LOEFFLER v. TARGET CORPORATION

Appellants’ Petition for Review

Cal.June 19, 2009

~$173972 iP FILED JUN 1 9 2009 IN THE SUPREME COURT OF CALIFORNIA Frederick K. Ohlrich Clerk KIMBERLY LOEFFLERet al., So Petitioners, FRIWTTFES ApO apreerlyWI Vv. TARGET CORPORATION, ‘Respondent, ORPRPPAKT ABA PESO-“0RWy 2oe eg oe oe 2 2g 2K 2s 2K 2k 2k 2 2k ok ok ok ok 2 ok ok ok OK ok oK oe ok PETITION FOR REVIEW KREKKKEKEKKEKKKERRKEKKER KEKRKEEEK After Decision by the Court of Appeal of the State of California, Second Appellate District, Division Three, Case No. B199287, Affirming a Judgment of the Superior Court, Los Angeles County, Case No. BC30004, The Honorable Michael L. Stern JOSEPHJ. M. LANGE LESLIE A. BAILEY (Cal. Bar No. 128115) (Cal. Bar No. 232690) JEFFREY A. KONCIUS ARTHUR H. BRYANT (Cal. Bar No. 189803) (Cal. Bar No. 208365) LANGE & KONCIUS, LLP PUBLIC JUSTICE,P.C. 222 N. Sepulveda Blvd., Ste.2000 555 Twelfth Street, Ste. 1620 El Segundo,California 90245 Oakland, California 94607 Telephone: (310) 414-1880 Telephone: (510) 622-8150 Facsimile: (310) 414-1882 Facsimile: (510) 622-8155 Counselfor Petitioners NO. «CINOFCALIFORNIA KIMBERLY LOEFFLERetal., Petitioners, Vv. TARGET CORPORATION, Respondent. 2H 2K 2 2k 2s 8 2g 2s 2c fe is 2k ie 2k 2 oie 2 2k 2c 2k oie 2 ok ok 2 2 ok 2k 2k ok PETITION FOR REVIEW RRRREEKEKRRRKEKEREEEEK After Decision by the Court of Appeal of the State of California, Second Appellate District, Division Three, Case No. B199287, Affirming a Judgment of the Superior Court, Los Angeles County, Case No. BC30004, The Honorable Michael L. Stern JOSEPHJ. M. LANGE LESLIE A. BAILEY (Cal. Bar No. 128115) (Cal. Bar No. 232690) JEFFREY A. KONCIUS ARTHUR H. BRYANT (Cal. Bar No. 189803) (Cal. Bar No. 208365) LANGE & KONCIUS, LLP PUBLIC JUSTICE,P.C. 222 N. Sepulveda Blvd., Ste. 2000 555 Twelfth Street, Ste. 1620 E] Segundo, California 90245 Oakland, California 94607 Telephone: (310) 414-1880 Telephone: (510) 622-8150 Facsimile: (310) 414-1882 Facsimile: (510) 622-8155 Counselfor Petitioners TABLE OF CONTENTS ee TABLEOFCONTENTS«7,ossssesuecesseessceeseassessssuseessseeenassensavansesees li TABLE OF AUTHORITIES0.0... ccccccccccssecsscsssscescsecsssesseseceeereesears iv PETITIONonceccecceeecsceeeeeeceecseesessesseesessesseesecssssessecsscsecsesessuaeensasenes l ISSUES FOR REVIEW .....cceccccccsessssscssessssccecssssscssceecestausuaevarsauerecaeeaas 1 INTRODUCTION...0ooieececscesesseseecesessecssessccecsssesssevssessscsesausaeeaeaes 2 STATEMENTOF THE CASE W.....cccccccceccccesccssesscsscessssecesesesessaeeaseseas 6 A. Factual Background and Procedural History «0.0.0.0... 6 B. Overview of Sales Tax and Sales Tax Reimbursement... cecccccsssssesessscescssesecssssueseccseveseeevaceaes 9 1. Sales Tax oo... cccecccsssessscssceseesceeessceseseessassevsesseseesees 9 2. Sales Tax Reimbursementt............cccccscsceeeeeeees 10 ARGUMENT 000i cccceeceessesessesecsesecssesssecsessussssevscseesatacaseceeseassaceusas 11 I. THE COURT OF APPEAL ERRED BY HOLDING CALIFORNIA’S CONSUMER PROTECTION STATUTES UNCONSTITUTIONAL AS APPLIED TO PLAINTIFFS’ CLAIMS. 0......ccccccccccsccsssscssescsecseecesesceeeaees I] A. Courts Have Broad Authority Under California’s ConsumerProtection Statutes to Provide Restitution and Other Remedies to Consumers Who Are Unlawfully or Unfairly Charged Sums that They Do Not RightfullyOwe...11 B. The Constitution Does Not BarPlaintiffs’ Claims Because This is Not a Tax Refund Case and Would Not Enjoin or Prevent the State from Collecting Any Tax. ......c.ccccccccscccssssessesssceecceeeseescseees 17 C. The California Tax Code Does NotBarPlaintiffs’ Claims........ cece ccccececccsecccsssecssssecessecssseeescecsssessesscetseseeees 20 -ii- H. =THE COURT OF APPEAL’S HOLDING WOULD LEAVE CALIFORNIA CONSUMERSWITHNO —________.__REMEDYAGAINSTRETAILERSTHATeee WRONGFULLY IMPOSE SALES TAX REIMBURSEMENT CHARGES. .......ccccccccssescssssscsseseeceeceteee 22 A. Retailers Do Not Adequately Represent the Interests Of CONSUMETS..........ccccecesceccesseessesceeseeseeseeseees 22 B. The SBE Does Not Adequately Represent the Interests Of Consumers...........ccccccccccsccseceeetsceeesecsseceeseeees 25 Hf. THE RULING OF THE COURT BELOW EFFECTIVELY DIVESTS COURTSOF THEIR LONGSTANDING AUTHORITY TO RESOLVE SALES TAX REIMBURSEMENTDISPUTES BETWEEN RETAILERS AND CONSUMERS.........cccceeeee 27 A. This Court Has Long Held that Courts Have the Ultimate Authority to Interpret and Enforce the Tax Code. o.c.cecccccescesssseessesssscsscesessessesessessecaveecaeeaneaeeas 27 B. Under the Court of Appeal’s Holding, Few If Any Disputes Between Retailers and Customers About Sales Tax Reimbursements Would Ever Reach the COUMTS......ccceccccccccccssscessecceececsescsssseeenssessausccetvecettecceceeeees 29 CONCLUSION 0. cccccieccccseccecesssessscecseccsstsesesstacesteetesesacescsesescesccccces 31 CERTIFICATE OF WORD COUNT o...cccccccccccccccccecceceeeceeeccesececccecees 32 -i11- TABLE OF AUTHORITIES Cases Agnew v. State Bd. ofEqualization (1999) 21 Cal. 4th 310, 87Cal. Rptr. 2d 423 oo...seseeeseecseeseseeees 18, 20, 21 Ardon v. City ofLos Angeles (Ct. App. 2009) 94 Cal. Rptr. 3d 245, 2009 WL 1479168 o.oo. ccceceescssesccecsecsceseeeeees 18 Bodingson Mfg. Co. v. California Emp. Com. (1941) 17 Cal. 2d 320 occcecesesesssssssesesescsescscscsesvasscecstetecatanacscssanscsess 28 Borders Online, LLC v. State Bd. ofEqualization (Ct. App. 2005) 129 Cal. App. 4th 1179, 29 Cal. Rptr. BD VTO. occ eeesescecsceesesesesesesessscscsessscscscscacsvavacscecsesesesstasasatscasescesans 28 Botney v. Sperry & Hutchinson Co. (Ct. App. 1976) 55 Cal. App. 3d 49, 127 Cal. Rptr. 263 oo..cccccccccsscesssecesscsesececeees 30 Broughton v. Cigna Healthplans (1999) 21 Cal. 4th 1066, 90 Cal. Rptr. 2d 334... ccccccccssscssceecsceceecscscsessseceseees 16 California Logistics, Inc. v. State (Ct. App. 2008) 161 Cal. App. 4th 242, 73 Cal. Rptr. 3d 825 v.vcccccccscssscseseseecscssesees 19 Cel-Tech Commce’ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal. 4th 163, 83 Cal. Rptr. 2d 548 .......... 2, 12, 13 Day v. AT&T Corp. (Ct. App. 1998) 63 Cal. App. 4th 325, 74 Cal. Rptr. 2d 55... eccccccccsssesseceseceecsesesecacscseevaveseeee 15 Decorative Carpets, Inc. v. State Bd. ofEqualization (1962) 58 Cal. 2d 252, 23 Cal. Rptr. 589 occeeccsestecceesees, 5, 23 Dell, Inc. v. Super. Ct. (Mohan) (Ct. App. 2008) 159 Cal. App. 4th 911, 71 Cal. Rptr. 3d 905 vo. cceeccssecsesseees 5, 29, 30 Diaz v. Allstate Ins. Group (C.D. Cal. 1998) 185 F.R.D. SOL eeeccccseesssesscsesssneeesesesssesesestscsesssscscsvavssavevasavaraavasatarsesesecsees 14 Gemisys Corp. v. Phoenix American, Inc. (N.D. Cal. 1999) 186 F.R.D. 551 occcccccccscscssssscscsceeecetetssscssessereseseseseses 14 -IvV- Gen. Elec. Co. v. State Bd. ofEqualization (1952) 111 Cal. App. 2d 180, 185 oe eecccsccsesessescscseeesscssesescsssessceesererertans 9 Haskell v. Time, Inc. (E.D. Cal.1997) 965 F. Supp. L398. ooeccssesccsssesssssecssstesssssuusesssssecssavecesssecsasasessrasssssstecsasecssasevcese 14 In re Tobacco II Cases (May 18, 2009)--- Cal. Rptr. 3d ---, No. $147345, 2009 WL 1362556......cccecescssessesecscesseeeeeees 13 Javorv. State Bd. ofEqualization (1974) 12 Cal. 3d 790, 117 Cal. Rptr. 305...cc cccccssesscsesscsstecestscsesseeeneeeespassim Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 131 Cal. Rptr. 2d 29... cccceccecseceeceeteeeees 15 Laster v. T-Mobile USA, Inc. (S.D. Cal. Aug. 11, 2008) No. 05cv1167 DMS(AJB), 2008 WL 5216255 vcccccccccccsscseeeee 30 Linder v. Thrifty Oil Co. (2000) 23 Cal. 4th 429, 97 Cal. Rypptr, 2d 