UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

IN RE: H&R BLOCK REFUND ) 

ANTICIPATION LOAN LITIGATION ) MDL No. 2373 

 ) 

This Document Relates to: ) Case No. 12 CV 2973 

All Cases ) 

 ) Judge Joan B. Gottschall 

)

MEMORANDUM OPINION & ORDER 

 This case concerns H&R Block’s practice of offering “refund anticipation loans” to its 

customers. The plaintiffs allege that H&R Block’s practice violates various state laws by failing 

to adequately disclose loan fees, charging unreasonably high interest rates, and deceiving 

customers about the loans. H&R block moves to compel arbitration and stay further proceedings 

until arbitration has been completed. For the reasons explained below, the motion is granted. 

I. BACKGROUND

Refund anticipation loans allow tax filers to receive their refund sooner than if they 

waited for a mailed check from the IRS. The plaintiffs allege that these loans “include exorbitant 

finance charges that, when properly calculated in accordance with the Truth in Lending Act 

(‘TILA’) and relevant state laws, often exceed 100% APR.” (Compl. ¶ 23, ECF No. 18.) They 

allege that the loans “provide little to no value to consumers at predatory interest rates and fees, 

often in conjunction with exorbitant tax preparation fees for straightforward tax filings.” 

(Compl. ¶ 24.) 

Each of the seventeen plaintiffs in this case originally sued H&R Block in his or her 

home state. After the Judicial Panel on Multidistrict Litigation consolidated the cases before this 

court, the plaintiffs filed a thirty-one count consolidated amended complaint. They sue on behalf 
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of themselves, nine state-specific classes, and a multistate class. The named defendants in this 

case are HRB Tax Group, Inc.; H&R Block Services, Inc.; H&R Block Eastern Enterprises, Inc.; 

and H&R Block Enterprises, Inc. The court refers to these defendants collectively as “H&R 

Block.”

The claims applicable to all of the proposed classes fall into three general categories. 

First, the plaintiffs bring claims under various state statutes requiring tax preparers such as H&R 

Block to disclose certain information about the fees associated with refund anticipation loans. 

Second, the plaintiffs allege that H&R Block violated state usury laws because the annual 

percentage rate charged for the loans exceeded the statutory limit. Third, the plaintiffs contend 

that H&R Block violated state consumer-protection laws by (1) violating state statutes 

concerning refund anticipation loans; (2) violating the Truth in Lending Act, 15 U.S.C. §§ 1601-

1667f.; and (3) deceiving customers about the nature of the loans. 

 Although the complaint alleges that H&R Block “facilitated” the transaction between the 

customer and a bank, H&R Block itself did not issue any loans. The loans were issued by H&R 

Block Bank (HRBB); HSBC Bank USA, N.A. (HSBC); and HSBC Trust Company (Delaware), 

N.A. (HSBCT). When customers applied for a loan at one of these banks, they were required to 

sign a loan agreement. Although there are minor differences among the three banks’ loan 

agreements, those differences are not relevant for present purposes. 

The 2012 HRBB loan agreement contains an arbitration clause that is similar to the 

arbitration clauses found in the other loan agreements. The first sentence of that arbitration 

clause states: 

IF YOU APPLY FOR A RAC [i.e., a refund anticipation loan] IN A STATE 

THAT PROHIBITS ARBITRATION OR CLASS ACTION WAIVERS FOR 

CLAIMS RELATED TO A RAC OR THE TRANSACTION TO APPLY FOR 
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OR OBTAIN A RAC, THIS SECTION ELEVEN (11) SHALL NOT APPLY TO 

THOSE CLAIMS. 

(Crew Decl. Ex. A (Loan Agreement) § 11, ECF No. 23-1.) The arbitration clause goes on to 

state:

Any claim, dispute, or controversy between me and HRBB (as specifically 

defined below for purposes of this Arbitration Provision), whether in contract or 

tort (intentional or otherwise), whether pre-existing, present or future, and 

including constitutional, statutory, common law, regulatory, and equitable claims 

arising out of or in any way relating to (a) any of the Documents or any other 

documents or product that I have previously received from HRBB . . . ; and (d) 

except as provided below, the validity, enforceability or scope of this Arbitration 

Provision or any part thereof, including, but not limited to, the issue of whether 

any particular claim, dispute or controversy must be submitted to arbitration 

(collectively, the “Claim”), shall be resolved, upon the election of either me or 

HRBB, by binding arbitration pursuant to this Arbitration Provision and the 

applicable rules of the American Arbitration Association (“AAA”) (the 

“Administrator”) in effect at the time the Claim is filed. 

