Loeffler v. Target Corp.

Citation58 Cal.4th 1081,324 P.3d 50,171 Cal.Rptr.3d 189
Decision Date01 May 2014
Docket NumberNo. S173972.,S173972.
Parties Kimberly LOEFFLER et al., Plaintiffs and Appellants, v. TARGET CORPORATION, Defendant and Respondent.
CourtUnited States State Supreme Court (California)

Law Office of Joseph J.M. Lange, Joseph J.M. Lange Law Corporation, Joseph J.M. Lange, El Segundo; Public Justice, Leslie A. Bailey, Victoria W. Ni, Arthur H. Bryant ; Lange & Koncius, Kiesel Boucher & Larson, Kiesel + Larson and Jeffrey A. Koncius, El Segundo, for Plaintiffs and Appellants.

Mastroianni Law Firm and A. Douglas Mastroianni, Los Angeles, for Jason Frisch as Amicus Curiae on behalf of Plaintiffs and Appellants.

Edmund G. Brown, Jr., Attorney General, Frances T. Grunder, Assistant Attorney General, Gordon Burns, Deputy State Solicitor General, Kathrin Sears and Alexandra Robert Gordon, Deputy Attorneys General, for Attorney General of State of California as Amicus Curiae on behalf of Plaintiffs and Appellants.

Barry D. Keene; Nossaman and William T. Bagley, San Francisco, as Amici Curiae on behalf of Plaintiffs and Appellants.

J. Bruce Henderson for the Association of Concerned Taxpayers as Amicus Curiae on behalf of Plaintiffs and Appellants.

The Kick Law Firm, Taras Kick, Thomas A. Segal, Matthew E. Hess, Los Angeles, Graig Woodburn and G. James Strenio for Michael McClain, Avi Feigenblatt and Gregory Fisher as Amici Curiae on behalf of Plaintiffs and Appellants.

Harvey Rosenfield, Pamela Pressley, Santa Monica, and Todd M. Foreman for Consumer Watchdog, Public Good, Consumeraffairs.com and National Association of Consumer Advocates as Amici Curiae on behalf of Plaintiffs and Appellants.

Thorsnes Bartolotta McGuire and Benjamin I. Siminou, San Diego, for Carmen Herr, Heidi Spurgin, Mark Hegarty and Joseph Thompson as Amici Curiae on behalf of Plaintiffs and Appellants.

Morrison & Foerster, Miriam A. Vogel, David F. McDowell and Samantha P. Goodman, Los Angeles, for Defendant and Respondent.

Reed Smith, Margaret M. Grignon, Douglas C. Rawles, Los Angeles, and Judith E. Posner for Rite Aid Corp. and Walgreen Co. as Amici Curiae on behalf of Defendant and Respondent.

Holland & Knight and Richard T. Williams, Los Angeles, for CVS Caremark Corp. and CVS Pharmacy, Inc., as Amici Curiae on behalf of Defendant and Respondent.

Hunton & Williams and Phillip J. Eskenazi, Los Angeles, for Albertson's Inc., as Amicus Curiae on behalf of Defendant and Respondent.

Wilson Turner Kosmo, Frederick W. Kosmo, Jr., and Theresa Osterman Stevenson, San Diego, for PETCO Animal Supplies Stores, Inc., as Amicus Curiae on behalf of Defendant and Respondent.

Kristine Cazadd, Robert W. Lambert and John L. Waid, Sacramento, for California State Board of Equalization as Amicus Curiae on behalf of Defendant and Respondent.

Alston & Bird, Andrew E. Paris, Ethan D. Millar, Los Angeles, and

Joann M. Wakana for DIRECTV Inc., as Amicus Curiae on behalf of Defendant and Respondent.

Edmund G. Brown, Jr., Attorney General, David S. Chaney and Matt Rodriquez, Chief Assistant Attorneys General, and Al Shelden, Deputy Attorney General, as Amici Curiae.

Letwak & Bennett and Stephen H. Bennett as Amici Curiae.


Plaintiffs are consumers who contend that defendant retailer represented that it properly was charging and in fact charged them sales tax reimbursement on sales of hot coffee sold "to go," when, according to plaintiffs, the tax code rendered such sales exempt from sales tax. They brought an action against defendant retailer under two consumer protection statutes, seeking a refund of the assertedly unlawful charges, damages, and an injunction forbidding collection of sales tax reimbursement for such sales. The trial court sustained defendant's demurrer without leave to amend, and the Court of Appeal affirmed, concluding that plaintiffs' action was not authorized under the tax code and was barred by article XIII, section 32 of the California Constitution. That provision limits the manner in which taxpayers may seek a refund of taxes from the taxing entity.