179ccceecessesecssssesecesessceecsesscssstaeseceeseeceeaeess 16, 26 Livingston Rock & Gravel Co. y. De Salvo (Ct. App. 1955) 136 Cal. App. 2d 156......ccceccsescsscsessssssseecsecessesssseaeens 30 Loeffler v. Target Corporation (Ct. App. 2009) 93 Cal. Rpt. 515 ieeeecceceeessessessescsesseeeesscsssscsvsssassavsceesensaesaespassim Ontario Community Found., Inc. v. State Bd. of Equalization (1984) 35 Cal. 3d 811, 201 Cal. Rpt. 165 oie eeeeccesesssseessseseeeescscsssessescssssesrsacsnessusatstsesacacavanenees 28 Pacific Gas & Elec. Co. v. State Bd. ofEqualization (1980) 27 Cal. 3d 277, 165 Cal. Rptr. 122 viccccceececesessscseeees 19 Pacific Gas & Electric Co. v. State Bd. ofEqualization (1980) 27 Cal. 3d 277, 165 Cal. Rptr. 122 w.oeeceesesesesseeeeeees 18 People ex rel. Kennedy v. Beaumont Investments(Ct. App. 2003) 111 Cal. App. 4th 102, 3 Cal. Rptr. 3429.cccesccesseseseseseeseseecsacssecsessseseevsvsvevacaravavanevataeaeseaeas 15 Preston v. State Bd. ofEqualization (2001) 25 Cal. 4th 197, 105 Cal. Rptr. 2d 407... cccccccssccescscecsseseseeesrsesetecasaes 28 Rothschild v. Tyco Int’l (US), Inc. (Ct. App. 2000) 83 Cal. App. 4th 488, 99 Cal. Rptr. 2d 721 oocccccccceesceeceseseseeees 14 Schnall v. Hertz Corp. (Ct. App. 2000) 78 Cal. App. 4th 1144, 93 Cal. Rptr. 2d 439. ccccccccescsscesssssesscssessceseasescacenees 14 Sea World, Inc. v. County ofSan Diego (Ct. App. 1994) 27 Cal. App. 4th 1390, 33 Cal. Rptr. 2d 194...eeeseeee28 State Bd. ofEqualization v. Super. Ct. ofLos Angeles (O’Hara & Kendall Aviation, Inc.) (1985) 39 Cal. 3d 633, 217 Cal. Rptr. 238 wo...cccccceeceeseeceseseceseees 10, 18 Vasquez v. Super. Ct. (1971) 4 Cal. 3d 800, 94 Cal. Rpt, 796 occcceeceeceecseeeseeecsecseessssessecsscsvcecseseseeeacasareeaes 26 Wershba v. Apple Computer, Inc. (Ct. App. 2001) 91 Cal. App. 4th 224, 110 Cal. Rptr. 2d 145 ..c.ccceccccsecssscecssssseeees 17 Woosley v. State ofCalifornia (1992) 3 Cal. 4th 758, 13 Cal. Rptr. 2d 30... ecceeccssesesssecsessessssescscsssscsesevsaseceesaeusseseess 19 Yamaha Corp. ofAm. v. State Bd. ofEqualization (1998) 19 Cal. 4th 1, 78 Cal. Rptr. 2d Loccceeesseseseee. 6, 27 Statutes & Regulations Cal. Bus. & Prof. Code § 17203 uoo.ceeccecccssssssssessecscecesscceeseeses 2, 12,15 Cal. Bus. & Prof. Code §§ 17200 ef s€q. .c.ccecccecscsssssssssseceseeeseees 1,7, 11 Cal. Civ. Code § 1656.1 ..ccccccccccssscsscscsesseceseesseescsacsassecssssasenssceeees 10 Cal. Civ. Code § 1751 o.ccccccccccsssscessescecesssceesssesssscsecsessesssesesecescecees 17 Cal. Civ. Code § 1752 .ecccccccccscsssssscssssescsssseseceessesesssassecstesseseeeasees 16 Cal. Civ. Code § 1760 ..ceciccccccccssesesssscsessssscscsevessrareetsessessacaseees 3, 16 Cal. Civ. Code § 1770 .ccccccccccssscscssssssssessesssseacesesssrerertatsusseassesevecseees 16 Cal. Civ. Code § 1781 .eecccccscscscssssscsssescsssssssvecscaesesutenstasstsssessseseses 16 Cal. Civ. Code §§ 1750 et 869. .cccecccccscesessesssssessesssstatesesssesassesacevecens 1,7 -Vi- Cal. Civ. Code Regs. § 1700.2... ccccccscccsssceeeeseesecsseesesssessecsesseeenes 11 Cal. Rev. & T. Code § 6001 ef 8€q. .oceeeeeeceececesesestseseceseteeeesenenseeenees l Cal. Rev. & T. Code § 605 1 oo... cc ceeeseececeseneeeeeeseseeaeesssseeessssssseeesseens 9 Cal. Rev. & T. Code § 6359. ....cccccccscssecseesseesecsecesessecsessseessessssesensneens 7 Cal. Rev. & T. Code § 6481 oo. ..ccccccccccsccsscssecssecsecsessessssetsessesseseeeseees 25 Cal. Rev. & T. Code § 6901.5... eecccccscssscscsesssecseessseeseeeseeeseeees 11,21 Cal. Rev. & T. Code § 6931 oo... cccccceccccssecsssessetessessseresseesees 8, 18, 20 Cal. Rev. & T. Code § 6932.00... ccccccsscsssesessesecseessesesessserecresaseses 9, 10 Cal. Rev. & T. Code § 7054.00... cccccccsccsscesscssesseesscsscsseseessesescsseessaeans 25 Cal. Rev. & T. Code §§ 6901 et S€q. ceccccecccceccsssessceesscscsssesssesseeeseees 10 Constitutional Provisions Cal. Const. art. XU§ 32... ccc cceeccecsccecsesssecssesesessssereseeeees 3, 8, 17, 19 -Vii- PETITION To the Honorable Chief Justice and the Honorable Associate Justices of the California Supreme Court: Petitioners respectfully petition for review of the opinion by the Court of Appeal, Second Appellate District, Division Three (Kitching, J., with Klein, P.J. and Aldrich, J., conc.). The Court of Appeal’s opinion, published at Loeffler v. Target Corporation (Ct. App. 2009) 93 Cal. Rptr. 515, affirmed the order sustaining Target’s demurrer. A copy of the decision is attached as an exhibitto this petition. ISSUES FOR REVIEW 1. Doesarticle XIII, section 32 of the California Constitution bar consumers from filing lawsuits against retailers under California’s Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code §§ 17200 et seq.) and Consumers Legal Remedies Act (“CLRA”)(Cal. Civ. Code §§ 1750 et seq.) for charging sales tax reimbursement on transactions that are not taxable? (No.) 2. Doesthe California Revenue & Tax Code (Cal. Rev. & T. Code §§ 6001 et seq.) bar consumers from filing lawsuits againstretailers for charging sales tax reimbursementon transactionsthat are not taxable? (No.) INTRODUCTION ~~~ “CaliforniaRuleCourt8.500(b) sets forth the grounds for review by this Court. Rule 8.500(b)(1) provides for review whereit is “necessary to secure uniformity of decision or to settle an important rule of law.” Both ofthese criteria are plainly present here. First, this Court should grant review because the legal issues posed by this appealare vitally important. Plaintiffs allege that Target violated the UCL and the CLRA by charging them for sales tax reimbursement on transactions that are tax-exempt under California’s Tax Code. California’s strong, wide-ranging consumerprotection statutes were enacted to give consumers remedies when businesses commit unfairorillegal acts that take money from consumers. The UCL,for example, provides that courts may order restitution of “any money . .. which may have been acquired by means of such unfair competition.” Bus. & Prof. Code § 17203. The statute refers to “any money,” not “any money exceptfor unfairor illegal charges relating to sales tax reimbursement.” It is black-letter law that these statutes are to be read broadly. As this Court said with respect to the UCL,“Its coverage is sweeping, embracing anything that can properly be called a business practice andthat at the same time is forbidden by law.” Cel-Tech Commce’ns, Inc. v. Los Angeles Cellular Tel. Co. (1999) 20 Cal. 4th 163, 180, 83 Cal. Rptr. 2d 548. The UCL not only covers illegal practices, it also covers unfair practices. __Cel-Tech, 20 Cal. 4th at 180. The CLRA,similarly, is to be “liberally construed” to protect consumers “against unfair and deceptive business practices ....” Cal. Civ. Code § 1760. Until the decision of the Court of Appeal below, no authority had suggested that either the UCL or the CLRA contains an exception to courts’ broad authority to remedy and enjoin unlawful and deceptive practices for situations when businesses cheat consumersby falsely imposing “sales tax” where nosuchtax is due. However, Target argued—andthe Court of Appeal agreed—that a court lacks the power underthese statutes to address Target’s conduct because of an unrelated provision of the California Constitution. The actual text of that constitutional provision contains no language limiting the rights of consumers against companies that overcharge them. Instead, the provision simply limits the ability of courts to prevent or enjoin the state from collecting tax, and mandates that taxpayers may seek a tax refund only after paying the tax. See