(Id.) The arbitration clause defines “HRBB” as “H&R Block Bank, a federal savings bank, and 

HRB Tax Group, Inc., and each of their parents, subsidiaries, affiliates, and predecessors, 

successors, assigns and the franchisees of any of them, and each of their officers, directors, 

agents, and employees.” (Id.)

Finally, the arbitration clause includes a class-action waiver, which states: “No class 

actions or private attorney general actions in court or in arbitration or joinder or consolidation of 

claims in court or in arbitration with other persons are permitted without the consent of HRBB 

and me.” (Id.)

II. LEGAL STANDARD

The Supreme Court has stated that the “principal purpose” of the Federal Arbitration Act 

(FAA) is “to ensur[e] that private arbitration agreements are enforced according to their terms.” 

AT&T Mobility LLC v. Concepcion, 563 U.S. __, 131 S. Ct. 1740, 1748 (2011). As the Court 

explained in Concepcion:
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This purpose is readily apparent from the FAA’s text. Section 2 makes arbitration 

agreements “valid, irrevocable, and enforceable” as written . . . ; § 3 requires 

courts to stay litigation of arbitral claims pending arbitration of those claims “in 

accordance with the terms of the agreement”; and § 4 requires courts to compel 

arbitration “in accordance with the terms of the agreement” upon the motion of 

either party to the agreement . . . . 

Id. at 1748. In light of these provisions, the Court has held that “parties may agree to limit the 

issues subject to arbitration, to arbitrate according to specific rules, and to limit with whom a 

party will arbitrate its disputes . . . .” Id. at 1748-49 (internal citations omitted). 

 The Court has stated that § 2 of the FAA reflects a “liberal federal policy favoring 

arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). 

Thus, “questions of arbitrability must be addressed with a healthy regard for the federal policy 

favoring arbitrations.” Id. “Notwithstanding this strong federal policy, however, ‘arbitration is a 

matter of contract and a party cannot be required to submit to arbitration any dispute which he 

has not agreed so to submit.’” MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 

1999) (quoting AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986)), 

abrogated on other grounds by Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009). “As a 

general rule, therefore, ‘the parties’ intentions control, but those intentions are generously 

construed as to issues of arbitrability.’” MS Dealer, 177 F.3d at 947 (quoting Mitsubishi Motors 

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)). 

III. ANALYSIS

The plaintiffs argue that the arbitration clause does not apply to their claims because they 

reside in states that prohibit class-action waivers in consumer arbitration agreements. 

 In Concepcion, the Supreme Court held that § 2 of the FAA prohibits states from 

conditioning the enforceability of arbitration agreements on the availability of classwide 

arbitration procedures. 131 S. Ct. at 1744. Specifically, the Court held that California’s 
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“Discover Bank” rule, which stated that class-action waivers in consumer arbitration agreements 

were unconscionable, was preempted by the FAA and therefore invalid. Id. at 1753. The Court 

reasoned that “[r]equiring the availability of classwide arbitration interferes with fundamental 

attributes of arbitration and thus creates a scheme inconsistent with the FAA.” Id. at 1748.

 The plaintiffs argue that Concepcion is irrelevant because it was issued after the plaintiffs 

signed the loan agreements. “Therefore,” the plaintiffs argue, “at the time the RAL Applications 

were signed, each of the relevant states prohibited the enforcement of the RAL Application.” 

(Pls.’ Br. 13, ECF No. 52.) 

 The Ninth Circuit addressed the plaintiffs’ argument in Murphy v. DirecTV, Inc., 724 

F.3d 1218 (9th Cir. 2013). There, the plaintiffs signed arbitration clauses that stated: “If . . . the 

law of your state would find this agreement to dispense with class arbitration procedures 

unenforceable, then this entire [arbitration clause] is unenforceable.” Id. at 1224. The plaintiffs 

argued that because the law of their states “would have found” the agreement to be 

unenforceable at the time the agreements became effective, the arbitration clause was 

unenforceable. Id. at 1225. 

 The Ninth Circuit rejected the plaintiffs’ argument, noting that it “misapprehends the 

doctrine of preemption and the rationale of the Supreme Court’s ruling in Concepcion.” Id. The 

court held that Concepcion applied retroactively to the arbitration provision and that, therefore, 

the arbitration provision was enforceable. Id. In reaching this conclusion, the court drew on two 

principles of judicial construction articulated by the Supreme Court. 

