United States v. H & R Block, Inc.
2011 U.S. Dist. LEXIS 59963, 789 F.Supp.2d 74, 2011 WL 2182544 (2011)
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Rule of Law:
A plaintiff's choice of forum is granted substantial deference and will not be disturbed unless the defendant meets the heavy burden of showing that the balance of private and public interest factors strongly favors transferring the case to another venue.
Facts:
- H&R Block, Inc., a Missouri corporation, planned to acquire 2SS Holdings, Inc. ('TaxACT'), a Delaware corporation headquartered in Iowa, for $287.5 million.
- In the U.S. digital do-it-yourself tax preparation market, H&R Block and TaxACT were the second- and third-largest providers, respectively, behind market leader Intuit (maker of TurboTax).
- The U.S. Department of Justice (DOJ) alleged that TaxACT acted as a 'maverick' competitor, historically disrupting the market with low prices and free offerings, which forced competitors to improve their own products and lower prices.
- One such instance occurred in 2004 when TaxACT offered free federal filing to all U.S. taxpayers through the Free File Alliance (FFA), a partnership with the Internal Revenue Service (IRS), which is headquartered in Washington, D.C.
- In response to TaxACT's offering, competitors including H&R Block allegedly lobbied the government in Washington, D.C. to limit the scope of free offerings through the FFA.
- In October 2005, the IRS did in fact restrict the type and number of customers that could be offered a free product through the FFA.
- The DOJ alleged that a key motivation for H&R Block's proposed acquisition was to eliminate TaxACT as a disruptive competitive force in the market.
Procedural Posture:
- The United States, through the Department of Justice (DOJ), filed a civil antitrust suit against H&R Block, Inc., 2SS Holdings, Inc. (“TaxACT”), and TA IX, L.P. in the United States District Court for the District of Columbia, a federal trial court.
- The DOJ's complaint sought an injunction to block H&R Block's proposed acquisition of TaxACT.
- The defendants jointly filed a motion to transfer venue to the United States District Court for the Western District of Missouri.
- The court granted the defendants' motion for an expedited hearing on their motion to transfer venue.
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Issue:
Does the balance of private and public interest factors under 28 U.S.C. § 1404(a) strongly favor transferring a government antitrust case from the plaintiff's chosen forum to the defendant's home district when the primary factor supporting transfer is the convenience of some party and non-party witnesses?
Opinions:
Majority - Howell, J.
No, the balance of factors does not strongly favor transferring the case. A defendant seeking a transfer of venue bears a heavy burden to overcome the substantial deference afforded to the plaintiff's choice of forum, and that burden was not met here. The court analyzed the transfer motion under the established framework of private and public interest factors. Among the private factors, the plaintiff's choice of forum weighed heavily against transfer, as the DOJ filed in its home district and the case had meaningful ties to the District of Columbia, specifically through the defendants' past interactions with the D.C.-based IRS regarding the Free File Alliance. While the convenience of witnesses, particularly H&R Block employees in Missouri, slightly favored transfer, this factor alone was insufficient to be dispositive. The court noted that transferring the case would merely shift the inconvenience from the defendants to the plaintiff, and other factors like the national scope of the claim and the ease of electronic document access were neutral. The public interest factors, including local interest, court congestion, and familiarity with federal law, were also deemed neutral. Therefore, because the defendants failed to demonstrate that the balance of factors strongly favored their preferred forum, the substantial deference given to the plaintiff's choice prevailed.
Analysis:
This decision reinforces the significant hurdle defendants face when seeking to transfer venue in major government antitrust enforcement actions. It establishes that the DOJ's choice to file in its home forum of Washington, D.C. is entitled to substantial deference, which can only be overcome by a compelling showing from the defendant. The court's reasoning demonstrates that merely showing the defendant's headquarters and a majority of its witnesses are located in another district is insufficient. This precedent solidifies the D.C. District Court's role as a primary venue for national antitrust litigation and makes it more difficult for corporate defendants to move such cases to what they might perceive as a more favorable home court, absent extraordinary circumstances like pending related litigation in the transferee district.
