous statutes, including, but not limited to, 26 U.S.C. section 7206(1), California
7
Penal Code section 470, and other statutes enumerated herein; (2) there is no
8
legitimate justification for Defendants’ conduct; (3) Defendants’ conduct is immoral,
9
unethical, oppressive, unconscionable, or substantially injurious to Plaintiff and class
10
members; and/or (4) Defendants’ conduct has a tendency to deceive Plaintiff and class
11
members.
12
92.
Defendants’ unlawful, unfair, and fraudulent business acts and practices,
13
as described above, include, but are not limited to, the unauthorized appropriation of
14
Plaintiff’s and class members’ identity to generate false income tax refunds.
15
93.
Plaintiff and class members have been damaged by these practices.
16
94.
Defendants’ conduct, as described herein, violates California’s Unfair
17
Competition Law and other similar state unfair competition and unlawful business
18
practice statutes.
19
SIXTH CAUSE OF ACTION
20
On Behalf of the Manipulated Returns Class
21
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
22
JJF & AC, Inc.; and Juan Flores
23
VIOLATION OF CALIFORNIA BUS. AND PROF. CODE SECTION 17530.5
24
25
95.
fully set forth herein.
26
27
Plaintiff hereby incorporates by reference the foregoing allegations as if
96.
Plaintiff asserts this cause of action on behalf of himself and California
members of the Manipulated Returns Class.
28
419455
22
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 23 of 35 Page ID #:23
1
97.
Plaintiff brings this cause of action pursuant to Business and Professions
2
Code section 17535. That provision allows “any person who has suffered injury in
3
fact and has lost money or property” to bring a civil action for violations of “this
4
chapter,” referring to Business and Professions Code Division 7, Part 3, Chapter 1.
5
Business and Professions Code section 17530.5 is included within Business and
6
Professions Code Division 7, Part 3, Chapter 1.
7
98.
Defendants are, and, at all times relevant to this complaint, were,
8
engaged in the “business of preparing federal or state income tax returns or assisting
9
taxpayers in preparing those returns” within the meaning of Business and Professions
10
Code section 17530.5(b).
11
99.
Business and Professions Code section 17530.5 prohibits the use or
12
disclosure of “any information obtained in the business of preparing federal or state
13
income tax returns or assisting taxpayers in preparing those returns.” Defendants
14
violated Business and Professions Code section 17530.5 by, inter alia, using Plaintiff
15
and class members’ information to obtain fraudulent refunds from the IRS and to open
16
bank accounts for Plaintiff and class members without their consent or knowledge.
17
18
100. Defendants are each “subsidiaries or affiliates” of one another within the
meaning of Business and Professions Code sections 17530.5(c) and (d).
19
101. As a result of Defendants’ unlawful conduct alleged herein, Plaintiff
20
suffered injury in fact and has lost money and property. Had Plaintiff known of
21
Defendants’ conduct, he would not have used them to prepare his tax returns.
22
102. As a direct and proximate result of Defendants’ conduct, Defendants
23
have received, continue to receive, and continue to hold unlawfully obtained property
24
and money, and have profited from their unlawful acts as alleged herein.
25
103. Pursuant to Business and Professions Code section 17535, Plaintiff, on
26
behalf of Class Members and the general public, seeks restitution and disgorgement of
27
all earnings, profits, compensation and benefit obtained by Defendants as a result of
28
419455
23
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 24 of 35 Page ID #:24
1
the unlawful practices described herein in violation of Business and Professions Code
2
section 17530.5.
3
104. Defendants continue to utilize the unlawful business practices alleged
4
herein. Thus, and pursuant to Business and Professions Code section 17535, Plaintiff
5
further seeks an Order from this Court enjoining Defendants, and each of them, from
6
continuing to engage in the unlawful practices alleged herein. The general public will
7
be irreparably harmed if such an Order is not granted.
8
105. Plaintiff has assumed the responsibility of enforcing the laws and public
9
policies specified herein by suing on his own behalf and on behalf of other similarly-
10
situated class members. Plaintiff’s action will enforce important rights affecting the
11
public interest, including the Legislature’s express intent in enacting Business and
12
Professions Code sections 17530.5 and 17535. Plaintiff will incur a financial burden
13
in pursuing this action in furtherance of the public interest.
14
attorneys’ fees to Plaintiff is appropriate pursuant to California Code of Civil
15
Procedure section 1021.5.
