(CN) — A California appeals court denied an injunction requested by financial software company Intuit to move tens of thousands of arbitration requests made by users of their TurboTax program into small claims court.
The company faced several class actions from taxpayers who said they were duped into purchasing a paid version of TurboTax when they were eligible for a free version offered to low-income taxpayers and members of the military.
Intuit successfully compelled individual arbitration of the claims, as the justices of California’s Second District Court of Appeal then noted in Thursday’s opinion “the manufacturer found itself facing 40,000 individual arbitrations, each with at least a $3,200 price tag.”
The software maker then moved for a preliminary injunction in state court last year in an attempt to stop the arbitrations and move them to small claims court instead. The state court denied the motion and the appellate court agreed with the decision.
In the 23-page opinion written by Associate Justice Brian Hoffstadt, the court found Intuit's argument that it could elect to send arbitrations to small claims court under its terms and services agreement did not hold water due to the ambiguity of the wording of the contract.
“We conclude that this ambiguity must be resolved in favor of reading the terms of service to permit only the consumer to transfer a claim to small claims court,” the opinion stated.
“Because the terms of service only empower a consumer to elect whether to move an arbitration to small claims court, the trial court did not err in concluding that Intuit was unlikely to succeed in asserting a contrary construction of the terms of service.”
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