Yabsley v. Cingular Wireless, LLC 8/18/08 CA2/6

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State: California

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

Docket No: B198827

Case Date: 11/19/2009

Preview:Filed 8/18/08

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SIX

RICHARD A. YABSLEY, Plaintiff and Appellant, v. CINGULAR WIRELESS, LLC, Defendant and Respondent.

2d Civil No. B198827 (Super. Ct. No. 01221332) (Santa Barbara County)

Respondent Cingular Wireless, LLC (Cingular) advertises a cellular phone for sale at half the retail price if the purchaser also enrolls in a calling plan package. The California Code of Regulations requires that the sales tax must be computed against the non-sale price of the product. The regulation permits, but does not require, that the charge be passed on to the customer. Cingular does so without informing the customer prior to sale that the tax will be based on the full price of the cell phone. The amount of tax is shown on the sales invoice furnished to the customer at the time of sale. Appellant Richard Yabsley alleges that Cingular engaged in unfair competition in violation of Business and Professions Code section 172001 and misleading advertising in violation of section 17500 by failing to inform the consumer that the tax would be imposed on the full price of the cell phone. The trial court sustained Cingular's demurrer to Yabsley's first amended complaint without leave to All statutory references are to the Business and Professions Code unless otherwise stated.
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amend finding that the provisions of California Code of Regulations, title 18, section 1585 (Regulation 1585)2 requiring the payment of such a tax provided a "safe harbor" from a claim under section 17200. We affirm. FACTUAL AND PROCEDURAL HISTORY Cingular advertised a cell phone for $149.99, a 50 percent reduction in the phone's retail price, if the purchaser enrolled in a Cingular wireless calling plan. Yabsley saw the advertisement and purchased the cell phone with the calling plan. When he received the sales receipt, he noticed that the sales tax was imposed on the regular price of the cell phone, $299.99, rather than the discounted price of $149.99, resulting in the payment of $11.62 more in sales tax than he had anticipated. Yabsley filed a putative class action complaint for declaratory relief against the State Board of Equalization (Board), asserting that Regulation 1585, governing taxation of sales of wireless communication devices, was invalid because it conflicted with Revenue and Taxation Code section 6051 imposing a sales tax on gross receipts. Yabsley filed a first amended complaint (FAC), naming the Board and Cingular as defendants, but dismissed the Board the same day. The FAC alleges that Cingular's advertising practices were deceptive under sections 17200 and 17500 by failing to apprise prospective customers that sales tax would be charged on the undiscounted price of the cell phone.

Regulation 1585, subdivision (b) provides: "Application of Tax. [

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