Thus, an award of
16
SEVENTH CAUSE OF ACTION
17
On Behalf of California Members of the Manipulated Returns Class
18
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
19
JJF & AC, Inc.; and Juan Flores
20
VIOLATION OF THE CALIFORNIA LEGAL REMEDIES ACT
21
22
106. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
23
107. Plaintiff asserts this cause of action on behalf of himself and California
24
members of the Manipulated Returns Class, all of whom are “consumers” within the
25
meaning of Civil Code section 1761(d) and section 1770.
26
108. Defendants’ representations, omissions and conduct have violated, and
27
continue to violate, California’s Consumer Legal Remedies Act (“CLRA”), because
28
419455
24
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 25 of 35 Page ID #:25
1
they extend to transactions that are intended to result, or which have resulted, in the
2
sale of services to consumers, including Plaintiff and class members.
3
109. Defendants’ conduct violates the CLRA, Civil Code section 1770(16),
4
which prohibits “[r]epresenting that the subject of a transaction has been supplied in
5
accordance with a previous representation when it has not.” Specifically, Defendants
6
represented that they would file the tax returns Plaintiff approved, but they instead
7
filed different, manipulated returns in furtherance of their fraudulent refund scheme.
8
9
110. Defendants’ tax preparation services are “services” within the meaning of
Civil Code section 1761(b) and section 1770.
10
111. Defendants’ provision of tax preparation services to Plaintiff and class
11
members each constituted a “transaction” within the meaning of Civil Code section
12
1761(e) and section 1770.
13
112. Defendants’ conduct is ongoing and, unless restrained, likely to recur.
14
113. Plaintiff, on behalf of himself and class members, seeks injunctive relief
15
prohibiting Defendants from engaging in the misconduct described herein.
16
114. No relief of any other kind, other than injunctive relief, is currently
17
sought pursuant to this CLRA cause of action. No damages of any kind are currently
18
sought pursuant to this CLRA cause of action.
19
115. Pursuant to Civil Code section 1782(a), Plaintiff will provide Defendants
20
with notice of their CLRA violations by certified mail return receipt requested. If
21
Defendants fail to provide appropriate relief for the CLRA violations, Plaintiff will
22
amend this complaint to seek damages and other relief under the CLRA on his own
23
behalf and on behalf of the class.
24
116. Pursuant to Civil Code section 1780(d), Plaintiff includes the requisite
25
venue declaration as an exhibit to this complaint.
26
///
27
///
28
///
419455
25
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 26 of 35 Page ID #:26
1
EIGHTH CAUSE OF ACTION
2
On Behalf of California Members of the Manipulated Returns Class
3
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.; and JJF & AC, Inc.
4
VIOLATION OF THE CALIFORNIA CUSTOMER RECORDS ACT
5
117. Plaintiff hereby incorporates by reference the foregoing allegations as if
6
fully set forth herein.
7
8
118. Plaintiff asserts this cause of action on behalf of himself and California
members of the class.
9
10
119. Defendants Jackson Hewitt, Inc., Tax Services of America, Inc., and JJF
& AC, Inc., are each a “business” as defined by Civil Code section 1798.80(a).
11
120. Plaintiff and each class member is an “individual” as defined by Civil
12
Code section 1798.80(d) and a “customer” as defined by Civil Code section
13
1798.80(c).
14
121. The information Defendants used to for the acts described herein was
15
“personal information” as defined by Civil Code sections 1798.80(e) and
16
1798.81.5(d), which includes “information that identified, relates to, describes, or is
17
capable of being associated with, a particular individual, including, but not limited to,
18
his or her name, signature, Social Security number, physical characteristics or
19
description, address, telephone number, passport number, driver’s license or state
20
identification card number, insurance policy number, education, employment,
21
employment history, bank account number, credit card number, debit card number, or
22
any other financial information, medical information, or health insurance
23
information.”
24
122. The misuse of Plaintiff’s and class members’ personal information by
25
Defendants to perform the acts described herein was a “breach of the security system”
26
as defined by Civil Code section 1798.82(g).
27
123. By failing to immediately notify all affected consumers that their
28
personal information had been misused, Defendants violated Civil Code section
419455
26
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 27 of 35 Page ID #:27
1
1798.82. Defendants’ failure to immediately notify customers of the misuse caused
2
Plaintiff and class members to suffer damages by having their identities used to
3
fraudulently obtain refunds from the IRS, which may potentially require Plaintiff and
4
class members to correct their filings and/or incur penalties or interest.
5
NINTH CAUSE OF ACTION
6
On Behalf of the Undisclosed Fees Class
7
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
8
JJF & AC, Inc.; and Juan Flores
9
NEGLIGENCE
10
11
124. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
12
13
125. Plaintiff asserts this cause of action on behalf of himself and members of
the class.
