Loeffler v. Target Corp. 5/12/09 CA2/3

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B199287

Case Date: 09/10/2009

Preview:Filed 5/12/09

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE

KIMBERLY LOEFFLER and AZUCENA LEMUS, Plaintiffs and Appellants, v. TARGET CORPORATION, Defendant and Respondent.

B199287 (Los Angeles County Super. Ct. No. BC360004)

APPEAL from a judgment of the Superior Court of Los Angeles County, Michael L. Stern, Judge. Affirmed.

Lange & Koncius, Joseph J. M. Lange and Jeffrey A. Koncius for Plaintiffs and Appellants.

The Kick Law Firm, Taras Kick and G. James Strenio for Michael McClain, Avi Feigenblatt and Gregory Fisher as Amici Curiae on behalf of Plaintiffs and Appellants.

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

Alston & Bird, Andrew E. Paris, Ethan D. Millar and Joann M. Wakana for The Directv Group, 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, Assistant Deputy Attorney General, as Amicus Curiae. Kristine Cazadd, Robert W. Lambert and John L. Waid for California State Board of Equalization as Amicus Curiae. _____________________ INTRODUCTION In California, retailers are obligated to pay sales taxes to the state on their gross receipts, subject to certain exemptions. Retailers may, however, seek sales tax reimbursement from their customers. In this case, plaintiffs and appellants Kimberly Loeffler and Azucena Lemus contend that defendant and respondent Target Corporation (Target) was not entitled to collect sales tax reimbursement on purchases of hot coffee "to go" because sales tax was allegedly not due on such purchases. Plaintiffs seek a refund of sales tax reimbursement from Target on their own behalf and on behalf of the class they purport to represent. They also seek an injunction prohibiting Target from collecting sales tax reimbursement on purchases of hot coffee "to go." The trial court sustained without leave to amend Targets demurrers to plaintiffs pleadings and entered judgment in favor of Target on the ground, among others, that article XIII, section 32 of the California Constitution (article XIII, section 32) bars plaintiffs action. We affirm. Article XIII, section 32 prohibits injunctions against the collection of state taxes and provides that refunds of taxes may only be recovered in a manner provided by the Legislature. As our Supreme Court explained in Woosley v. State of California (1992) 3 Cal.4th 758, 792 (Woosley), under Article XIII, section 32, the courts cannot expand the methods for seeking tax refunds expressly provided by the Legislature. The purpose of this constitutional provision is to ensure that governmental entities may engage in fiscal planning so that essential public services are not unnecessarily interrupted.

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The Legislature has enacted a statutory scheme for sales tax and associated sales tax reimbursement refunds. The only way to litigate a sales tax refund dispute under this scheme is for the retailer, as the taxpayer, to pay the tax, exhaust its administrative remedies by filing a claim for a refund with the State Board of Equalization (Board), and if the claim is denied or not acted upon, to file a suit for a sales tax refund. Because they are not the taxpayers, plaintiffs cannot file a claim for a sales tax refund and thus cannot file a suit for a sales tax refund. In other words, plaintiffs do not have standing to commence a sales tax refund suit. Customers like plaintiffs, however, may obtain a refund of excess sales tax reimbursement collected by a retailer. Under Revenue and Taxation Code section 6901.51 and a related regulation (Cal. Code Regs., tit. 18,

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