In Loeffler, consumers sued retailer Target, claiming it was improperly charging them sales tax reimbursement on sales of hot coffee sold “to go.” (58 Cal. 4th at 1092.) The plaintiffs sought refund of the unlawful charges, damages, and an injunction. The Supreme Court upheld the decision sustaining the demurrer without leave to amend, finding the tax code provides the exclusive means by which the dispute over taxability of a retail sale may be resolved, and the plaintiffs’ claims were inconsistent with tax code procedures. (Id.)
The Court noted the taxpayer is the retailer, not the consumer, and administrative procedures must be exhausted before the taxpayer may resort to court. (Id. at 1103.) The Court also recognized and summarized other cases in which a consumer was allowed to bring an action to require a taxpayer to seek a refund from the Board. (Id. at 1104.) With regard to Decorative Carpets, Inc. v. State Board of Equalization (1962) 58 Cal. 2d 252, the Court noted, Plaintiffs are admonished for failing to comply with California Rules of Court rule 3.1113 (f).
18 Cal.Code Regs. Sec. 1585(b)(3), discusses sales and use taxes with respect to cellular telephones, pagers, and other wireless telecommunication devices, and provides in relevant part:
“Bundled Transactions: Tax applies to the gross receipts from the retail sale of a wireless telecommunication device sold in a bundled transaction, measured by the unbundled sales price of that device. Tax applies to the unbundled sales price whether the wireless telecommunication device and utility service are sold for a single price or are separately itemized in the context of a sale or on a sales invoice. The retailer of the wireless telecommunication device is required to report and pay tax measured by the unbundled sales price of the device and may collect tax or tax reimbursement from its customer measured by the unbundled sales price. Tax does not apply to the charges in excess of the unbundled sales price made for telecommunication services.”
“The question [presented was] whether customers who have paid sales tax reimbursement on purchases they believe to be exempt from sales tax may file suit to compel the retailers to seek a tax refund from the Department when there has been no determination by the Department or a court that the purchases are exempt. In Javor, we authorized a customer suit where the Board, upon determining that certain retailers had collected excess sales tax reimbursement, had promulgated rules to provide refunds to overpaying customers. The trial court declined to extend Javor to authorize a similar judicial remedy in this case, and the Court of Appeal affirmed. (McClain v. SavOn Drugs (2017) 9 Cal.App.5th 684, 700–702 (McClain).) We agree with the courts below in refusing to extend Javor and affirm the judgment sustaining defendants’ demurrer.
Littlejohn v. Costco Wholesale Corp (2018) 25 Cal.App.5th 251, a class action suit concerned the following issues:
(Id. at 256)
The prayer for relief was: “that sales tax should be refunded to Costco and in turn refunded to the Costco customers who paid the sales tax reimbursement. This cause of action seeks to require the court to "[o]rder Costco to immediately apply to the full extent it legally can do so to the [Board] for reimbursement of all sales tax it paid to the [Board] due to sales of Ensure in order to immediately return to the class the sales tax reimbursement it paid to Costco for Ensure and to pay interest on said sums from the date they were paid to Costco to the full extent allowed by law.” (Id.)
The court in Littlejohn, acknowledging the similarity to McClain v. Sav-On Drugs, stated in relevant part, “[T]he most recent published case to reject a possible Javor cause of action is McClain v. Sav-On Drugs (2017) 9 Cal. App. 5th 684, (review granted June 14, 2017, S241471.) McClain distilled from Decorative Carpets and Javor three factors for courts to consider in deciding whether to recognize a Javor cause of action. They are:
Although the Littlejohn court did find that the first two Javor identified in McClain, the court declined to agree with Littlejohn, stating in relevant part, “appellant has not shown that the Board made a precursor determination that sales tax paid on purchases of Ensure between May 30, 2009, and mid-2014 must be refunded.” (Littlejohn, supra, 25 Cal. App. 5th at 260.)
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