We affirm the judgment of the Court of Appeal, although our analysis differs somewhat from that court's analysis. We conclude that the tax code provides the exclusive means by which plaintiffs' dispute over the taxability of a retail sale may be resolved and that their current lawsuit is inconsistent with tax code procedures. As explained, the consumer protection statutes under which plaintiffs brought their action cannot be employed to avoid the limitations and procedures set out by the Revenue and Taxation Code.1

A. Proceedings and arguments in the trial court

Plaintiffs' first amended complaint alleged that defendant Target Corporation (Target)2 had committed an unfair business practice as defined by the unfair competition law (UCL) ( Bus. & Prof.Code, § 17200 et seq. ) and an unlawful practice in violation of the Consumers Legal Remedies Act (CLRA) ( Civ.Code, § 1750 et seq. ). The complaint also alleged a cause of action for violation of section 6359, a provision exempting many food sales from sales tax. Plaintiffs sought class certification.3

Plaintiffs alleged that "the sale of hot coffee drinks ‘to go’ or for ‘take-out’ is not subject to sales tax" under section 6359 and a related regulation adopted by the state Board of Equalization (Board). They alleged that defendant nonetheless charged what the complaint referred to as "sales tax" on purchases of hot coffee to go to two named plaintiffs, and "thus caused [plaintiffs] to suffer monetary loss." (As we shall see, the complaint is inaccurate to the extent it refers to plaintiffs' payment to the retailer as "sales tax." The tax code provides that the retailer is the taxpayer and that it is the retailer which is required to pay sales tax to the state; the retailer is permitted but not required to collect a matching "sales tax reimbursement" from consumers. It is the reimbursement charge that is at issue in the present case.)

Plaintiffs also alleged that "[defendant] falsely and illegally represented to members of the general public that it had the legal right to charge the sales taxes described herein including, but not limited to, oral representations made by [its] agents, and on receipts and registers at [its] facilities."

Plaintiffs alleged that defendant's actions constituted "unlawful, unfair and fraudulent business acts and practices within the meaning of ... Business and Professions Code section 17200, et seq." It was further alleged that "[b]y [its] actions, [defendant] unfairly and unlawfully increased the costs to Class members in direct contradiction to law. In the event [defendant] retained these monies it unjustly enriched itself at the expense of Plaintiffs, other Class members and the general public and, as such, [defendant's] conduct amounts to unfair competition" and "offends public policy and is immoral, unscrupulous, unethical and offensive, and causes substantial injury." The complaint alleged continuing violations and asserted that defendant "refused to publicly acknowledge [its] improper imposition of the charges, correct [its] wrongdoing, and provide compensation...."

Plaintiffs sought an order enjoining defendant from "improperly charging sales tax to consumers" on hot coffee to go, and from withholding information regarding its practices. Plaintiffs also sought "restitution of any monies wrongfully acquired or retained" and "disgorgement of ... ill-gotten gains obtained by means of ... unfair practices."

Plaintiffs alleged a violation of the CLRA in that defendant "(a) misrepresented the source, sponsorship, approval or certification of [its] charges for sales taxes by indicating to consumers that [it has] ... the legal authority to charge the sales taxes that [it has] ... charged and continue[s] to charge"; (b) "[misrepresented the] affiliation, connection, or association with, or certification by, another by indicating to consumers that [it has] ... the legal authority to charge the sales taxes ...; [misrepresented that] the transactions at issue confer or involve rights, remedies, or obligations which [it does] not have or involve, or which are prohibited by law by charging the sales tax"; and inserted an unconscionable provision into contracts by charging the assertedly improper "sales tax."

Plaintiffs alleged that they had informed defendant by mail of its alleged violation of the CLRA and made a "demand for remedy," but that no remedy has been forthcoming.

Plaintiffs sought an order "enjoining the [defendant] from continuing the methods, acts and practices set out above regarding [its] charging of illegal sales taxes...." They sought damages in "the amount of sales taxes wrongfully collected from plaintiffs and the Class for the purchase of hot coffee ‘to go’ or for ‘take out,’ without being limited thereto" and punitive damages on the ground that "[defendant's] conduct allegedly was willful, oppressive and fraudulent."

Finally, plaintiffs sought an order certifying the class, awarding restitution and disgorgement, enjoining the continuation of "illegal practices," requiring defendant to "inform the public of [its] unlawful practices and enjoining [defendant] from the practices complained of."

Defendant demurred. It objected that plaintiffs' action would call upon the court to order a refund and enjoin collection of the sales tax reimbursement "on the allegedly non-taxable items" "without a determination that Target erroneously paid the tax to the [Board]." Defendant argued that article XIII, section 32 of the state Constitution barred such a proceeding because plaintiffs' lawsuit sought, in effect, "an order preventing the [Board] from collecting this tax" and "remedies not provided for" in the tax code.

Defendant also argued that consumer remedies regarding sales taxes should be permitted only as specifically provided by the Legislature, asserting that the Board is responsible in the first instance for deciding whether retailers have collected too much sales tax...

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