A suburban Marengo man will not – for now - be able to press his claim income tax return preparer Jackson Hewitt, and its partners American Express and Restaurant.com, illegally spammed his phone with text messages, after a Chicago federal judge ruled the agreement he signed with Jackson Hewitt also mandated all disputes over the contract be handled through arbitration.

On Nov. 16, U.S. District Judge Philip D. Reinhard granted the request from Jackson Hewitt to compel arbitration in the case, rejecting the contention from plaintiff Phil Hollingsworth that the agreement’s arbitration provision shouldn’t apply in this case.

“The Agreement was offered to him and accepted by him, as part of the tax preparation services provided by Jackson Hewitt,” Reinhard wrote. “As noted above, the terms of the arbitration provision of the Agreement require ‘all claims, disputes, or controversies asserted individually or collectively against … any of the Jackson Hewitt System’ to be arbitrated.

“The court cannot say ‘with positive assurance’ that the arbitration provision does not reach Hollingsworth’s claims against Jackson Hewitt. Whether the scope of the arbitration agreement reaches these claims is for the arbitrator to decide.”

The ruling comes as the latest step in litigation dating back to March, when Hollingsworth filed his complaint against the tax services provider, AmEx and discounted dining voucher provider, Restaurant.com, arguing text messages sent by Jackson Hewitt on its behalf and to promote offers through AmEx and Restaurant.com violated federal telecommunications law.

Hollingsworth, through his attorney Sergei Lemberg, of Lemberg Law, of Wilton, Conn., had sought to extend the putative class action to also cover potentially tens of thousands of others who may have received similar alleged spam messages.

The complaint acknowledged Hollingsworth, like many across the country, had provided his mobile phone number to Jackson Hewitt as part of his interactions with the company.

However, Hollingsworth’s complaint alleged the text messages exceeded the consent to contact him using that number when he provided it. The complaint alleged Jackson Hewitt was not clear enough in explaining to Hollingsworth and others believed to have received similar text messages about “the consequence of providing Jackson Hewitt their phone number” and did not specify the customer was agreeing “unambiguously to receive automated text messages from or on behalf of” Jackson Hewitt, AmEx or Restaurant.com.

Further, Hollingsworth alleged Jackson Hewitt violated the law by continuing to send text messages even after receiving a reply from the recipient asking them to stop.

The complaint asked the court to issue injunctions barring Jackson Hewitt from continuing to send the text messages, and statutory damages of $500-$1,500 per text message, plus attorney fees.

In response, Jackson Hewitt argued the case did not belong in court, but rather in arbitration, as mandated by the customer agreement Hollingsworth signed, which was governed by the laws of Kentucky.

Hollingsworth argued the arbitration agreement should not apply in this case, as the agreement was issued through Jackson Hewitt’s financial services provider, Republic Bank & Trust, and should not apply to his claims against the other defendants, AmEx and Restaurant.com, at all.

The judge, however, said the arbitration agreement should be considered valid in this case, as the agreement was executed “as part of the tax preparation services provided by Jackson Hewitt.” And the judge said the task of determining the legal reach of the arbitration agreement is better left to an arbitrator.

Jackson Hewitt was defended in the case by attorneys with the firm of Locke Lord LLP, with offices in Chicago and Morristown, N.J.

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Organizations in this Story

Jackson Hewitt
3 Sylvan Way
Parsippany-Troy Hills, NJ - 07054

Lemberg Law LLC
43 Danbury Road
Wilton, CT - 06897

Locke Lord LLP
111 South Wacker Drive
Chicago, IL - 60606

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