Cal. Const. art. XIII § 32. Here, Plaintiffs do not seek any injunction againstthe state, and an awardofrestitution, damages, or injunctive relief against Target for imposing unlawful charges onits customers would in no wayprevent the state from collecting any tax. Nor do (or could) Plaintiffs seek a pre-paymenttax refund in violation of section 32, since they are not taxpayersofsales tax. Indeed,prior to the -3- decision below, no published appellate decision had ever held thatarticle XII, section 32 was a bar to an action by a non-taxpayer against a private, non-governmental party. The Attorney General of California has strongly sided with the Petitioners’ position on this point. In its amicus brief in this case in the Court of Appeal, the Attorney General stated “If appellants can provetheir allegations, the activities of the retailer may fall within the purview of California’s Unfair Competition Law.” A.G.Briefat 20. Second, this Court should grant review because under the Court of Appeal’s interpretation of the law, California consumers will be without any meaningful remedy andretailers will be exculpated from liability under the consumer protection statutes for a large category of deceptive practices. Underthe Court of Appeal’s holding, a consumerhasno right to recover wrongfully charged sales tax reimbursementfrom retailer unless the retailer first seeks a refund of overpaid sales tax from the State Board of Equalization (“SBE”or “Board”’). However, even if one assumes (and Plaintiffs have not yet had an opportunity to learn if this is true in this case) that the retailer has paid all sumscollected to the Board, the retailerstill would have no incentive to sue the Board for a refund of overpaid tax because it would be required to turn over that moneyto its customers. In the instances wherea retailer has charged consumersfor sales tax reimbursementbut has notactually paid any moneytothestate, the retailer -4- certainly would have no reason to urge the Board to determine whetherit has been overcharging its customersin violation of the law. Underthe Court ofAppeal’s reasoning, therefore, even if a consumer has been wrongfully charged sales tax reimbursement, as a realistic matter such a consumerstill would never be able to recover the overpayment. This outcome cannot be reconciled with this Court’s holdings in Javor v. State Bd. ofEqualization (1974) 12 Cat. 3d 790, 117 Cal. Rptr. 305, and Decorative Carpets, Inc. v. State Bd. ofEqualization (1962) 58 Cal. 2d 252, 23 Cal. Rptr. 589, which established that consumers havea rightto receive refunds of wrongfully chargedsales tax reimbursementthatis distinct from the rights ofretailers. Third, this Court’s review is necessary to secure uniformity of decision. Prior to the decision below, courts throughout California had held that consumers maybringclass action claims againstretailers for wrongful sales tax reimbursement charges. See, e.g., Dell, Inc. v. Super. Ct. (Mohan) (Ct. App. 2008) 159 Cal. App. 4th 911, 71 Cal. Rptr. 3d 905. Ifthe decision below stands, courts will effectively lose their ability to resolve disputes about sales tax reimbursement between customersandretailers. This result would eviscerate the long-standingrule that courts, not the SBE, have the ultimate authority to interpret the Tax Code. See Yamaha Corp. of Am.v. State Bd. ofEqualization (1998) 19 Cal. 4th 1, 7-8, 78 Cal. Rptr. 2d 1 (“[I]t isthe duty of this court . . . to state the true meaning ofthe statute __ finally and conclusively . . . .”) (quotation omitted). _ In sum, the Court should grantthis Petition and hear this case becausethe radical holding of the Court of Appeal not only standsin opposition to the holdings of a numberofprevious California cases, but also becauseit creates a harmful new rule. If permitted to stand, the Court of Appeal’s decision will gut the strong consumerprotection statutes enactedby the Legislature, leave California consumers with no remedy against businesses that imposecertain kinds of unfair and deceptive charges, andstrip this state’s courts of a longstanding and important responsibility. STATEMENT OF THE CASE A. Factual Background and Procedural History Plaintiffs Kimberly Loeffler and Azucema Lemusallege that defendant Target imposed a 8.25% “sales tax” on their purchases ofhot coffee drinks “to go”or for “take out” from Targetstores in California, despite a provision in California’s Tax Code that exempts these products from sales tax. They filed this putative class action on October 6, 2006, and filed a First Amended Complaint on November 28, 2006 and a Second Amended Complaint on March 2, 2007, seekingrestitution, damages, and an injunction prohibiting Target from imposing the unlawful charges, on their own behalf and on behalfof all other similarly-situated California residents. . - co Plaintiffs assert causes of action for (1) violation of California’s Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code §§ 17200 et seq.); (2) violation of the Consumers Legal Remedies Act (“CLRA”’)(Cal. Civ. Code §§ 1750 et seq.); (3) violation of California Revenue and Tax Code § 6359; and (4) money hadandreceived.' Significantly, there is no evidence in the record as to whether Target has retained the amountsit charged customersas “sales tax” or remitted them to thestate. Target demurred, and the demurrer wassustained by the Superior Court on April 9, 2007. In its oral ruling, the court stated: The question is . .. whether you’re an appropriate complainant pursuant to the statutory [scheme]. . . Asfar as I could determine, neither the statutory [scheme] nor any case authority allows you to go forward with this type of action unless there’s been, at the very least . .. some request to the tax court, or probably the statute is silent on this action by the tax court allowing you to . . file a taxpayer’s action for... relief from this kind oftax. RT B-2:3-18. Thetrial court entered judgment on April 9, 2007. Plaintiffs timely appealed on May 17, 2007. The Court of Appeal affirmed the judgmentof the Superior Court on May 12, 2009. The court acknowledged that, as consumers,Plaintiffs are ' Plaintiffs originally asserted additional causes of action for conversion and negligent misrepresentation, but did not appeal the dismissal of those claims. not taxpayersofsales tax, and thus have no standing under the Tax Codeto fileaclaim or a lawsuit against the Board for a refund ofsales tax. Loeffler, 93 Cal. Rptr. at 524. The court then held, however,that consumers cannot obtain refunds of wrongly charged sales tax reimbursements by bringing a lawsuit against retailer. First, the court held that Plaintiffs have no private right of action under the Tax Code against Target for imposing unlawful sales tax reimbursement charges, because only the Board has the powerto determine whethera retailer has collected excess sales tax reimbursement. Jd. at 524— 25. The court held that a customer cannot recover for these charges unless the Board has madesuch a determination, either based on a retailer’s claim for a refund of overpaid taxor its own review;orafter a retailer prevails in a suit against the Board for a refund. /d. at 518. “Neither of these circumstancesexists here,” the court concluded. “Plaintiffs are therefore not entitled to a refund of alleged excess sales tax reimbursementcollected by Target underthe statutory scheme... .” Jd. at 519. Second, the court held that Plaintiffs’ claims for restitution, damages,and injunctive relief under the UCL and CLRA,as