93 A.3d 988
R.I.2014Background
- Plaintiffs (Ricci and Long) bought Dell computers circa 2000 and optional third‑party service contracts; Dell’s acknowledgments showed most line items at $0.00 and listed a taxable amount that included the service contract, resulting in small sales‑tax charges collected and remitted to the State.
- Plaintiffs sued in 2003 alleging violations of the Deceptive Trade Practices Act (DTPA) and negligence for collecting tax on nontaxable service contracts; class relief was sought.
- Procedural history: multiple interlocutory appeals (including arbitration and jurisdiction rulings); case remanded to Superior Court; summary judgment granted to defendants on both counts; plaintiffs and Tax Administrator appealed.
- The Division of Taxation issued a 2005 letter ruling interpreting its regulation to exempt optional service contracts when a separate charge is stated and concluded Dell should not have taxed the service contract at issue.
- On summary judgment the Superior Court: found Dell improperly charged Ricci, dismissed negligence (no duty owed to consumers), and granted summary judgment for Dell on the DTPA claim (misrepresentation not "material" and conduct not "unfair"); it struck the Tax Administrator’s affirmative defenses as immaterial.
- The Supreme Court affirmed summary judgment on negligence and on Long’s equitable claims, affirmed striking affirmative defenses, but vacated summary judgment on Ricci’s DTPA claim and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether retailer owes consumers a tort duty to collect correct sales tax (negligence) | Dell owed purchasers a duty to properly collect tax; failure caused injury | Duty runs to State; penalties exist for misremittance; sellers shouldn’t face tort liability for tax collection errors | No duty to consumers; negligence claim dismissed (summary judgment affirmed) |
| Whether Dell’s tax‑collection practice was an "unfair" practice under DTPA | Charging tax on nontaxable optional service contracts violated statutes, offended public policy, could be unethical and caused substantial class injury | Dell acted in good faith under a plausible interpretation of complex tax law; not immoral or unscrupulous | Question for factfinder remains; a reasonable jury could find practice unfair; summary judgment vacated as to DTPA count |
| Whether Dell’s representation (charging tax) was "deceptive" under DTPA (likely to mislead; material) | Charging and collecting tax was a misleading representation and materially affected consumers (false express representation) | Tax amount was trivial and did not affect consumer choice; not material | Representation likely to mislead and false express representations are presumptively material; triable issue exists; summary judgment vacated |
| Whether Tax Administrator’s affirmative defenses were properly stricken | Tax Administrator argued defenses were available | Plaintiffs: no claims asserted against Tax Administrator; defenses conditional/immaterial | Affirmative defenses immaterial absent any claim against Tax Administrator; striking affirmed |
Key Cases Cited
- Long v. Dell Inc., 984 A.2d 1074 (R.I. 2009) (prior opinion addressing arbitration and jurisdictional issues)
- DeFontes v. Dell Inc., 984 A.2d 1061 (R.I. 2009) (companion opinion on shrinkwrap arbitration)
- Sullo v. Greenberg, 68 A.3d 404 (R.I. 2013) (summary judgment reviewed de novo; view facts for nonmoving party)
- Chavers v. Fleet Bank (RI), N.A., 844 A.2d 666 (R.I. 2004) (treating class as certified for summary judgment evidentiary inferences)
- Ames v. Oceanside Welding & Towing Co., 767 A.2d 677 (R.I. 2001) (three‑factor unfairness test adopted from FTC)
- Park v. Ford Motor Co., 844 A.2d 687 (R.I. 2004) (DTPA is remedial and to be liberally construed)