14
126. Defendants owed Plaintiff and class members a duty of reasonable care.
15
For instance, Defendants knew or should have known that Plaintiff and class members
16
were relying on Defendants to provide all required information concerning the fees
17
charged for their services.
18
127. As described herein, Defendants breached that duty.
19
128. Defendants’ breaches of duty proximately caused harm to Plaintiff and
20
class members.
21
22
129. Defendants, and each of them, are vicariously liable for each other’s
activities in furtherance of the unlawful scheme described herein.
23
130. As a direct and proximate cause of Defendants’ negligence, carelessness,
24
and violation of law, Plaintiff and class members Plaintiff and class members suffered
25
and will continue to suffer damages.
26
///
27
///
28
///
419455
27
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 28 of 35 Page ID #:28
1
TENTH CAUSE OF ACTION
2
On Behalf of the Undisclosed Fees Class
3
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
4
JJF & AC, Inc.; and Juan Flores
5
FRAUD
6
7
131. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
8
9
132. Plaintiff asserts this cause of action on behalf of himself and members of
the class.
10
133. Defendants failed to disclose that they had and intended to enroll Plaintiff
11
and class members in the “Assisted Refund” program and charge Plaintiff and class
12
members fees, including double-charging for tax preparation services. Defendants
13
had a legal duty to disclose those facts because, inter alia, they had a position of
14
influence and superiority over Plaintiffs and class members.
15
134. Plaintiff and class members acted in justifiable reliance on Defendants’
16
misrepresentations and omissions by permitting Defendants to prepare and file their
17
tax returns. Defendants held themselves out as tax preparation professionals and
18
represented to Plaintiff and class members that they would submit the version of the
19
return Plaintiff and class members authorized. Plaintiff and class members acted in
20
the manner that a reasonably prudent person would have acted under the
21
circumstances.
22
135. Had Plaintiff and class members known that Defendants intended to
23
charge them undisclosed fees, Plaintiff and class members would not have permitted
24
Defendants to prepare and submit their tax returns.
25
136. As
a
direct
and
proximate
result
of
Defendants’
fraudulent
26
misrepresentations and failures to disclose, Plaintiff and class members suffered and
27
will continue to suffer damages.
28
///
419455
28
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 29 of 35 Page ID #:29
1
ELEVENTH CAUSE OF ACTION
2
On Behalf of the Undisclosed Fees Class
3
Against All Defendants
4
VIOLATION OF CALIFORNIA BUS. AND PROF. CODE SECTION 17200
5
6
137. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
7
8
138. Plaintiff asserts this cause of action on behalf of himself and members of
the Undisclosed Fees Class.
9
139. As alleged above, California’s Unfair Competition Law protects
10
consumers by promoting fair competition and is interpreted broadly to provide a cause
11
of action for any unlawful, unfair, or fraudulent business act or practice that causes
12
injury to consumers.
13
140. Defendants engage in substantial marketing and business in California.
14
141. Defendants’ acts and practices, as described herein, constitute unlawful,
15
fraudulent, or unfair business practices, in that (1) Defendants’ conduct violated
16
numerous statutes; (2) there is no legitimate justification for Defendants’ conduct; (3)
17
Defendants’ conduct is immoral, unethical, oppressive, unconscionable, or
18
substantially injurious to Plaintiff and class members; and/or (4) Defendants’ conduct
19
has a tendency to deceive Plaintiff and class members.
20
142. Defendants’ unlawful, unfair, and fraudulent business acts and practices,
21
as described above, include, but are not limited to, the undisclosed imposition of fees
22
on Plaintiff and class members’ refunds through the “Assisted Refund” program.
23
143. Defendants’ conduct was further unlawful because it violated the Truth in
24
Savings Act (“TISA”). Congress enacted TISA to require, inter alia, full disclosure
25
of fees applicable to consumer depository accounts. 12 U.S.C. § 4301. To further that
26
goal, TISA mandates that “before an account is opened or a service is rendered,” a
27
financial institution must provide a potential customer with a schedule of interest rates
28
and fees applicable to the account or service. 12 U.S.C. § 4305.
419455
29
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 30 of 35 Page ID #:30
1
2
144. Defendants failed to provide Plaintiff and class members with any of the
materials required by TISA when opening the bank accounts noted herein.
3
4
145. Further, Defendants failed to advise Plaintiff and class members of the
applicable fees as required by TISA.
