The lawsuit on this page was dismissed after a federal judge found that the collection of sales tax does not fall under “trade or commerce” as defined under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL).
U.S. District Judge Robert J. Colville noted in a November 5 opinion that other judges had similarly held that sales tax collection is “divorced from private profit” and that companies only collect it “because state law requires them to do so.” As such, tax collection is not covered under the UTPCPL, the judge concluded.
Moreover, Judge Colville found that even if the UTPCPL applied to the plaintiff’s claim, he had failed to show that the defendants had misrepresented the face masks or that he had relied upon those misrepresentations when deciding to buy them.
“We see no factual allegations in support of the claim that the defendants acted unfairly or deceptively such that those actions would tend to deceive,” the judge wrote.
Judge Colville also dismissed the plaintiff’s remaining claims, including an allegation of misappropriation and/or conversion, finding there were no facts to support a claim that the defendants had appropriated the sales tax on face masks for their own use, especially given they are legally required to remit those amounts to the state.
After granting Etsy and Outdoor Research’s motion to dismiss, Judge Colville also dismissed the allegations against defendant Brave New Look, finding that they fail for the same reasons stated in the judge’s November 5 opinion.
Amazon had previously been dismissed from the case after the plaintiff agreed that his claims against the company were subject to mandatory arbitration. The plaintiff’s claims against Zazzle were privately settled in June, according to court documents.
A number of retailers face a proposed class action that alleges they unlawfully charged sales tax on protective face masks or coverings considered nontaxable “medical supplies” in Pennsylvania amid the coronavirus pandemic.
The 26-page lawsuit alleges Amazon.com, Etsy.com, Zazzle, Brave New Look, Outdoor Research and Arena Merchandising have violated state law by collecting sales tax on protective face masks or coverings during the pandemic without first obtaining a license from the Pennsylvania Department of Revenue to do so.
According to the complaint, the Pennsylvania Department of Revenue exempted from sales tax protective face masks sold at retail during the COVID-19 disaster emergency declared by Governor Tom Wolf on March 6, 2020. Per the case, the department provides updates to state and local tax information on its website, and the defendants represent “a fraction of retailers that failed to comply with” Pennsylvania regulations.
“Defendants, as licensed retailers, knew or should have known that, during the state of emergency, ‘medical supplies’ such as face masks or coverings are nontaxable,” the suit says. “Defendants, as licensed retailers, knew or should have known that ‘clothing and accessories’ are nontaxable.”
The lawsuit looks to cover classes comprised of individuals who bought over the internet a protective face mask or face covering from one of the defendant retailers in Pennsylvania and were charged an amount or fee represented to be sales tax on that purchase on or after March 6, 2020.
Initially filed on November 12, 2020 in the Allegheny County Court of Common Pleas, the case has since been removed to Pennsylvania’s Western District Court.
ClassAction.org’s coverage of COVID-19 litigation can be found here and over on our Newswire.