Loeffler v. Target, Inc.

California Supreme Court depublishes opinion holding that companies that improperly charge sales tax are immune from lawsuits seeking to recover the charges.

A California court of appeal ruled that when a retailer illegally charges consumers sales tax on non-taxable purchases, the consumers may not sue the retailer under California’s basic consumer protection statutes to recover the improper charges.  If upheld, this decision could have raised the very real prospect that illegally assessed sales tax charges could never be recovered, since the sales tax law allows only retailers to recover improperly assessed sales tax charges from the Board, and retailers have no incentive to bring such a case unless they are themselves liable for restitution to consumers.

The case raised important issues regarding the breadth and flexibility of California’s core consumer protection statutes—the Unfair Competition Law (UCL) (Business & Professions Code § 17200 et seq.) and the Consumer Legal Remedies Act (CLRA) (Civil Code § 1750 et seq.).  Case law has generally found that the UCL and CLRA are available to consumers even when more subject-specific laws provide no private right of action.  To establish an exception to this rule would have been an unfortunate step toward limiting the applicability of these broad and vital laws.

Public Good joined an amicus letter successfully urging the California Supreme Court to grant review.

Once the case was accepted for review, Public Good joined an amicus brief authored by Consumer Watchdog, seeking reversal of the Court of Appeal’s decision.  The amicus brief argued that the state’s fundamental consumer protection statutes are broad and flexible, and that there is no good reason to carve out an exception that would effectively shield businesses from having to refund any illegal or improper charges as long they call them “sales tax.”

In a victory for consumers, the California Supreme Court ordered the Appeals Court decision depublished, depriving it of its authority as precedent.

Court of Appeal opinion (now superseded): 173 Cal.App.4th 1229 (2009); California Supreme Court No. S173972.