5
146. Plaintiff and class members have been damaged by these practices.
6
147. Defendants’ conduct, as described herein, violates California’s Unfair
7
Competition Law and other similar state unfair competition and unlawful business
8
practice statutes.
9
TWELFTH CAUSE OF ACTION
10
On Behalf of California Members of the Undisclosed Fees Class
11
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
12
JJF & AC, Inc.; and Juan Flores
13
VIOLATION OF THE CALIFORNIA LEGAL REMEDIES ACT
14
15
148. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
16
149. Plaintiff asserts this cause of action on behalf of himself and California
17
members of the Undisclosed Fees Class, all of whom are “consumers” within the
18
meaning of Civil Code section 1761(d) and section 1770.
19
150. Defendants’ representations, omissions and conduct have violated, and
20
continue to violate, the CLRA, because they extend to transactions that are intended to
21
result, or which have resulted, in the sale of services to consumers, including Plaintiff
22
and class members.
23
151. Defendants’ conduct violates the CLRA, Civil Code section 1770(14),
24
which prohibits “[r]epresenting that a transaction confers or involves rights, remedies,
25
or obligations that it does not have or involve, or that are prohibited by law.”
26
Specifically, Defendants represented that they were entitled to charge Plaintiff
27
unauthorized fees as described above when, in fact, they were not.
28
///
419455
30
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 31 of 35 Page ID #:31
1
2
152. Defendants’ tax preparation services are “services” within the meaning of
Civil Code section 1761(b) and section 1770.
3
153. Defendants’ provision of tax preparation services to Plaintiff and class
4
members each constituted a “transaction” within the meaning of Civil Code section
5
1761(e) and section 1770.
6
154. Defendants’ conduct is ongoing and, unless restrained, likely to recur.
7
155. Plaintiff, on behalf of himself and class members, seeks injunctive relief
8
prohibiting Defendants from engaging in the misconduct described herein.
9
156. No relief of any other kind, other than injunctive relief, is currently
10
sought pursuant to this CLRA cause of action. No damages of any kind are currently
11
sought pursuant to this CLRA cause of action.
12
157. Pursuant to Civil Code section 1782(a), Plaintiff will provide Defendants
13
with notice of their CLRA violations by certified mail return receipt requested. If
14
Defendants fail to provide appropriate relief for the CLRA violations, Plaintiff will
15
amend this complaint to seek damages and other relief under the CLRA on his own
16
behalf and on behalf of the class.
17
18
158. Pursuant to Civil Code section 1780(d), Plaintiff includes the requisite
venue declaration as an exhibit to this complaint.
19
THIRTEENTH CAUSE OF ACTION
20
On Behalf California Members of the Undisclosed Fees Class
21
Against Jackson Hewitt, Inc.; Tax Services of America, Inc.;
22
JJF & AC, Inc.; and Juan Flores
23
VIOLATION OF CALIFORNIA BUS. AND PROF. CODE SECTION 17530.5
24
25
159. Plaintiff hereby incorporates by reference the foregoing allegations as if
fully set forth herein.
26
160. Plaintiff asserts this cause of action on behalf of himself and California
27
members of the Undisclosed Fees Class.
28
///
419455
31
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 32 of 35 Page ID #:32
1
161. Plaintiff brings this cause of action pursuant to Business and Professions
2
Code section 17535. That provision allows “any person who has suffered injury in
3
fact and has lost money or property” to bring a civil action for violations of “this
4
chapter,” referring to Business and Professions Code Division 7, Part 3, Chapter 1.
5
Business and Professions Code section 17530.5 is included within Business and
6
Professions Code Division 7, Part 3, Chapter 1.
7
162. Defendants are, and, at all times relevant to this complaint, were,
8
engaged in the “business of preparing federal or state income tax returns or assisting
9
taxpayers in preparing those returns” within the meaning of Business and Professions
10
Code section 17530.5(b).
11
163. Business and Professions Code section 17530.5 prohibits the use or
12
disclosure of “any information obtained in the business of preparing federal or state
13
income tax returns or assisting taxpayers in preparing those returns.” Defendants
14
violated Business and Professions Code section 17530.5 by, inter alia, using Plaintiff
15
and class members’ information to obtain fraudulent refunds from the IRS and to open
16
bank accounts for Plaintiff and class members without their consent or knowledge.
17
18
164. Defendants are each “subsidiaries or affiliates” of one another within the
meaning of Business and Professions Code sections 17530.5(c) and (d).
19
165. As a result of Defendants’ unlawful conduct alleged herein, Plaintiff
20
suffered injury in fact and has lost money and property. Had Plaintiff known of
21
Defendants’ conduct, he would not have used them to prepare his tax returns.
