Stoloff v. Neiman Marcus Group, Inc.
24 A.3d 366
| Pa. Super. Ct. | 2011Background
- Stoloff purchased a black jersey dress by telephone from Neiman Marcus and was charged 6% sales tax.
- Appellants alleged Neiman Marcus routinely taxed clothing although many clothing items are exempt from Pennsylvania tax.
- The Philadelphia trial court dismissed the complaint as lacking subject-matter jurisdiction after an advisory Department opinion and finding Appellants had not exhausted administrative remedies.
- The court recognized a potential need for agency input but held no jurisdiction to proceed; it dismissed the entire action.
- The Superior Court held that exhaustion does not divest jurisdiction and that primary jurisdiction applies, requiring bifurcation and referral to the Department for tax-refund issues.
- On remand, the trial court should reinstate the amended complaint and stay the action, referring tax-refund issues to the Department if Appellants petition the Department.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exhaustion of administrative remedies deprives courts of jurisdiction. | Stoloff argues exhaustion not jurisdictional and primary-jurisdiction analysis governs. | Neiman Marcus contends lack of exhaustion defeats court jurisdiction and the Department should determine tax issues. | Primary jurisdiction applies; exhaustion alone does not destroy jurisdiction. |
| Whether the doctrine of primary jurisdiction applies to tax-refund claims against a private seller. | Stoloff asserts the Department is the proper forum for tax-refund claims. | Neiman Marcus argues the case does not belong in court due to lack of administrative exhaustion. | Yes, primary jurisdiction applies and the Department should resolve tax-refund issues. |
| Who has authority to determine if the tax was properly assessed and collected. | Department should adjudicate refunds and tax propriety. | Court should decide claims unless referred to Department. | Department has primary jurisdiction over tax-refund issues; court should refer. |
Key Cases Cited
- Jackson v. Cent. Sch. Dist., 509 Pa. 101 (Pa. 1985) (exhaustion and jurisdiction considerations; agency preemption guidance)
- Elkin v. Bell Tel. Co. of Pa., 491 Pa. 123 (Pa. 1980) (primary jurisdiction framework for agency-referral when specialized expertise is required)
- Ostrov v. I.F.T., Inc., 402 Pa. Super. 87, 586 A.2d 409 (Pa. Super. 1991) (role of courts and agencies; bifurcation when complete relief from agency is unavailable)
- Lilian v. Commonwealth, 467 Pa. 15, 354 A.2d 250 (Pa. 1976) (sales tax refund claims and lack of court jurisdiction when seeking refund from Department)
- Ellenbogen v. PNC Bank, N.A., 731 A.2d 175 (Pa. Super. 1999) (exhaustion and jurisdiction principles; standard for review of prelim. objections)
- Maryland Cas. Co. v. Odyssey Contracting Corp., 894 A.2d 750 (Pa. Super. 2006) (interpretation of exhaustion/primary jurisdiction concepts in tax matters)