Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-02892/USCOURTS-ca8-14-02892-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 

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United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-2892

___________________________

Ronald Perras

lllllllllllllllllllll Plaintiff - Appellant

v.

H&R Block; HRB Tax Group, Inc.; HRB Technology, LLC

lllllllllllllllllllll Defendants - Appellees

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Missouri Attorney General’s Office

lllllllllllllllllllllAmicus on Behalf of Appellant

Chamber of Commerce ofthe United States; Product LiabilityAdvisoryCouncil, Inc.

lllllllllllllllllllllAmici on Behalf of Appellees

____________

Appeal from United States District Court 

for the Western District of Missouri - Kansas City

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 Submitted: April 14, 2015

 Filed: June 18, 2015

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Before MURPHY, COLLOTON, and KELLY, Circuit Judges.

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KELLY, Circuit Judge.

In this interlocutory appeal, Ronald Perras contests the denial of his motion to

certify a class action under Federal Rule of Civil Procedure 23. Though we follow 1

a different analysis than the district court, we conclude that the court correctly denied 2

the motion to certify. Thus, we affirm the judgment.

I. Background

In 2011, the Internal Revenue Service began regulating tax preparers who are

neither attorneys nor Certified Public Accountants. Among other qualifications, the

new regulations required tax preparers to pass a certification exam and obtain a

preparer identification number at their cost. Defendants H&R Block, Inc.; HRB Tax

Group, Inc.; and HRB Technology, LLC (collectively “H&R”), are “the world’s

largest tax services provider,” Our Company, H&RBLOCK.COM,

http://www.hrblock.com/corporate/our-company/index.html (last visited June 15,

2015), and are headquartered in Kansas City, Missouri. H&R decided to pass on the

anticipated costs of complying with the new certification requirements to its

customers by charging a “Tax Preparer Compliance Fee.” H&R explained to

customers at its tax offices and on its website that the fee would cover only the costs

to comply with the new federal tax laws. In 2011, the fee was $2; in 2012, the fee

was $4.

3

We have jurisdiction under 28 U.S.C. § 1292(e) and Fed. R. Civ. P. 23(f). 1

The Honorable Beth Phillips, United States District Judge for the Western 2

District of Missouri.

The fee was not implemented in later years because a federal injunction halted 3

implementation of the new requirements. See Loving v. I.R.S., 917 F. Supp. 2d 67

(D.D.C. 2013).

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In 2012 Ronald Perras, a California resident, sued H&R in a Missouri federal

court on behalf of himself and a putative class of otherssimilarly situated. Perras had

paid for tax-return servicesfrom H&R in 2011 and 2012. He alleged that the amount

collected fromthe compliance fee exceeds H&R’s actual costs of complying with the

new regulations. Perras sued under the Missouri Merchandising Practices Act (“the

MMPA”) claiming that the compliance fee was deceptive and actually a

profit-generating scheme. Perras sought to define the class to include persons in all

states except Missouri who purchased tax-return-preparation services from H&R in

2011 and/or 2012 and paid the compliance fee. The district court compelled 4

arbitration of the 2011 claims.

In a later order, the district court addressed Perras’s motion for class

certification. The court agreed that the proposed class met the requirements under

Federal Rule of Civil Procedure 23(a) of “numerosity, commonality, typicality, and

fair and adequate representation.” But Perras also had to satisfy a subsection of

Rule 23(b). Perras contended that he met Rule 23(b)(3), which requires that “the

questions of law or fact common to class members predominate over any questions

affecting only individual members.” The court rejected Perras’s argument and

concluded that Perras failed to meet the second part of Rule 23, which requires that

the class action be the “superior” method of adjudicating the controversy.

5

Accordingly, the district court denied the motion to certify the class. We granted

Perras’s request to file an interlocutory appeal.

A Missouri resident separately filed an action against H&R on behalf of 4

herself and similarly situated Missouri residents.

Perras also argued that the purported class action met Rule 23(b)(2) or 5

23(c)(4). The district court rejected those assertions. Perras does not address either

of these rules on appeal, so we will not discuss them further. See Neb. State

Legislative Bd., United Transp. Union v. Slater, 245 F.3d 656, 658 n.3 (8th Cir.

2001).

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II. Discussion

On appeal, Perras and his amicus, the Missouri Attorney General, argue that

the district court improperly denied his motion to certify the putative class. 

