Ranalli v. Etsy.com, LLC

Decision Date05 November 2021
Docket NumberCivil Action No. 21-88
Citation570 F.Supp.3d 301
Parties Vince RANALLI, on behalf of himself and all others similarly situated, Plaintiff, v. ETSY.COM, LLC, Brave New Look and Outdoor Research, Defendants.
CourtU.S. District Court — Western District of Pennsylvania

Joshua P. Ward, Kyle H. Steenland, J.P. Ward & Associates, LLC, Pittsburgh, PA, for Plaintiff.

Gary P. Hunt, Kathleen A. Nandan, Tucker Arensberg, Pittsburgh, PA, Kevin Broughel, Pro Hac Vice, Zachary Zwillinger, Pro Hac Vice, Paul Hastings LLP, New York, NY, Stephen Joseph Turanchik, Pro Hac Vice, Paul Hastings LLP, Los Angeles, CA, for Defendant Etsy.com, LLC.

Gregory P. Graham, Danielle M. Vugrinovich, Michael D. Winsko, Marshall, Dennehey, Warner, Coleman & Goggin, Pittsburgh, PA, for Defendant Outdoor Research.

OPINION

Robert J. Colville, United States District Judge.

Presently pending before the Court are Motions to Dismiss filed on behalf of Defendant Etsy.com, LLC ("Etsy") (ECF No. 66) and Defendant Outdoor Research (ECF No. 68). The matter has been fully briefed and is ripe for disposition. For the reasons stated herein, the motions will be granted.

I. Backgrounds

Plaintiff Vince Ranalli, individually and on behalf of all others similarly situated, brings claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. §§ 201-1 et seq. , the Pennsylvania Fair Credit Extension Uniformity Act (PFCEU), 73 P.S. § 227, et seq , as well as common law claims of unjust enrichment, fraud, and misappropriation/conversion. Plaintiff alleges in this putative class action that defendants violated the UTPCPL when they collected from him amounts equal to and purporting to be Pennsylvania sales tax on the sale of protective face masks,1 when they were not subject to Pennsylvania sales tax. Am. Compl., ¶¶ 9-17.

It is alleged that face masks or coverings became exempt from Pennsylvania sales tax as of March 6, 2020, the date of Governor Wolf's Proclamation of Disaster Emergency regarding the COVID-19 pandemic. Am. Compl., p. 3 at n. 1. Prior to the COVID pandemic, non-medical face masks "were subject to sales tax because [they] were generally classified as ornamental wear or clothing accessories and the use for which consumers purchased nonmedical masks and face coverings was not for an exempt purpose." See Sales and Use Tax Bulletin 2021-01, Pa. Dept. Rev. ("the January 2021 Bulletin") Am. Compl., p. 3 at n. 2. Plaintiff claims that the Defendants "knew or should have known that, during the state of emergency, "medical supplies" such as face masks or covering are nontaxable" based on publicly available information on the Pennsylvania Department of Revenue's website. Am. Compl. ¶¶15-16. Plaintiff alleges that "[c]harging consumers, like Mr. Ranalli and others similarly situated, sales tax on medical supplies and/or clothing and accessories–both of which are nontaxable–constitutes unfair methods of competition and unfair and deceptive practices in stark violation of the UTPCPL." Am. Compl. ¶¶ 17.

II. Standard of Review

A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the complaint. Kost v. Kozakiewicz , 1 F.3d 176, 183 (3d Cir. 1993). In deciding a motion to dismiss, the court is not opining on whether the plaintiff will likely prevail on the merits; rather, when considering a motion to dismiss, the court accepts as true all well-pled factual allegations in the complaint and views them in a light most favorable to the plaintiff. U.S. Express Lines Ltd. v. Higgins , 281 F.3d 383, 388 (3d Cir. 2002). While a complaint does not need detailed factual allegations to survive a Rule 12(b)(6) motion to dismiss, a complaint must provide more than labels and conclusions. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A "formulaic recitation of the elements of a cause of action will not do." Id. (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 554, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). The Supreme Court of the United States has explained:

The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of ‘entitlement to relief.’ "

Id. (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ) (internal citations omitted). "In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents." Mayer v. Belichick , 605 F.3d 223, 230 (3d Cir. 2010).