 The first principle is that “[a] judicial construction of a statute is an authoritative 

statement of what the statute meant before as well as after the decision of the case giving rise to 

that construction.” Rivers v. Roadway Exp., Inc., 511 U.S. 298, 313 (1994); see also Morales-
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Izquierdo v. DHS, 600 F.3d 1076, 1090 (9th Cir. 2010) (“[W]hen a court interprets a statute, 

even an ambiguous one, and even that interpretation conflicts with the court’s own prior 

interpretation, the new interpretation is treated as the statute’s one-and-only meaning.”). 

Applying this principle to the Concepcion court’s construction of the FAA, the Ninth Circuit 

held that “the FAA has always preempted states from invalidating agreements that disallow class 

procedures.” Murphy, 724 F.3d at 1226. “[T]he FAA meant what the Court in Concepcion says 

it means—that the Customer Agreement’s class waiver is enforceable—even prior to 2011 when 

the Discover Bank rule was nominally in effect.” Id. at 1225.

 The second principle is that “the Constitution, laws, and treaties of the United States are 

as much a part of the law of every State as its own local laws and Constitution.” Fid. Fed. Sav. 

& Loan Ass’n v. de la Cuesta, 458 U.S. 141, 157 (1982) (internal quotation marks omitted). 

When the Supreme Court holds that a state law is preempted, the state law is “nullified to the 

extent that it actually conflicts with federal law.” Id. at 153 (emphasis added). Thus, the Ninth 

Circuit recognized that “Section 2 of the FAA, which under Concepcion requires the 

enforcement of arbitration agreements that ban class procedures, is the law of California and of 

every other state.” Murphy, 724 F.3d at 1226. The arbitration agreement’s reference to state law 

did not incorporate California’s Discover Bank rule, because “the Discover Bank rule is not, and 

indeed never was, California law.” Id. The arbitration clause was always enforceable, because 

“federal law require[d] its enforcement.” Id.1

1

 It appears that only one other federal court has addressed the retroactive application of 

Concepcion. See Meyer v. T-Mobile USA Inc., 836 F. Supp. 2d 994 (N.D. Cal. 2011). The 

Meyer court arrived at the same conclusion as the Murphy court, holding that “[a]lthough the 

Supreme Court decided Concepcion after Plaintiff entered the 2008 Service Agreement, the 

Court must nonetheless apply Concepcion to its review of the agreement.” Id. at 1001 (“[A]n 

intervening Supreme Court decision must be given full retroactive effect in all cases still open on 
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 The plaintiffs argue that the facts of Murphy are “readily distinguishable.” (Pls.’ Resp. to 

Defs.’ Notice of Additional Authority, ECF No. 72-1.) They contend that “[t]he crucial 

distinction between Murphy and the instant case is that, here, there was never an agreement to 

arbitrate in the first place, based upon the plain language of H&R Block’s contract with its 

customers . . . .” (Id.) They base their argument on the fact that, in Murphy, the arbitration 

clause used the term “unenforceable,” whereas here the arbitration clause uses the phrase “shall 

not apply.” 

The court disagrees with the plaintiffs that this is a meaningful difference. Under 

Murphy, “the FAA has always preempted states from invalidating agreements that disallow class 

procedures.” 724 F.3d at 1226. This means that the states in which the plaintiffs reside never 

“prohibited” class-action waivers. Thus, the arbitration clause always “applied” to the plaintiffs’ 

claims. The plaintiffs may disagree with the Murphy court’s reasoning, but it is disingenuous to 

claim that the case is factually distinguishable. In both this case and in Murphy, the plaintiffs 

agreed to arbitrate their disputes unless state law prohibited class-action waivers.

 The plaintiffs also direct the court to a recent decision from the California Court of 

Appeal criticizing Murphy. See Imburgia v. DIRECTV, Inc., 170 Cal. Rptr. 3d 190 (Cal. Ct. 

App. 2014). Imburgia involved the same arbitration clause that was at issue in Murphy. Id. at 

193. In analyzing that clause, the court first noted that the clause did not state that its 

enforceability “shall be determined under the law of your state to the extent that it is not 

preempted by the FAA” or that it “shall be determined under the law of your state without 

considering the preemptive effect, if any, of the FAA.” Id. at 195. If the agreement had included 

such language, the court noted, then the clause would have been enforceable. Id. But the court 

direct review and as to all events, regardless of whether such events predate or 

postdate . . . announcement of the rule[.]” (internal quotation marks omitted)). 

