Loeffler v. Target Corporation, 58 Cal. 4th 1081

Background

Plaintiffs (consumers) alleged Target charged and represented it was charging sales tax reimbursement on hot "to go" coffee that plaintiffs claim is exempt under Rev. & Tax. Code § 6359, and brought claims under the UCL and CLRA seeking restitution, damages, and injunctive relief.
The trial court sustained Target’s demurrer without leave to amend; the Court of Appeal affirmed, holding the tax code and Cal. Const. art. XIII, § 32 precluded plaintiffs’ suit.
Plaintiffs conceded the tax code (specifically § 6901.5) did not create a private consumer right to sue a retailer but argued UCL/CLRA remedies remain cumulative and available.
The Revenue & Taxation Code assigns tax liability to the retailer (the taxpayer), gives the State Board of Equalization (Board) primary authority to determine taxability and process refund claims, and permits retailers either to refund excess reimbursement to customers or remit excess amounts to the Board (§ 6901.5), which creates a statutory “safe harbor” when remitted.
The Supreme Court affirmed the Court of Appeal: when a consumer claim depends on resolving whether a sale is taxable, the tax code’s administrative scheme is the exclusive means to resolve that dispute and a UCL/CLRA action that would bypass those procedures is precluded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 6901.5 or the tax scheme allows consumers to bring UCL/CLRA suits to recover alleged excess sales tax reimbursement from retailers	UCL/CLRA remedies are cumulative; absence of a private tax-code remedy for consumers means consumer statutes must be available	Tax code vests taxability and refund procedures in Board; § 6901.5 does not create consumer private right and provides safe harbor to retailers who remit to Board	Court: Tax code procedures are exclusive for resolving taxability disputes that underlie plaintiffs’ claims; UCL/CLRA cannot be used to circumvent them
Whether art. XIII, § 32 (no injunctions against tax collection; refunds only as provided by Legislature) bars plaintiffs’ suit	Plaintiffs argued art. XIII, § 32 does not apply because suit is against a private retailer and seeks reimbursement, not a state tax refund	Target/Board argued consumer action would effectively adjudicate tax liability and circumvent constitutionally and statutorily prescribed refund procedures	Court: Because resolving plaintiffs’ claims requires deciding taxability (committed to Board first), allowing the consumer suit would be inconsistent with tax refund procedures; constitutional issues need not be decided separately because statute precludes the action
Whether consumers may force a retailer to seek a Board refund (Javor remedy)	Plaintiffs did not pursue Javor-type remedy here but argued consumer statutes should be available instead	Target argued Javor is the limited proper route and plaintiffs did not follow it	Court: Reiterated Javor is limited and consistent with tax scheme; plaintiffs declined to seek that remedy, and their UCL/CLRA suit cannot substitute for it
Whether permitting consumer suits would prejudice tax administration (policy/practicality)	Plaintiffs/AG: private enforcement complements government enforcement and protects consumers when Board/retailer have no incentive to act	Target/Board: consumer suits would sidestep Board expertise, create inconsistent rulings, and disrupt revenue certainty	Court: Agrees with Target/Board; permitting consumer suits resolving taxability would undermine Board’s primary role and the orderly administration of tax law

Key Cases Cited

Decorative Carpets, Inc. v. State Bd. of Equalization, 58 Cal.2d 252 (1962) (recognized customers’ equitable interest in refunds of excess sales tax reimbursement but emphasized refunds and procedures must conform to tax statutes)
Javor v. State Board of Equalization, 12 Cal.3d 790 (1974) (permitted narrow remedy joining Board to compel retailer to seek refund from Board where retailer paid excess reimbursement to Board)
Pacific Gas & Electric Co. v. State Bd. of Equalization, 27 Cal.3d 277 (1980) (explains art. XIII, § 32 bars prepayment actions and requires postpayment refund procedures)
Woosley v. State of California, 3 Cal.4th 758 (1992) (tax refund procedures must be those provided by the Legislature; courts cannot expand methods for seeking tax refunds)
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (1999) (UCL cannot be used to attack statutory ‘‘safe harbors’’; specific legislation can limit UCL remedies)
Vacanti v. State Compensation Ins. Fund, 24 Cal.4th 800 (2001) (statutory exclusivity can bar UCL claims where alternative statutory scheme is the exclusive remedy)
Yamaha Corp. of America v. State Bd. of Equalization, 19 Cal.4th 1 (1998) (courts may consider Board annotations and deference to administrative expertise when construing tax statutes)