wellastheir claim for money had and received, are barred by article XIII, section 32 of the California Constitution and section 6931 of the Tax Code, which preclude courts from enjoining the collection of tax. The court stated that Plaintiffs were not permitted to “seek an injunction, damages and -8- restitution without providing the Board with an opportunity to _ administratively determine the merits of Plaintiffs’ interpretation of the _ sales tax laws.” Jd. at 529. The court admitted that “the Board’s interpretation of the tax laws does not bind the courts,” but concluded that permitting consumersto “circumvent the claims process” would undermine the policy of Tax Code section 6932, which is to “give the Board an opportunity to correct any mistakes.” Jd. This Petition follows. B. Overview of Sales Tax and Sales Tax Reimbursement 1, Sales Tax The State of California imposessalestax on all retailers “[f]or the privilege of selling tangible personal property at retail.” Cal. Rev. & T. Code § 6051. In other words,sales tax is “imposed uponthe seller, not the buyer.” Gen. Elec. Co. v. State Bd. ofEqualization (1952) 111 Cal. App. 2d 180, 185. Retailers, not their customers,are “taxpayers” for purposes of sales tax. In the event retailer has remitted sales tax to the SBE that was not owed, or has paid more sales tax than was owed (for example,if a retailer has remitted sales tax to the state based on sales of products that are not properly subjectto sales tax), the retailer may seek a refund from thestate. To seek such a refund, the retailer mustfirst file an administrative claim with the Board under the provisions in Chapter 7, Article 1 of the Tax -9- Code. See Cal. Rev. & T. Code §§ 6901 et seg. If the Board denies the _administrative claim, the retailermay bring a suit against the Board fora sales tax refund under Chapter 7, Article 2 of the Tax Code. See Cal. Rev. & T. Code § 6932. The California Constitution bars courts from enjoining or preventing the state from collecting tax. Art. XIII, § 32. Therefore, a retailer may not contest the validity of sales tax in court unlessthe retailer has first remitted the tax to the state. See State Bd. ofEqualization v. Super. Ct. ofLos Angeles (O’Hara & Kendall Aviation, Inc.) (1985) 39 Cal. 3d 633, 639, 217 Cal. Rptr. 238. 2. Sales Tax Reimbursement California law does not require retailers to charge their customers for sales tax. Retailers are permitted, however, to pass the costs of sales tax on to customers by imposing a “sales tax reimbursement” charge on taxable transactions. Whethera retailer may add a sales tax reimbursement charge to a particular transaction depends “solely upon the terms of agreement of sale” between the retailer and the customer (normally the purchasereceipt). Cal. Civ. Code § 1656.1. The Tax Code providesthat if a retailer has imposeda sales tax reimbursement charge on a customer for an amountthat is not taxable, that amount“shall be returnedby the person[the retailer] to the customer upon notification by the Board of Equalization or by the customer that such -10- excess has been ascertained.” Cal. Rev. & T. Code § 6901.5. Ifthe retailer __ fails or refuses to return theamount to a customer whohaspaidit, the Tax Code providesthat “the amount sopaid, if knowingly or mistakenly computed by the person upon an amountthatis not taxable . . . shall be remitted by that person to this state.” Jd.; see also Cal. Civ. Code Regs.§ 1700 (providing procedure for retailers to refund excess sales tax reimbursement charges to customersifthe retailer “has not already made sales tax reimbursementrefunds to each customerbut desires to do so, rather than incur an obligation to the state”). ARGUMENT I. THE COURT OF APPEAL ERRED BY HOLDING CALIFORNIA’S CONSUMER PROTECTION STATUTES UNCONSTITUTIONAL AS APPLIED TO PLAINTIFFS’ CLAIMS. A. Courts Have Broad Authority Under California’s ConsumerProtection Statutes to Provide Restitution and Other Remedies to Consumers Who Are Unlawfully or Unfairly Charged Sumsthat They Do Not Rightfully Owe. Theplaintiffs in this case raise claims under two landmark California consumerprotection laws: the CLRA and the UCL. Each of these statutes provides remedies for the wrongsalleged in this case, and neither ofthem has any exception for deceptiveacts that relate to sales taxes. Under the UCL,a plaintiff is entitled to injunctive relief and restitution where an “unlawful, unfair or fraudulent” business act or -l]- practice has occurred. The sweeping nature of the UCLis clear from its extremely broadlanguage. It specifically provides that courts may order restitution of “any money .. . which may have been acquired by meansof such unfair competition.” Cal. Bus. & Prof. Code § 17203 (emphasis added). The UCL does not say “any money except for funds wrongfully charged for sales tax reimbursement” or contain any other such limitation. Instead, the statute uses the broadest term imaginable: “any.” Asthis Court has explained, “[b]ecause Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlawful’ and vice versa.” Cel-Tech Commc’ns, 20 Cal. 4th at 180 (quotation omitted). In Cel-Tech, this Court set forth why the scope of the UCL has always been intended to be quite broad: [T]he unfair competition law’s scope is broad. Unlike the Unfair Practices Act, it does not proscribe specific practices. Rather . . . it defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice.” Its coverage is sweeping, embracing anything that can properly be ‘called a business practice and that at the sametimeis forbidden by law. It governs anti-competitive business practices as well as injuries to consumers, and has as a major purpose “the preservation of fair business competition.” The unfair competition law . . . has a broader scopefor a reason. The Legislature . . . intended by this sweeping language to permittribunals to enjoin on-going wrongful business conduct in whatever context such activity might occur. Indeed, . . . the section wasintentionally framedin its -12- broad sweeping language, precisely to enable judicial tribunals to deal with the innumerable’ new schemes which _ the fertilityofman’s invention wouldcontrive. —__ Id. at 180-81 (internal citations and quotations omitted). A recent decision of this Court reaffirmed the importance of UCLactions: [C]onsumerclass actions and representative UCL actions serve importantroles in the enforcement of consumers’ rights. [They] make it economically feasible to sue when individual claims are too small to justify the expense oflitigation, and thereby encourage attorneys to undertake private enforcement actions. Through the UCLa plaintiff may obtain restitution and/or injunctive relief against unfair or unlawfulpractices in order to protect the public and restore to the parties in interest moneyor property taken by means of unfair competition. These actions supplementthe efforts of law enforcement and regulatory agencies. This court has repeatedly recognized the importance of these private enforcementefforts. In re Tobacco IH Cases (May 18, 2009) --- Cal. Rptr. 3d ---, No. $147345, 2009 WL 1362556 at *6 (quotation omitted). Furthermore, “Class actions have often been the vehicle through which UCLactions have been brought.” Jd. Asset forth above, Petitioners here allege that Target falsely labeled and collected from Petitioners and other customers a chargefor sales tax whennosales tax was owed. Seekingrestitution of such wrongfully charged sumsis a classic type of UCL claim. The UCL “‘borrows’ from other laws, treating