PITTSBURGH – For the third time, counsel for Dollar General and Aldi argue that allegations brought against them and other retailers which said they unlawfully charged sales taxes on the purchases of face masks during the COVID-19 pandemic are unsupported, and should be dismissed.
Joshua James of Freeport (and on behalf of all others similarly situated) first filed suit in the Allegheny County Court of Common Pleas on Nov. 12.
(The case was later removed to the U.S. District Court for the Western District of Pennsylvania on Feb. 11.)
The lawsuit took aim at many different retailers, including Marshall’s, Forever 21, Sally Beauty Supply, Dry Goods, Amazon, Zazzle, Etsy, Brave New Look, Outdoor Research, Aldi, Dollar General and eBay.
“Retailers operating in Pennsylvania cannot collect sales tax on protective face masks or coverings because they are nontaxable as ‘medical supplies’. Retailers operating in Pennsylvania cannot collect sales tax on protective face masks or coverings because they are nontaxable as ‘clothing and accessories.’ In order to charge or collect sales tax, retailers must first obtain a license from the Pennsylvania Department of Revenue,” the suit stated.
“During Governor [Tom] Wolf’s declared state of emergency, [the plaintiffs] and others similarly situated purchased protective face masks and coverings from various Pennsylvania-licensed retailers and were charged an unlawful sales tax on said purchase. Defendants represent a fraction of retailers that failed to comply with 72 P.S. Section 7204(4) and 72 P.S. Section 7204(18) despite information readily available to them.”
During the coronavirus pandemic, charging consumers, like the plaintiffs and others similarly situated, sales tax on medical supplies and/or clothing and accessories – both of which are non-taxable, the suits say – constitutes unfair methods of competition and unfair and deceptive practices in stark violation of the Unfair Trade Practices and Consumer Protection Law.
The class action lawsuit seeks damages for all those who purchased face masks from those businesses since March 6, 2020 and paid sales tax for them.
Since there are an estimated 12.8 million people in Pennsylvania and everyone was ordered to wear a mask in public since Wolf’s emergency orders were enacted in the spring, the lawsuits estimate the class of plaintiffs could number in the hundreds of thousands.
In a social media post, potential class counsel Joshua P. Ward of Pittsburgh-based law firm Fenters Ward stated, “It’s illegal to charge any sales tax on any COVID mask.”
UPDATE
Attorneys for Dollar General and Aldi first filed a motion on March 12 to dismiss the case and its counts with prejudice. Likewise, they filed to dismiss both the plaintiff’s first and second amended complaints.
In the joint motion to dismiss to the second amended complaint filed on May 12, the defendants are looking to throw out all of the counts in the lawsuit and prevent the levying of punitive damages.
“This Court should reject plaintiff’s brazen attempt to obtain such a windfall. Plaintiff’s assertion that defendants would intentionally or recklessly engage in illegal and deceptive conduct, the only result of which would be to fill the coffers of the Commonwealth, defies logic and common sense, and is belied by the facts alleged here,” the motion stated.
“While the backdrop of this case is the propriety of the collection of sales tax on face masks during the pandemic, the Court need not decide that issue to dismiss this second amended complaint. Plaintiff’s second amended complaint identifies the date he purchased protective face masks from each defendant and attaches purchase receipts as exhibits. The timing of the purchases cannot support his claims.”
The motion asserts that the plaintiff alleges he purchased a protective face mask from Aldi on Oct. 21, 2020, or nine days before the Department of Revenue posted an ‘answer’ regarding the exemption of cloth face masks from sales tax.
As a result, by plaintiff’s own allegations in the second amended complaint, Aldi’s collection of sales tax on his protective face mask purchase was lawful and does not constitute an unfair or deceptive business practice under Unfair Trade Practices and Consumer Protection Law.
“Similarly, plaintiff alleges that he purchased a protective face mask from Dollar General on Nov. 12, 2020, just over 5 hours before he filed his initial complaint in this case. Because plaintiff clearly understood that protective face masks were tax exempt on the date of his Dollar General purchase – demonstrated by the filing of this lawsuit – plaintiff cannot plausibly allege justifiable reliance as required by the UTPCPL. Plaintiff’s UTPCPL claims fail as alleged against defendants on these grounds alone,” per the motion, in part.
For counts of violating the Pennsylvania’s Fair Credit Extension Uniformity Act and UPTCPL, unjust enrichment, misappropriation/conversion and the seeking of permanent injunctions looking to end unlawful charging of sales tax, the plaintiff is seeking a long list of reliefs:
• Declaring these actions as proper class actions, certifying the classes as requested herein, designating plaintiffs as class representatives and appointing the undersigned counsel as class counsel;
• Ordering defendant to pay actual, consequential, statutory, and/or punitive damages to plaintiff and the class members, including restitution and disgorgement of all profits and unjust enrichment that defendant obtained from plaintiff and the class members as a result of defendant’s unlawful conduct;
• Ordering declaratory and injunctive relief as permitted by law or equity, including enjoining defendant from continuing the unlawful conduct;
• Ordering defendants to pay attorney’s fees and litigation costs to plaintiff and the other members of the class;
• Ordering defendants to pay both pre- and post-judgment interest on any amounts awarded and;
• Ordering such other and further relief as may be just and proper, plus a trial by jury.
The plaintiff is represented by Joshua P. Ward of Fenters Ward, in Pittsburgh.
The defendants are represented by Craig D. Mills, Samantha Southall and Bridget J. Daley of Buchanan Ingersoll & Rooney in Philadelphia and Pittsburgh, Courtney S. Schorr, Gerald J. Stubenhofer Jr. and Bethany Lukitsch of McGuire Woods in Pittsburgh and Los Angeles, Calif., plus Andrew J. Soven and Hyun Yoon of Holland & Knight, in Philadelphia.
U.S. District Court for the Western District of Pennsylvania case 2:21-cv-00209
Allegheny County Court of Common Pleas cases GD-20-011704
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com