Meta wins bid to toss several privacy violation claims in H&R Block breach lawsuit

OAKLAND, Calif. (CN) — Meta successfully convinced a federal judge to toss some privacy claims in a class action accusing the social media company of collecting people's banking information through an agreement with H&R Block.

U.S. District Judge P. Casey Pitts ruled Tuesday to dismiss three claims against Meta in a consolidated class action charging the tech giant with collecting users’ personal financial data through tracking tools installed on tax preparation websites like H&R Block, TaxAct and TaxSlayer.

H&R Block prepares more than 20 million tax returns annually, and per the Internal Revenue Code, may not disclose any information it collects for any purpose other than to prepare a tax return.  

In his six-page order Tuesday, the Joe Biden appointee dismissed claims for violations of the Washington Privacy Act, the New York Deceptive Practices Act, and the California Consumers Legal Remedies Act.

Lori Feldman, attorney for the plaintiffs, said that the primary claims against Meta survived dismissal earlier this year, including claims for violations of the federal wiretap act, unjust enrichment, negligence, California's invasion of privacy act, the Illinois invasion of privacy act and the Missouri wiretap act are still being litigated.

“Those primary claims continue to be vigorously litigated on behalf of plaintiffs and the class,” Feldman said. “This ruling will not disturb Judge Pitts’ earlier ruling.”

The parties return to court in March 2025, to discuss the plaintiffs' forthcoming motion for class certification.

Pitts previously allowed most of the claims to proceed, and after the plaintiffs filed an amended complaint, Meta moved to dismiss the three revised claims. 

Attorneys for Meta did not immediately respond to a request for comment.

The judge dismissed without leave to amend the plaintiffs’ claim of violation of the Washington Privacy Act, which prevents transfer of private communications between two or more individuals. The court previously ruled to dismiss as the communications involved the tax sites' automated systems rather than actual people.

Though the plaintiffs identified people at Meta who reportedly received intercepted communications of their data, Pitts determined that they did not establish that those intercepted communications were made between those people, rather than between individual users and the automated systems. 

The plaintiffs also failed to plead a claim for violation of the ​​New York Deceptive Practices Act, Pitts said. 

While they were correct that under New York law they don't need to plead that a company's statement is misleading if it omitted information, they must plead causation, he said.

The plaintiffs’ claim in their amended complaint they were injured when they paid for tax filing services without knowing their information was shared with Meta, but doesn’t offer a theory about whether they could have seen if Meta disclosed that data sharing could happen.

“And without an allegation that plaintiffs would have seen any disclosures they fault Meta for omitting, it is impossible to see how plaintiffs’ alleged injuries could have been caused by Meta’s omissions,” Pitts said. 

Pitt also dismissed the third claim for violation of the California Consumers Legal Remedies Act without leave to amend, saying the plaintiffs didn’t claim they read various agreements where Meta made disclosures. 

“The general theory is that even if a plaintiff cannot identify exactly where a disclosure that the plaintiff would have seen could have been made, a sufficient public reaction occurring after the allegedly concealed information becomes public can suggest that the news would have made its way to the plaintiff if a disclosure had been made earlier,” Pitt wrote.

The lawsuit is separate from a September 2023 RICO action accusing Meta, Google and others of coordinating to scrape taxpayers’ private information for profit. It followed a July 2023 congressional report confirming that tax preparation companies shared millions of customers’ personal and financial information with Meta and Google.

That report said the tech companies helped tax prep firms place “pixels” on websites where customers entered tax information to collect that data, called firms like H&R Block “shockingly careless with their treatment of taxpayer data” and detailed Meta Pixel's default settings providing “a broad set of sensitive information, from taxpayer reporting rental income to alimony.”

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