violations of those laws as unlawful practices independently actionable.” Rothschild v. Tyco Int’l (US); Inc. (Ct. App. 2000) 83 Cal. App. 4th 488, 493-94, 99 Cal. Rptr. -13- 2d 721. “Virtually any federal, State, or local law can serveas the predicate _for an action under §17200 basedonunlawfulbusinesspractices”= Gemisys Corp. v. Phoenix American, Inc. (N.D. Cal. 1999) 186 F.R.D. 551, 564. There is no suggestion in the statute or any of the case law interpreting it—before the opinion issued below—thatthe phrase “virtually any law’ would notinclude relief for consumers whoare chargedsales tax reimbursement for sumsthat are not properly owed. There are many circumstances where the UCL creates causes of action for violations of statutes that do not do so themselves. See Diaz v. Allstate Ins. Group (C.D. Cal. 1998) 185 F.R.D. 581, 594 (“lawsthat have been enforced under § 17200’s ‘unlawful’ prong includestate anti- discrimination laws, environmental protection laws, state labor laws, and state vehicle laws”); Haskell v. Time, Inc. (E.D. Cal. 1997) 965 F. Supp. 1398, 1402 (“Aprivate plaintiff may bring an action under §§ 17200 and 17204 to redress any unlawful businesspractice, including an unlawful practice that does not otherwise permit a private right of action, such as a criminal statute.”). Moreover, the remedies under § 17200 are cumulative to other remedies. Schnall v. Hertz Corp. (Ct. App. 2000) 78 Cal. App.4th 1144, 1152-53, 93 Cal. Rptr. 2d 439. The foregoing authorities establish that the UCL hasa broad scope, encompassing a wide range of unfair andillegal acts, and borrowing substance from so many differentstatutes that it has been described as -14- creating claimsfor “virtually any” statute. The Court of Appeal’s invention ___ ofamajor exception to this statute, without any serious discussion of the history or scope of the UCL, stands in sharp contrastto all of these cases. The UCL empowersa court to make “such orders or judgments . . as may be necessary to restore to any person in interest any money or property, real orpersonal, whichmay have been acquiredby means of” unfair competition. Bus. & Prof. Code § 17203. The court’s equitable imperative “is to restore the status quo by returningto the plaintiff funds in which heor she has an ownership interest.” Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1149, 131 Cal. Rptr. 2d 29. Restitution under Section 17203 “is not solely intended to benefit the victims by the return of money, but instead is designed to penalize a defendant for past unlawful conduct and thereby deter future violations.” People ex rel. Kennedy v. Beaumont Investments (Ct. App. 2003) 111 Cal. App.4th 102, 135, 3 Cal. Rptr. 3d 429 (internal quotes andcitations omitted); see also Day v. AT&T Corp. (Ct. App. 1998) 63 Cal. App. 4th 325, 329, 74 Cal. Rptr. 2d 55 (UCL’s remedy provisions serve the purpose of “returningto the plaintiff funds in which he or she has an ownership interest”) The CLRA,likewise, is a broad remedial statute aimed at protecting consumers from deceptive business practices. As the preamble to it states: -15- This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers __against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection. Cal. Civ. Code § 1760; see also Broughton v. Cigna Healthplans (1999) 21 Cal. 4th 1066. 1077, 90 Cal. Rptr. 2d 334 (“The CLRA was enacted in an attemptto alleviate social and economic problems stemming from deceptive business practices.”). The CLRA prohibits nearly twenty different deceptive practices, including misrepresenting the source, characteristics, use, benefits or status of goods andservices, falsely advertising goodsor services, etc. See Cal. Civ. Code § 1770. The CLRA contains expansiveliability and remedial provisions designed to broaden liability and impose comprehensive legal and equitable remedies for scores of separate types of misrepresentation. For example,it contains relaxed class certification provisions, as well as a prohibition against summary judgment motions. See Cal. Civ. Code § 1781. The remedies available under the CLRA include compensatory damages, punitive damagesandspecial penalties, as well as injunctive relief and restitution. See Cal. Civ. Code § 1780; Linder v. Thrifty Oil Co. (2000) 23 Cal. 4th 429, 437-38, 97 Cal. Rptr. 2d 179. The remedies of the CLRA are expressly “not exclusive” but rather are “in addition to any other procedures or remedies . . . in any other law.” Cal. Civ. Code § 1752. The statute also includes a strong anti-waiver -16- provision. Civil Code section 1751 provides that “[a]ny waiver by a consumerof the provisions ofthis title is contrary to public policy and shall be unenforceable and void.” The expanse of the CLRA is a large part of the reason courts have recognized that “California’s consumerprotection laws are amongthe strongest in the country.” Wershba v. Apple Computer, Inc. (Ct. App. 2001) 91 Cal. App. 4th 224, 242, 110 Cal. Rptr. 2d 145. B. The Constitution Does Not BarPlaintiffs’ Claims Because This is Not a Tax Refund Case and Would Not Enjoin or Prevent the State from Collecting Any Tax. In spite of the breadth of California’s consumerprotection statutes, the court below held that they are unconstitutional as applied to Plaintiffs’ claims, becausethe particular wrongful charges at issue here were imposed underthe guise of sales tax reimbursement. The court created this new exception based onarticle XIII, section 32 of the California Constitution, whichprovides: Nolegal or equitable process shall issue in any proceeding in any court against this State or any officer thereof to prevent or enjoin the collection of any tax. After paymentof a tax claimedto be illegal, an action may be maintained to recover the tax paid, with interest, in such a manner as may be providedby the Legislature. Cal. Const. art XIII, § 32.” This constitutionalbaris plainly inapplicable to Plaintiffs’ claims. * Similar language in the Tax Code provides: “No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against this State or against any officer of the State to prevent or enjoin -17- First, by its terms, section 32 “applies only to actions against the State.” Pacific Gas & Elec. Co. v. State Bd. ofEqualization (1980) 27 Cal. 3d 277, 281 n.6, 165 Cal. Rptr. 122 (emphasis added). “Whenthe language of a statute or constitutional provision is clear and unambiguous, judicial construction is not necessary and the court should not engageinit.” Agnew v. State Bd. ofEqualization (1999) 21 Cal. 4th 310, 323, 87 Cal. Rptr. 2d 423. Here, Plaintiffs have simply brought claims against a private corporation. They have no standingto file a tax refund claim or lawsuit against the state, since they are not taxpayers ofsales tax, and the state is not a party to this action. Second, section 32 is irrelevant here becauseit bars only actions that would “enjoin or preventthe collection of any tax” before that tax is paid. As this Court has explained, section 32 is intended to prohibit “prepayment judicial declarations or findings which would impede the prompt collection of a tax.” State Bd. ofEqualization, 39 Cal. 3d at 639. As such, “a taxpayer may not go into court and obtain adjudication ofthe validity of a tax which is due but notyet paid.” Jd. at 638 (emphasis added); see also California Logistics, Inc. v. State (Ct. App. 2008) 161 Cal. App. 4th 242, the collection underthis part of any tax or any amountoftax required to be collected.” Cal. Rev. & T. Code § 6931. 