According to Perras, Missouri has sufficient contacts with each class member’s claim

based on, among other things, H&R’s presence there. In Missouri, Perras alleges,

“the decisions and implementation of the compliance fee and ratification of those

choices occurred.” The Missouri Attorney General adds that the state of Missouri

“has a compelling interest in policing the conduct of its domestic corporations.” That

interest, the argument goes, justifies certifying the class and giving the foreign class

members a legal avenue for bringing their purportedly common claims against these

Missouri defendants.

We review a district court’s denial of class certification for abuse of discretion. 

Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1029 (8th Cir. 2010). Our review of

the court’s rulings of law is de novo. In re St. Jude Med., Inc., 425 F.3d 1116, 1119

(8th Cir. 2005). For Perras to qualify for class certification under Rule 23, he first

had to meet all the requirements of Rule 23(a); the district court concluded Perras had

met those requirements, and H&R does not challenge that ruling on appeal. 

Perras also had to meet one of the three subsections of Rule 23(b). See Fed.

R. Civ. P. 23(a), (b); In re St. Jude, 425 F.3d at 1119. Perras’s appeal focuses on Rule

23(b)(3). That rule has two parts: the “predominance” requirement and the

“superiority” requirement. To meet the predominance requirement, Perras had to

show that “the questions of law or fact common to class members predominate over

any questions affecting only individual members.” Fed. R. Civ. P. 23(b)(3). This

requirement is evidentiary: If the class members can make a prima facie showing of

their claims with the same evidence, then the question of law is common. See Avritt,

615 F.3d at 1029. If, on the other hand, the evidence will vary from member to

member, then the question is an individual one. Id. The superiority requirement

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involves showing “that a class action is superior to other available methods for fairly

and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).

The district court concluded that Perras failed to meet the predominance

requirement because each potential class member’s claim would be governed not by

the laws of Missouri but by the laws of the class member’s home state, where the fee

was paid and where the class member would expect to file a claim. The court reached

that conclusion after analyzing the claims under the Due Process and Full Faith and

Credit Clauses of the U.S. Constitution. Though we agree with the court’s outcome,

we believe it is better to heed the “‘longstanding principle of judicial restraint’”

counseling against unnecessarily deciding constitutional issues. Camreta v. Greene,

131 S. Ct. 2020, 2031 (2011) (quoting Lyng v. Nw. Indian Cemetery Protective

Ass’n, 485 U.S. 439, 445 (1988)). Instead, we will address this question based on the

scope of the state law involved here, the MMPA, though the district court expressly

declined to decide that issue. See Rosemann v. Sigillito, --- F.3d ----, 2015 WL

1963634, at *3 (8th Cir. May 4, 2015) (noting that this court “may affirm the

judgment on any basis supported by the record”).

The MMPA makes unlawful “any deception, fraud, false pretense, false

promise, misrepresentation, [or] unfair practice . . . in connection with the sale or

advertisement of any merchandise in trade or commerce . . . in or from the state of

Missouri.” Mo. Stat. § 407.020.1. The law allows a private civil action to be filed

by “[a]ny person who purchases or leases merchandise primarily for personal, family

or household purposes and thereby suffers an ascertainable loss of money or property

. . . as a result of the use or employment by another person of a method, act or practice

declared unlawful” by the MMPA. Mo. Stat. § 407.025.1. That civil suit may be

brought “in either the circuit court of the county in which the seller or lessor resides

or in which the transaction complained of took place.” Id. The MMPA also

expressly allows for a class-action suit, under which the plaintiffs may recover

damages, an injunction, or other equitable relief. Id. § 407.025.2. Section 407.025.3

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discusses the methods and requirements for certifying a class action, which mirror

those listed in Fed. R. Civ. P. 23.

To decide whether Perras may bring the class-action claims in this case under

the MMPA, and thus whether common questions of law predominate over individual

questions, we must determine if the tax-return services performed and paid for outside

of Missouri nonetheless constitute trade or commerce “in or from the state of

Missouri.” Mo. Stat. § 407.020. For the answer to that question ofstate law, we look

to the decisions of the state supreme court. See Ashley County, Ark. v. Pfizer, Inc.,

552 F.3d 659, 665 (8th Cir. 2009). If the Supreme Court of Missouri has not decided

the issue, we look to analogous state-court decisions and precedent to predict how

that Court would decide the issue. Id. 

The Supreme Court of Missouri has described theMMPA’s language regarding

unlawful merchandising as “unrestricted, all-encompassing and exceedingly broad.”

