Tuesday, April 25, 2006

H&R Block can go on with lawsuit against collection firm, judge says

A federal judge Monday denied a debt collection agency’s request to dismiss a lawsuit in which H&R Block Inc. accused it of misappropriating confidential client information.

U.S. District Judge Dean Whipple rejected all of J&M Securities LLC’s arguments and allowed the case, which Block filed in October, to go forward.

The lawsuit alleges that J&M Securities tried at least 79 times during January 2005 to April 2005 to garnishee refunds of Block clients, using confidential information it somehow obtained from Block.

J&M Securities of in Clayton, Mo., has denied the allegations and said it obtained the information legally, using sources the company regarded as a trade secret.

In asking Whipple to dismiss the suit, J&M Securities argued that Block’s claim under the Electronic Communications Privacy Act was improperly brought because Block is not a provider of electronic communication services.

Whipple ruled that Block’s assertion that it provides such services in connection with its tax preparation and other services was sufficient to withstand J&M Securities’ dismissal motion.
Whipple also rejected J&M Securities’ claim that Block didn’t adequately plead damages under the Computer Fraud and Abuse Act.

The suit alleges that J&M Securities accessed Block’s protected computer networks, obtained information about clients and other proprietary information, and then tried to use the information.

The suit seeks an injunction requiring the defendants to stop the alleged abuses and unspecified damages.

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