3 Notably,‘the court below recently extended section 32 beyond a claim against the state in another case, further demonstrating that this Court’s review is warranted. Ardon v. City ofLos Angeles (Ct. App. 2009) 94 Cal. Rptr. 3d 245, 2009 WL 1479168at *9. -18- 247, 73 Cal. Rptr. 3d 825 (section 32 effectively imposes a “payfirst, litigate later” requirement ontaxpayers). But no appellate courtin. California had previously held that section 32 bars a person whois indisputably not a taxpayer from gaining accessto court. To the extent that “(t]he policy behind section 32 is to allow revenue collection to continue during litigation so that essential public services depending on the funds are not unnecessarily interrupted,” Pacific Gas & Elec. Co. v. State Bd. ofEqualization (1980) 27 Cal. 3d 277, 283, 165 Cal. Rptr. 122, that policy is not underminedby this lawsuit. A determination of the merits of this case will not affect the SBE’s ability to collect taxes owed by Target. Finally, section 32 also does not apply becausethis case is not “an action . . . to recoverthe tax paid” by a taxpayer. Cal. Const. art. XIII § 32; see also Woosley v. State ofCalifornia (1992) 3 Cal. 4th 758, 789, 13 Cal. Rptr. 2d 30 (explaining that section 32 “provides that actions for tax refunds must be brought in the mannerprescribed by the Legislature”) (emphasis added). Plaintiffs do not—and could not—seeka tax refund, because they are not taxpayers of sales tax. Thus, a court decision in favor of Plaintiffs would in no way “expand[] the methodsfor seeking tax refunds expressly provided by the Legislature.” Woosley, 3 Cal. 4th at 792 (emphasis added). -19- In sum, a court decision enjoining Target from imposing wrongful charges or requiringTarget to pay restitution and damages to customers whom it has wrongfully charged would not enjoin or prevent the state from collecting taxes nor expand the Legislature’s remedies for tax refunds. Therefore, Plaintiffs’ claims are in no way barred by the California Constitution orits corollary in Tax Code § 6931. See Agnew, 21 Cal. 4th at 327 (Section 6931 does not bar claim not barred by Constitution). Cc. The California Tax Code Does Not Bar Plaintiffs’ Claims. Nor does the Tax Code bar consumers from bringing claims against a retailer. The Tax Code governsthe relationship between taxpayers and the state, and contains no language barring a consumerclassaction against a retailer. Nonetheless, the Court of Appeal held that permitting Plaintiffs’ lawsuit against Target to proceed would be tantamount to “circumventing the claims process,” which would “undermine[] the policy underlying section 6932, whichis to give the Board an opportunity to correct any mistakes ....” Loeffler, 93 Cal. Rptr. 3d at 529. As explained in the Statement of the Case, however, the “claims process” permits only a taxpayer—here,the retailer—tofile a claim for a refund ofsales tax, and, if that is not successful, to bring a lawsuit against the SBE. There is no provision that even permits (let alone requires) “ By the same reasoning, Plaintiffs’ claim for money had andreceivedis not constitutionally barred. -20- consumersto file a claim directly with the SBE. Therefore, the requirement _ that the claims process be exhausted before a lawsuit can be filed only _ applies to parties who have a claims process to exhaust: the taxpayers. See Agnew, 21 Cal. 4th at 320 (challenge to tax policy that was not subject to review by Board through administrative refund procedure was properly reviewable by court in first instance). Indeed, the code’s only provision referencing sales tax reimbursements evidencesa legislative intent to permit customers to recover these charges from retailer. See Cal. Rev. & T. Code § 6901.5 (providing that such amounts “shall be returned by the personto the customer uponnotification by the Board of Equalization or by the customer that such excess has been ascertained”); see also Javor, 12 Cal. 3d at 802 (holding under predecessorto § 6901.5 that in certain circumstances “a customer, whohaserroneously paid an excessive sales tax reimbursement to his retailer whohasin turn paid this moneyto the Board, may join the Board as a party to his suitfor recovery againstthe retailer.”) (emphasis added). -21- I. THE COURT OF APPEAL’S HOLDING WOULD LEAVE CALIFORNIA CONSUMERS WITH NO REMEDY AGAINST _RETAILERSTHATWRONGFULLYIMPOSESALESTAX REIMBURSEMENT CHARGES. Asthe court below recognized, because consumers are not taxpayers underthe state sales Tax Code, there is no provision allowing them to file claims for a sales tax refund with the SBE. Likewise, becausethe filing of an administrative claim with the SBEis a prerequisite to bringing a suit against the SBE, consumerslack standing to bring such a suit. Thus, Plaintiffs are precluded from seeking relief directly from thestate. The Court ofAppeal held, however, that consumers do not need to be able to seek relief from retailers, because they can obtain a refund of excess sales tax reimbursement undercertain circumstances. Those circumstances, according to the court, are: (1) the Board determines, based on a retailer’s claim for a refund of overpaid tax or its own review,that excess Sales tax reimbursementhas beencollected; or (2) a retailer prevails in a suit against the Board for a refund of overpaid sales tax. Loeffler, 93 Cal. Rptr. at 518. However, there is no evidence that either of these scenarios would provide any significant number of consumers a remedy. A. Retailers Do Not Adequately Represent the Interests of Consumers. The Court ofAppeal suggests that consumers may recover from retailers if the retailers exhaust their administrative remedies by secking a -22. refund of overpaid tax from the state. But this Court has recognized that _thereisa sharpconflictofinterestbetween retailersandtheir customers. when it comesto tax refunds. In Decorative Carpets, a retailer filed a lawsuit against the SBE seeking a refund ofsales taxes that it alleged it had overpaidto thestate. 58 Cal. 2d at 253-54. Although it had charged its customers for the sales tax, the retailer admitted that it was “seeking the refundfor itself only and d[id] not intend to pass it on to these customers.” /d. at 254. The Court noted that the state was not obligated to “mak[e] refunds to the taxpayer’s customers.” /d. at 255. However, the Court explained: To allow plaintiff a refund without requiring it to repayits customers the amounts erroneously collected from them would sanction a misuse ofthe sales tax by a retailer for his private gain. Id. Therefore, the Court directed that the retailer could only receive the refundofsales tax “if it submits proof satisfactory to the court that the refund will be returned to plaintiff's customers from whom the excess payments were erroneously collected.” Jd. at 256. The Court again recognized that the interests of retailers in tax refund proceedings are adverse to their customers in Javorv. State Board of Equalization. In Javor, a consumerbroughta class action against several automobile retailers and the SBE,alleging that the retailers had failed to credit their purchases for the portion of sales tax reimbursementthey paid -23- on refunded federal excise taxes. 