defendant moots claim by ending activity in a way that would require gov’t consent to restart

Snarr v. HRB Tax Gp., Inc., 2021 WL 4499416, No.
19-cv-03610-SK (N.D. Cal. Aug. 24, 2021)

Snarr alleged that HRB violated the usual California
statutes by creating a “bait and switch” program to lure customers into paying
for defendants’ services to file tax returns. Unfortunately, instead of
creating its own free file system, the IRS engaged with private, for-profit
companies to develop online tax services and to make them available for free to
certain taxpayers. Defendants are part of Free File, Inc., a company formed to
offer those services; FFI entered into agreements with the IRS about the
services.  The then-current agreement
(just expired) provided specific guidelines for members’ services.

Defendants allegedly advertised Free File widely “but then
used a variety of methods to divert potential customers into Defendants’ own
programs, which charged a fee.” For example, “Defendants purposely made it
difficult to find” the free part of the system “by placing a ‘noindex’ tag on
the webpage for the free part of the system, with the result that the search
engines did not go to that page but instead to Defendants’ system which
required payment of fees”—allegedly a classic bait and switch.

Defendants mooted the case—which requested public injunctive
relief to get around an arbitration agreement—because the allegedly violative
conduct “ceased and cannot reasonably be expected to recur.” Defendants terminated
their membership in the IRS’s Free File Program. They purportedly had no
intention of seeking readmission to the Free File Program or participating in
the Free File Program in the future. To restart, they’d be required to petition
the IRS to reapply for admission and would have to agree to the IRS
requirements (though those requirements only vaguely refer to usability and not
to deceptive marketing). Because defendants couldn’t by their own choice simply
resume the complained-of conduct, the voluntary cessation exception to mootness
didn’t apply.

Although defendants allegedly continued to market other
“free” services of their own, outside the formal Free File Program with the
IRS, and would use the same bait and switch approach, the claim for public
injunctive relief was limited to the confusion that defendants created between
the Free File Program with the IRS and their own paid programs. They no longer
possessed the bait. “To the extent that Defendants now market other ‘free’
services in a misleading way, another lawsuit against them may be possible. But
the case currently before the Court is moot.”

from Blogger

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