Ports Petroleum Co. of Ohio v. Nixon, 37 S.W.3d 237, 240 (Mo. banc 2001). That

court, however, has not decided whether the language is broad enough to cover

transactions taking place outside of Missouri. The Missouri Court of Appeals has

concluded that the MMPA may reach consumers in states other than Missouri who

succumb to fraudulent advertising or deceptive practices. State ex rel. Nixon v. Estes,

108 S.W.3d 795, 801 (Mo. Ct. App. 2003). In Estes, the fraudulent business

misleadingly advertised vending machines and fraudulently promised tens of

thousands of dollars in profit. Id. at 796–97. But that business had numerous ties to

Missouri: It was in Missouri that the defendant had operated his fraudulent business,

received signed sales agreements and wire transfers from the customers, held the

ill-gotten gains in Missouri bank accounts, and maintained company offices from

which he communicated with customers. Id. at 801. Those facts, the court ruled,

showed that Estes had advertised and sold the fraudulent machines “in trade or

commerce . . . in or from the state of Missouri.” Id. at 800–01 (quoting Mo. Stat.

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§ 407.020.1). Thus, the claims of those out-of-state plaintiffs could be brought under

the MMPA. Id. at 801.

In our case, there are no ties between the allegedly fraudulent transactions and

Missouri. Though true, as the district court noted, H&R’s headquarters are located

in Missouri; and there, it designed and implemented the compliance fee. But every

part ofthe transactions—the activity for which the class action seeks relief—occurred

in each class member’s home state. In those states, each class member contacted and

communicated with a local H&R representative at a local H&R office, contracted for

tax-return services, and paid the allegedly deceptive compliance fee. And it was in

each class member’s state that H&R had displayed the purportedly fraudulent

“materials” explaining the compliance fee. The evidence each class member would

proffer to support her claim, therefore, would be specific to her experience in her state

at her local H&R office. There is no other connection between the claims in the class

action and Missouri; the acts of commerce that Perras grieves did not occur in, or

originate from, the State of Missouri. See Mo. Stat. § 407.020.1. 

We do not think this conclusion is inconsistent with the Supreme Court of

Missouri’s generous description of the MMPA. See Ports Petroleum Co., 37 S.W.3d

at 240. Though the statute may cover “every practice imaginable and every

unfairness to whatever degree,” id., that practice still must involve trade or commerce

“in or from the state of Missouri.” Estes, 108 S.W.3d at 801; see Mo. Stat.

§ 407.020.1. This lawsuit does not challenge the mere fact of creating the compliance

fee—the only action that actually occurred in Missouri. Perras would have no

standing to bring a claim for relief against H&R solely for creating the fee. 

See Raines v. Byrd, 521 U.S. 811, 819–20 (1997) (noting that, to meet standing

requirements of Article III, plaintiff must allege a personal injury redressable by relief

requested). Instead, Perras seeks relief for H&R’s charging of the fee to consumers,

transactions that took place outside of Missouri between representatives of H&R

located outside of Missouri and consumers who reside outside of Missouri.

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Accordingly, we believe the Supreme Court of Missouri would conclude that

the MMPA does not cover the out-of-state transactions in this case. The law

applicable to each class member would be the consumer-protection statute of that

member’s state. Thus, questions of law common to the class members do not

predominate over any individual questions of law. See Fed. R. Civ. P. 23(b)(3). The

district court did not abuse its discretion in concluding that the class action does not

meet the predominance requirement. With that conclusion, we need not decide

whether the class action would meet the superiority requirement in Rule 23(b)(3). 

See Avritt, 615 F.3d at 1035 n.6.6

III. Conclusion

For the reasons discussed above, we conclude that the district court did not

abuse its discretion by denying Perras’s motion for class certification under Fed. R.

Civ. P. 23(b)(3). The judgment of the court is, therefore, affirmed.

______________________________

We acknowledge Missouri’s interest in policing the corporations located 6

within its borders, and the broad scope of the MMPA corroborates that interest. But,

as the U.S. Chamber of Commerce notes in its amicus brief, “other states also have

an interest in protecting their local consumers in transactions with foreign

corporations.” Given that H&R’s challenged conduct occurred in each class

member’s home state, and the MMPA does not cover those out-of-state transactions,

the claims of each member belong in a lawsuit brought under those local

consumer-protection laws.

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