12 Cal. 3d at 793-94. Asin the instant __ case, it was not known whethertheretailers had “paid said sales tax to the Board,or haveretained it, or owe it to the Board.” /d. at 794. In holding that customers could enforce their rights by compelling retailers who had remitted the moneyto the state to claim refunds from the Board, the Court noted that the procedures in the Tax Code permitting retailers to seek refunds did not adequately represent the interests of consumers: Defendantretailers are under no statutory obligation to claim any refunds from the Board for the benefit of plaintiff and have nofinancial interest in doing so. Defendant Boardis undernostatutory obligation to voluntarily refund said taxes to plaintiff and has no financial interest in doing so. Id. at 795. The Court further explained: Underthe procedure set up by the Boardtheretaileris the only one who can obtain a refund from the Board;yet, since the retailer cannotretain the refund himself, but must payit over to his customer,the retailer has no particular incentive to request the refund on his own. Id. at 801. While Javor was addressing a provision of the Tax Code notat issue in this case, the Court’s concern with consumers’ rightsis equally applicable here. It is clear from Javor and Decorative Carpets that consumers cannotrely onretailers to exhaust their administrative remedies and seek refunds on their behalf when thoseretailers have remitted unlawfully collected sales tax reimbursementto thestate. Furthermore,a retailer that has wrongly imposedsales tax on customers but has not remitted it to the state would have no claim for a -24- refund,andit is difficult to imagine that such a retailer would have any _ reasonto voluntarily report its unlawful behavior to the SBE. Meanwhile, as long as the retailer is not underpaying sales tax, the SBE would have no reason to audit or investigate the retailer’s relationships with its customers. Thus, under the Court of Appeal’s holding, consumers would have no remedy even if a retailer intentionally charged customers non-existent “tax” and keptit for profit—a scenario which may very well be present here, as there is no evidencein the record as to what Target did with the fundsit wrongfully collected. B. The SBE Does Not Adequately Represent the Interests of Consumers. The court below also assumed that a consumer maynotify the SBE that she has been overchargedsales tax reimbursement, and that the SBE maythen, on its own accord, decideto investigate the problem.> But even a cursory examination makesclear that this process is wholly inadequate to protect the rights of consumers. First, in order for the court’s assumption to be correct, a significant numberof consumers would haveto realize that they had been wrongly charged for sales tax reimbursement. Even if numerous customers >In support ofthis speculation, the Court of Appeal cites two provisions of the Tax Code, neither of which obligate the SBE to consider whether a consumeris entitled to a refund from retailer. See § 6481 (authorizing SBE to determine the proper amountoftax to be paid based on information other than the tax return); § 7054 (authorizing SBEto verify the accuracy of tax returns). Loeffler, 93 Cal. Rptr. at 518. -25- suspected that they had been wrongfully charged,it is unlikely that they _wouldbe able to determine whether they had a legal basis forthis= suspicion. It is even less likely that a significant number of these customers would be sufficiently motivated and informed that they would report the problem to the SBE. As this Court has recognized, when consumerssuffer individually small losses, “[i]ndividual actions by each of the defrauded consumersis often impracticable because the amountof individual recovery would beinsufficient to justify bringing a separate action.” Vasquez v. Superior Court (1971) 4 Cal. 3d 800, 808, 94 Cal. Rptr. 796. Assuch, this Court has“affirmed the principle that defendants should not profit from their wrongdoing simply because their conduct harmed large numbers of people in small amounts instead of small numbers of people in large amounts.” Linder, 23 Cal. 4th at 445. Moreover, even if an occasional motivated consumerdid contact the SBE,there is no evidence in the record that the SBE ever, let alone routinely, requires retailers to issue refunds to wrongfully charged customers. Asthis Court has recognized, the SBE “is underno statutory obligation to voluntarily refund said taxes to [non-taxpayers] and has no financialinterest in doing so.” Javor, 12 Cal. 3d at 795. Andifthe retailer has already remitted the wrongfully-charged sums to the SBE, there would be no reason for the SBEto audit or investigate that retailer’s tax payments. -26- A similar system wascriticized by this Court for failing to protect consumers’ rights: vcioa The entire burden is upon the customer. ... The Board has not required theretailer to notify his customer that the refund is due and owing, even thoughtheretailer hasall the necessary information. In short under the procedure which it has established, the Boardis very likely to become enriched at the expense of the customer to whom the amountofthe excessive tax belongs. Javor, 12 Cal. 3d at 801-02. The bottom line is that the Court of Appeal’s decision leaves consumers with norealistic or effective remedy, even if they are charged sumsfor tax on an item for which no tax is owed and theretailer simply keeps the overcharge. If. THE RULING OF THE COURT BELOW EFFECTIVELY DIVESTS COURTS OF THEIR LONGSTANDING AUTHORITY TO RESOLVE SALES TAX REIMBURSEMENT DISPUTES BETWEEN RETAILERS AND CONSUMERS. A. This Court Has Long Held that Courts Have the Ultimate Authority to Interpret and Enforce the Tax Code. Asthis Court has long recognized, the courts—not the SBE—have the ultimate authority to determine whethertax is owed with respect to any given item. As this Court stated in Yamahav. State Board ofEqualization: [I]t is the duty of this court . . . to state the true meaning of the statute finally and conclusively, even thoughthis requires the overthrow ofan earlier erroneous administrative construction. The ultimate interpretation of a statute is an exercise of the judicial power . . . conferred upon the courts by the Constitution .... -27- 19 Cal. 4th at 7 (quoting Bodingson Mfg. Co. v. California Emp. Com. (1941) 17 Cal.2d 321) (holding that the SBE’s annotations oftax= consequences were not dispositive of whethera retailer owed sales tax to the state on particular transactions); Preston v. State Bd. ofEqualization (2001) 25 Cal. 4th 197, 219 n. 6, 105 Cal. Rptr. 2d 407 (“agency interpretations are not binding or necessarily even authoritative’) (citation omitted); Borders Online, LLC v. State Bd. ofEqualization (Ct. App. 2005) 129 Cal. App. 4th 1179, 1193, 29 Cal. Rptr. 3d 176 (“court independently determines the meaningofa statute”); Sea World, Inc. v. County ofSan Diego (Ct. App. 1994) 27 Cal. App. 4th 1390, 1406, 33 Cal. Rptr. 2d 194 (“[a]lthough the [SBE] letters also arguably provide some support . ., it is our duty and not that of the SBE to construe the true meaning of[the statute]”’). Thus, this Court has not hesitated to reject the SBE’s interpretation of a sales tax exemption where “a consideration of but one ofthe consequencesof the Board’s interpretation of the sales tax laws... demonstrates the unsoundandarbitrary nature of that interpretation.” Ontario Community Found., Inc. v. State Bd. ofEqualization (1984) 35 Cal. 3d 811, 822, 201 Cal. Rptr. 165. -28- B. Under the Court of Appeal’s Holding, Few If Any Disputes Between Retailers and Customers About Sales Asset forth in Part II above, if the Court of Appeal’s decision stands as the law in California, it will have the practical effect of eviscerating consumers’ ability to bring challenges to wrongfully imposed sales tax reimbursement charges. While many disputes (as cited above) are between retailers and the SBE, in many othercases the only truly aggrieved party will be the consumer. Theruling of the court below wouldstrip the majority of these cases out of the court system. In this respect, the decision below is a significant change from the past practice in California. In a numberofcases, courts applying California law have exercised jurisdiction over claims by consumersagainst retailers in orderto interpret the Tax Code. For example, in Dell Inc. v. Superior Court, consumersfiled a putative class action under the UCL and CLRA alleging that Dell had improperly charged them sales tax on optional service contracts sold with computers. 