In McClain v. Sav-On Drugs, the Supreme Court today holds that consumers who assert they were incorrectly charged sales tax — technically, a sales tax reimbursement to the seller that pays the tax — cannot require the seller to demand a refund from the state. The court’s unanimous opinion by Justice Goodwin Liu declines to extend its 1974 decision authorizing a customer to sue when the state has already adopted specific rules to provide refunds to overpaying customers. Such a suit is a “judicially created remedy [that] is available only when the issue of taxability has already been resolved,” and even then “only rarely.” The court also concludes that the absence of that remedy here doesn’t violate the consumers’ due process rights nor does it effect an unconstitutional taking.
The court says aggrieved consumers are not without remedies because they can urge the state’s taxing authority to initiate an audit or a deficiency determination, or they can challenge in court the validity of any tax regulation.
Although all seven justices sign the court’s opinion, a majority of four issues its own concurrence. (That happens occasionally.) Authored by Justice Leondra Kruger (and signed by Justices Carol Corrigan and Ming Chin and pro tem Justice Kathleen O’Leary), the separate opinion cautions against treating as prerequisites to a lawsuit the pursuit of the alternate remedies mentioned in the court’s opinion, because taking those steps still might not be enough. Justice Kruger writes that “any cause of action to compel retailer refund suits will create a certain amount of tension with a statutory scheme that presumes goods are taxable [citation], and empowers the retailer to waive a potentially applicable tax exemption if it so chooses.”
The court affirms the Second District, Division Eight, Court of Appeal.
Your description of the case is a very poor description of what the court ruled. In fact they ruled that a consumer seeking the Javor remedy has a right to an “evidentiary determination.”.
The five person “concurrence,” all of whom joined the opinion of the court as well, held that even with a finding that the product is not taxable other equitable concerns may still bar the remedy.
“Opinion of the Court”
“This said, eligibility to pursue a judicially created remedy as a matter of law does not depend on a finding at the outset that the particular person seeking the remedy is entitled to a refund. Whether any particular individual is entitled to a refund will require an evidentiary determination specific to that individual. ”
Further:
“We have no occasion to express a definitive view on what qualifies as a prior legal determination for purposes of a Javor remedy because it is clear that no such determination has been made exempting the lancets and strips at issue here.”