PITTSBURGH – A federal judge has denied a motion to remand a class action lawsuit to state court, one brought by a Pittsburgh man who alleged Walmart unlawfully overcharges its customers taxes on the sale of dietary products.
Christopher Lisowski of Pittsburgh (on behalf of himself and all others similarly situated) first filed suit in the Allegheny County Court of Common Pleas on Oct. 7 versus Walmart Stores, Inc., of Bentonville, Ark.
“On Dec. 29, 2019 plaintiff Lisowski purchased a six-pack of “5-Hour Energy” brand dietary supplement at the Walmart store located at 877 Freeport Road, Pittsburgh, Pennsylvania. Plaintiff Lisowski’s receipt sets forth a purchase price of $13.48 and description of the dietary supplement purchased by plaintiff Lisowski. He was charged sales tax of $0.94 on the sale,” the suit stated.
Lisowski again purchased the product on Sept. 14 and again was charged $0.94 in sales tax.
“72 P.S. Section 7202 provides that sales tax is imposed upon each separate sale of tangible personal property within the Commonwealth of Pennsylvania equal to six percent of the ‘purchase price’ (seven percent in Allegheny County and eight percent in Philadelphia County), which shall be collected by the vendor from and on behalf of the purchaser.”
Lisowski argued that while certain items are specifically exempt from these sales taxes, one of which being dietary supplements, he was charged tax on the supplements regardless.
“Notwithstanding this clear directive, defendant Walmart charged plaintiff sales tax on plaintiff’s purchases of dietary supplements, and thus overcharged plaintiff for his purchase,” per the suit.
“It is believed and therefore averred that defendant Walmart overcharges, continues to overcharge and has in the past overcharged Pennsylvania residents in its Pennsylvania stores and Internet sales, in violation of Pennsylvania tax law and regulation. The extent of improper overcharges are believed and therefore averred to be significant, but the exact scope and amount of said overcharges are not yet known, and subject to further discovery.”
Attorneys for Walmart filed to remove the case to the U.S. District Court for the Western District of Pennsylvania on Nov. 10, citing the Class Action Fairness Act.
“The complaint’s allegations make clear that removal of the action to this Court is proper under the Class Action Fairness Act, because the putative class is numerous, the parties are minimally diverse and the amount-in-controversy unquestionably exceeds $5 million,” the removal notice stated, in part.
The defendant also pointed to the numerous plaintiffs as grounds for removal.
“Plaintiff is a citizen of Pennsylvania, while Walmart is a citizen of Delaware and Arkansas for the purposes of 28 U.S.C. Section 1332(c)(1). Thus, removal is proper under CAFA, because at least one class member is a citizen of a different state than the defendant. The numerosity requirement is met as the putative class exceeds 100,” the notice added.
Lisowski filed to remand the case to the Allegheny County Court of Common Pleas on Nov. 17, which Walmart responded to with an opposition motion on Nov. 24.
UPDATE
However, U.S. District Court for the Western District of Pennsylvania Judge J. Nicholas Ranjan denied Lisowski’s motion to remand on Jan. 7, finding there was no reason for the court to examine the issue of tax-related authority on the part of the state.
“There is no challenge as to the validity of any tax provision – i.e., a challenge that the Commonwealth lacked or exceeded its authority in imposing a tax. This Court may, at some point in this case, be asked to interpret state tax laws to determine whether Walmart engaged in unfair trade practices,” Ranjan said.
“But there’s a difference between, on one hand, interpreting a state tax law in order to adjudicate unfair-trade claims and determine liability as between two private parties, and, on the other hand, declaring a state tax law to be invalid. Only this latter scenario counsels in favor of federal-court restraint.”
Rather, Ranjan pointed to “the unworkable nature of the relevant considerations that ordinarily would guide the Court’s discretion to remand.”
“Both sides concede that the case doesn’t implicate any complex tax-law issues. State law either exempts 5-Hour Energy supplements, or it doesn’t. Walmart argues that the Court may not even have to reach any of the tax-law issues to decide the case,” Ranjan added.
“And for his part, Lisowski suggests in his complaint that the tax-law issues have already been resolved by the Commonwealth. As to the claims at issue in the complaint, they are state-law claims that are adjudicated in federal court all the time. Finally, whether in state or federal court, the remedies for any violations can be fashioned in similar manners. After weighing these factors, the Court concludes that there is not enough to warrant setting aside a congressional command under CAFA to take jurisdiction over this case.”
For counts of conversion and misappropriation, unjust enrichment, breach of constructive trust, unfair trade practices, the plaintiffs are seeking judgment that declares Walmart overcharged for its products, orders them to cease and desist from such conduct and awards the plaintiffs such other relief as it deems appropriate under the circumstances, costs, interest and attorney’s fees.
The plaintiffs are represented by Frank G. Salpietro and Emily E. Town of Rothman Gordon, in Pittsburgh.
The defendant is represented by Michael P. Pest and Thomas E. Sanchez of Eckert Seamans Cherin & Mellott, plus Kathryn A. Robinette, Suyash Agrawal and Paul Berks of Massey & Gail, in Washington, D.C. and Chicago.
U.S. District Court for the Western District of Pennsylvania case 2:20-cv-01729
Allegheny County Court of Common Pleas case GD-20-010605
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com