22
166. As a direct and proximate result of Defendants’ conduct, Defendants
23
have received, continue to receive, and continue to hold unlawfully obtained property
24
and money, and have profited from their unlawful acts as alleged herein.
25
167. Pursuant to Business and Professions Code section 17535, Plaintiff, on
26
behalf of Class Members and the general public, seeks restitution and disgorgement of
27
all earnings, profits, compensation and benefit obtained by Defendants as a result of
28
419455
32
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 33 of 35 Page ID #:33
1
the unlawful practices described herein in violation of Business and Professions Code
2
section 17530.5.
3
168. Defendants continue to utilize the unlawful business practices alleged
4
herein. Thus, and pursuant to Business and Professions Code section 17535, Plaintiff
5
further seeks an Order from this Court enjoining Defendants, and each of them, from
6
continuing to engage in the unlawful practices alleged herein. The general public will
7
be irreparably harmed if such an Order is not granted.
8
169. Plaintiff has assumed the responsibility of enforcing the laws and public
9
policies specified herein by suing on his own behalf and on behalf of other similarly-
10
situated class members. Plaintiff’s action will enforce important rights affecting the
11
public interest, including the Legislature’s express intent in enacting Business and
12
Professions Code sections 17530.5 and 17535. Plaintiff will incur a financial burden
13
in pursuing this action in furtherance of the public interest.
14
attorneys’ fees to Plaintiff is appropriate pursuant to California Code of Civil
15
Procedure section 1021.5.
Thus, an award of
16
17
PRAYER FOR RELIEF
18
19
WHEREFORE, Plaintiff, individually and on behalf of the class, prays for the
following relief:
20
1.
For an order certifying the classes as defined above, appointing Plaintiff
21
as class representative for each class, and appointing Plaintiff’s counsel
22
as class counsel for each class;
23
2.
For an order declaring Defendants’ actions to be unlawful;
24
3.
For equitable relief to Plaintiff and class members;
25
4.
For injunctive relief prohibiting Defendants from engaging in the
26
misconduct described herein;
27
5.
28
For an award of all recoverable compensatory, statutory, and other
damages
419455
sustained
by
Plaintiff
and
33
CLASS ACTION COMPLAINT
class
members, including
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 34 of 35 Page ID #:34
1
disgorgement, unjust enrichment, and all other available relief under
2
applicable law;
3
6.
4
For an award of treble damages pursuant to 18 U.S.C. § 1964(c) and any
other applicable law;
5
7.
For an award of punitive damages pursuant to applicable law;
6
8.
For reasonable attorney’s fees and expenses as permitted by applicable
7
statutes and law, including, but not limited to, Code of Civil Procedure
8
section 1021.5;
9
9.
For taxable costs;
10
10.
For pre and post-judgment interest as allowed by law; and
11
11.
For any other relief the Court deems just.
12
13
JURY DEMAND
14
Plaintiff requests trial by jury of all claims that are so triable.
15
16
17
Dated: April 17, 2017
18
19
ENGSTROM, LIPSCOMB & LACK
STALWART LAW GROUP
By:
20
21
/s/ Paul A. Traina
Paul A. Traina, Esq.
Ian P. Samson, Esq.
Dylan Ruga, Esq.
Ji-In Lee Houck, Esq.
22
23
Attorneys for Plaintiff and the Proposed
Class
24
25
26
27
28
419455
34
CLASS ACTION COMPLAINT
Case 2:17-cv-02899 Document 1 Filed 04/17/17 Page 35 of 35 Page ID #:35
pECL{RATION OF LUIS LOMELI
1
2
I, LUIS LOMELI, hereby declare that:
3
1.
I am over 18 years of age and arn competent to make this declaration. I
4
have personal knowledge of the facts stated in this declaration and could competently
5
testi$r thereto
2.
3.
6
7
if called upon to do so.
I am the named Plaintiff in this case.
For the tax services described in this complaint,
I
visited the Jackson
8
Hewitt location at 9212 Califomia Avenue in South Gate, California, which, on
9
information and belief is within Los Angeles County and the Central District of
10
California.
11
t2
I
13
United States that the foregoing is true and correct. Made
14
20L7
15
California.
declare under penalty of pe{ury under the laws of the State
in the city of
(, dq'\rv
of California and the
this L\*'
in Los Angeles
t6
t7
18
day of April
LUIS LOMELI
19
20
2t
22
23
24
25
26
27
28
CLASS ACTION COMPLAINT
County,