When a court grants a motion to dismiss, the court "must permit a curative amendment unless such an amendment would be inequitable or futile." Great Western Mining & Mineral Co. v. Fox Rothschild LLP , 615 F.3d 159, 174 (3d Cir. 2010).

III. Discussion
A. Counts IV and VI: UTPCPL

The Pennsylvania UTPCPL provides that:

Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money ... as a result of the use or employment by any person of a method, act or practice declared unlawful by section 3 of this act, may bring a private action to recover actual damages or one hundred dollars ($100), whichever is greater.

73 P.S. § 201-9.2. To state a claim under the UTPCPL, a private individual must establish that: (1) he is a purchaser or lessee; (2) the transaction is dealing with "goods or services"; (3) the good or service was primarily for personal, family, or household purposes; and (4) he suffered damages arising from the purchase or lease of goods or services. Keller v. Volkswagen of Am., Inc. , 733 A.2d 642, 646 (Pa. Super. 1999).

The UTPCPL applies to "unfair or deceptive acts or practices in the conduct of any trade or commerce. " 73 P.S. § 201-3(a) (emphasis added). Under the UTPCPL, both "trade" and "commerce" are defined as

the advertising, offering for sale, sale or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situate, and includes any trade or commerce directly or indirectly affecting the people of this Commonwealth.

Id. § 201–2(3).

As the parties know, recently, in in McLean v. Big Lots , another judge in this District rejected a similar claim that improper collection of sales tax in this context violates the UTPCPL. See McLean v. Big Lots Inc. , 542 F.Supp.3d 343, 349–51 (W.D. Pa. June 7, 2021) (Horan, J.). There, Judge Horan reasoned that the "collection of sales tax" was not an act "in the conduct of any trade or commerce" because tax collection is "divorced from private profit" and "[r]etailers ... collect sales tax on behalf of the Commonwealth's Department of Revenue" only "because state law requires them to do so." Id. at 349–51.

In her Opinion, Judge Horan surveyed several relevant authorities. Specifically, she found persuasive the concurring opinion in Meyer v. Cmty. Coll. of Beaver Cty. , 625 Pa. 563, 93 A.3d 806, 815 (2014) (Castille, C.J. concurring). There, Justice Castille expressed his view that a "governmental entity ... carrying out a public duty, ... is not engaged in the conduct of a trade or commerce, but in the conduct of government." Id. at 816 (citation omitted). Thus, he reasoned, conduct motivated by governmental duties fell outside the bounds of the UTPCPL. See id.

Judge Horan, in McLean , also examined decisions from courts in Massachusetts and Connecticut that addressed similar claims brought under statutes "nearly identical to the UTPCPL." McLean , 542 F.Supp.3d at 349. These other cases likewise concluded that the retailers’ collection of sales tax did not fall within the realm of the applicable statutes. Feeney v. Dell, Inc. , 454 Mass. 192, 908 N.E.2d 753, 770 (2009) ; Blass v. Rite Aid of Connecticut, Inc. , 51 Conn.Supp. 622, 16 A.3d 855, 863 (2009), aff'd, 127 Conn. App. 569, 16 A.3d 737 (2011). Judge Horan held that because collecting sales tax is a public duty imposed by statute, and is not for purposes of profit or private gain, collecting sales tax is therefore not "trade or commerce" under the UTPCPL. McLean , 542 F.Supp.3d at 349–51.

In addition, Judge Horan also held that the UTPCPL claim was subject to dismissal because: 1) the conduct of defendants could not be considered fraudulent, unfair, or deceptive because they disclosed all relevant information relating to the mask purchase in an effort to comply with their understanding of the law at the time of the purchase; 2) that plaintiffs’ failure to plead facts to support a claim that they justifiably relied upon some representation of defendants is fatal to their UTPCPL claim; and 3) because the McLean plaintiffs have not suffered an ascertainable loss as they failed to avail themselves of an available refund offered by the Department of Revenue. Id. , at 351–53.

Judge Horan further applied the same analysis in granting the motion to dismiss the UTPCPL claim in James v. Aldi, Inc. , No. 2:21-CV-00209-MJH, 2021 WL 2896837, at *2 (W.D. Pa. July 9, 2021), wherein it was likewise alleged that...

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