H&R Block Files Lawsuit Against FTC Alleging Unconstitutional Use of Administrative Law Judges
H&R Block, the renowned tax preparation company, filed a lawsuit against the US Federal Trade Commission (FTC) in the Western District of Missouri on October 13, 2021. The company is seeking a declaratory judgment and an order that could potentially disrupt the FTC’s ongoing case accusing H&R Block of misleading consumers regarding the extent of its free tax-filing services.
The complaint asserts that the FTC’s utilization of internal administrative law judges to hear cases infringes upon the US Constitution by impeding the power of US presidents to remove inferior officers. H&R Block insists that the FTC must abandon the use of these judges in their current capacity.
Background: The FTC’s Accusations Against H&R Block
The FTC levied accusations against H&R Block last month, claiming the company deceived customers with widespread marketing for allegedly free contact tax filing services that only applied to straightforward returns. The FTC also alleged that H&R Block had unfairly deleted consumers’ tax data without their consent.
H&R Block refutes these claims and an administrative hearing is scheduled for October 23, 2021.
The Legal Argument: The Power of US Presidents and FTC’s Administrative Law Judges
The lawsuit argues that the FTC’s internal judges, who preside over hearings, take evidence, and issue findings that can be appealed to the full commission, infringe upon the power of US presidents to remove inferior officers as enshrined in the Constitution. The complaint suggests that the FTC could still adjudicate its law enforcement interests by conducting the proceedings itself, without relying on these administrative law judges.
H&R Block’s Declaration: Fair and Transparent Pricing
Although the company declined to comment specifically on the lawsuit, it maintained that its pricing for tax services is fair and transparent.
The FTC’s Response: No Immediate Comment
At the time of writing, the FTC had not issued a response to the request for comment on this matter.
The Role and Controversy Surrounding Federal Agencies’ Use of Administrative Law Judges
The FTC is not the only federal agency that utilizes administrative law judges for hearings and appeals. However, their role has been contested in various cases, one of which was argued before the US Supreme Court in November 2020. The ruling on this challenge to the US Securities and Exchange Commission’s similar proceedings using administrative law judges could have far-reaching consequences for such in-house agency tribunals.