 
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found that the agreement “was not as explicit as either of those hypotheticals,” and thus 

concluded that “[t]he question before us . . . [is] whether ‘the law of your state[’] . . . mean[s] 

‘the law of your state to the extent it is not preempted by the FAA,’ or ‘the law of your state 

without considering the preemptive effect, if any of the FAA[.]’” Id.

 In deciding that question, the court emphasized the principle of contract interpretation 

that when a general and a particular provision are inconsistent, the particular provision is 

“paramount to the general provision.” Id. (internal quotation marks omitted). Because the 

reference to the “law of your state” operated as a particular provision, the court reasoned that it 

was “paramount to” to the agreement’s general adoption of the FAA. Id. The court also relied 

on “the common-law rule of contract interpretation that a court should construe ambiguous 

language against the interest of the party that drafted it.” Id. at 196 (internal quotation marks 

omitted). Based on these principles, the court concluded that the “law of your state” language 

meant “the law of your state without considering the preemptive effect, if any of the FAA.” Id.

The court held that because “the class action waiver is unenforceable under California law,” the 

arbitration clause was unenforceable. Id. at 198.

Recognizing that the Ninth Circuit in Murphy reached the opposite conclusion, the 

Imburgia court stated, “[w]e find the analysis in Murphy unpersuasive.” Id. at 197. The court 

criticized Murphy for two reasons: 

[First,] insofar as the court’s reasoning is a matter of contract interpretation, it 

means that when the parties used the phrase “the law of your state,” they meant 

“federal law plus (nonfederal) state law.” Murphy provides no basis for 

concluding that the parties intended to use the phrase “the law of your state” in 

such a way, and we are aware of none. . . . [Second,] insofar as the court reasoned 

that contract interpretation is irrelevant because the parties are powerless to opt 

out of the FAA by contract, we are aware of no authority for the court’s position.

Id.
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As H&R Block correctly points out, these criticisms of Murphy fail to respond to its 

central point that state rules found to be preempted by the FAA never were “state law.” Murphy,

724 F.3d at 1226. With respect to the first criticism, the Murphy court provided a basis for 

concluding that the parties did not intend for state law to govern the enforceability of the 

arbitration clause if the state law contravened federal law. It explained that federal law is part of 

the law of every state “as much as [every state’s] own local laws and Constitution.” Id. (internal 

quotation marks omitted). Thus, the court found it “nonsensical” that by agreeing that the “law 

of their state” would govern the agreement, the parties intended to mean “the law of their state 

without considering federal law.” Id.

 With respect to the second criticism, contrary to the Imburgia court’s misapphrension, the 

Murphy court did not “reason[] that contract interpretation is irrelevant because the parties are 

powerless to opt out of the FAA by contract . . .” Imburgia, 170 Cal. Rptr. 3d. at 197. Rather, 

the court expressly acknowledged that it was “clear that if DirecTV had actually contracted with 

Plaintiffs to allow class arbitration, it would be required to do so irrespective of Concepcion.”

724 F.3d at 1228. The parties, however, “did exactly the opposite” by agreeing to a class-action 

waiver. Id.

 Moreover, the Imburgia court failed to take account of the liberal federal policy favoring 

arbitration. Under federal policy, “a court may not deny a party’s request to arbitrate an issue 

unless it may be said with positive assurance that the arbitration clause is not susceptible to an 

interpretation that covers the asserted dispute.” Gore v. Alltel Commc’ns, LLC, 666 F.3d 1027, 

1032 (7th Cir. 2012) (internal quotation marks omitted). The court must construe the parties’ 

intentions “generously . . . as to issues of arbitrability.’” Mitsubishi Motors, 473 U.S. at 626. 

These principles further support the Ninth Circuit’s reasoning in Murphy.
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 Neither the Imburgia court nor the plaintiffs provides any compelling reason why this 

court should depart from the Ninth Circuit’s holding in Murphy. In view of consistent Supreme 

Court precedent, the court finds the reasoning of Murphy persuasive. Under its reasoning, the 

arbitration clause in this case is enforceable. Accordingly, H&R Block’s motion to compel 

arbitration is granted.

IV. CONCLUSION

For the foregoing reasons, H&R Block’s motion to compel arbitration and stay 

proceedings is granted. These cases are stayed pending arbitration in accordance with 9 U.S.C. 

§ 3. The clerk is respectfully directed to close this case and all member cases associated with 

MDL No. 2373. 

 ENTER: 

 /s/ 

 JOAN B. GOTTSCHALL 

 United States District Judge 

DATED: July 23, 2014