159 Cal. App. 4th at 916. Like Plaintiffs here, they soughtrestitution, damages, attorneys’ fees, and an order enjoining the retailer from continuing to impose the charges. Jd. at 920. Despite the fact that Dell had not, prior to the lawsuit, sought any determination by the SBE as to whetherits tax was proper, the Superior Court assumed jurisdiction and concludedthat Dell’s sales of service contracts were not subject to tax. Id. at 917. On appeal, after analyzing the -29- Tax Code, the Court of Appeal affirmed that “the proper approach under _ Californialawistotax the computer (tangible personalproperty) andnot... the service contract (service or intangible property).” Jd. at 930. Likewise, in Laster v. T-Mobile USA, Inc. (S.D. Cal. Aug. 11, 2008) No. 05cv1167 DMS(AJB), 2008 WL 5216255, the court held that consumers could bring claims under the UCL and CLRA againsta retailer whohad deceptively imposed a sales tax reimbursement charges. In Laster, the plaintiffs alleged that a retailer engaged in an unfair and deceptive practice whenit charged customersa “sales tax” on the full retail cost of cell phones that were advertised as “free” or discounted. 2008 WL 5216255 at *1. The retailer moved to dismissthe claims, arguing that the Tax Code permitted this conduct. The court declined to dismiss the claims. Id. at *16; see also Livingston Rock & Gravel Co. v. De Salvo (Ct. App. 1955) 136 Cal. App. 2d 156 (in dispute between retailer and customer, holding that customer was not contractually obligated to payretailer sales tax reimbursement); Botney v. Sperry & Hutchinson Co. (Ct. App. 1976) 55 Cal. App. 3d 49, 127 Cal. Rptr. 263 (in consumerclass action against retailer to recover sales tax reimbursement, determining that retailer’s conduct waslawful). In short, the Court of Appeal’s decision effectively blocks whathas, until now, been the primary, if not the only, way for customers to seek redress for these kinds of claims. -30- CONCLUSION For the foregoing reasons, thisCourt shouldgrant review ofthis __ Petition and reverse the decision of the Court of Appeal. Dated: June 19, 2009 Respectfully Submitted, U7) (Cal. Bar No. 189803) LANGE & KONCIUS, LLP 222 N. Sepulveda Blvd., Suite 2000 El Segundo,California 90245 LESLIE A. BAILEY (Cal. Bar No. 232690) ARTHUR H. BRYANT (Cal. Bar No. 208365) PUBLIC JUSTICE,P.C. 555 Twelfth Street, Ste. 1620 Oakland, CA 94607 Attorneysfor Petitioners -31- CERTIFICATE OF WORD COUNT Pursuant to Rulesof Court 8.204(c) and8.500(d)(1), the undersigned counsel hereby certifies that the foregoing PETITION FOR REVIEWis double-spaced, printed in Times New Roman13 point text, and contains 7,529 words. The above word count was determined using the Word Count function of the Microsoft Word program, and excludes wordsin the Table of Contents and Table of Authorities. Dated: June 19, 2009 Respectfully Submitted, SKONCIUSLLP / ff y / / : JOBSEUHTW/LANGEOBESE Attorneyfor Petitioners LANGE, -32- Westlaw. 93 Cal.Rptr.3d 515 Page | 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) Cc Court of Appeal, Second District, Division 3, Cali- fornia. Kimberly LOEFFLER and Azucena Lemus, Plaintiffs and Appellants, Vv. TARGET CORPORATION,Defendant and Re- spondent. No. B199287. May12, 2009. Background: Customers brought putative class ac- tion against retailer for refund of excess sales tax reimbursement, money had andreceived, and viola- tions of Unfair Competition Law (UCL) and Con- sumers Legal Remedies Act (CLRA). The Superior Court, Los Angeles County, No. BC360004,Mi- chael L. Stern, J., sustained demurrer without leave to amend. Customers appealed. Holdings: The Court of Appeal, Kitching, J., held that: (1) retail customers who pay sales tax reimburse- ment lack standing to maintain a suit for a sales tax refund; (2) statute authorizing administrative claims for re- funds of excess sales tax reimbursement does not authorize private action against retailer to challenge validity of tax; (3) constitution prohibited injunction against retail- er's collection of sates tax reimbursement; and (4) constitution barred claim for damages orrestitu- tion for retailer's collection of sales tax reimburse- ment. Affirmed. West Headnotes [1] Taxation 371 €-23700 371 Taxation 371IX Sales, Use, Service, and Gross Receipts Taxes 371LX(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Taxation 371 €=>3710 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X() Collection and Enforcement 371k3710 k. Remedies for Wrongful En- forcement. Most Cited Cases Purpose of constitutional provision prohibiting in- junctions against the collection of state taxes and providing that refunds of taxes may only be re- covered in a manner provided by the Legislature is to ensure that governmental entities may engage in fiscal planning so that essential public services are not unnecessarily interrupted. West's Ann.Cal. Const. Art. 13, § 32. (2] Taxation 371 €=>3661 371 Taxation 37iIX Sales, Use, Service, and Gross Receipts Taxes 3711X(D) Persons Subject to or Liable for Tax 371k3661 k. Buyer's or Seller's Liability. Most Cited Cases The California sales tax is imposed ontheretailer, not upon the buyer. West's Ann.Cal.Rev. & T.Code § 6051. [3] Taxation 371 €=>3661 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(D) Persons Subject to or Liable for Tax 371k3661 k. Buyer's or Seller's Liability. Most Cited Cases © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal. Rptr.3d 515 Page 2 93 Cal-Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) The California use tax is leviedupon thepurchaser — of the taxed personal property. West's Ann.Cal.Rev. & T.Code § 6202. [4] Taxation 371 €=23700 371 Taxation 371IX Sales, Use, Service, and Gross Receipts Taxes 371EX(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Filing a claim with the State Board of Equalization is a prerequisite to maintaining a suit for a refund of sales taxes. West's Ann.Cal.Rev. & T.Code § 6932. [5] Taxation 371 €=23700 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Purpose of statute requiring a taxpayer to file a claim with the State Board of Equalization before commencing a tax refund lawsuit is to give the Board an opportunity to correct any mistakes, which helps the parties and the courts avoid unne- cessary litigation, and delineates and restricts the issues to be considered in a taxpayer's refund ac- tion. West's Ann.Cal.Rev. & T.Code § 6932. {6] Taxation 371 €=23704 371 Taxation . 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(H) Payment 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases Constitutional provision stating that an action may _ be maintained to recover overpaid tax“in such manner as may be provided by the Legislature” pre- cludes courts from expanding the methods for seek- ing tax refunds expressly provided by the Legis- lature. West's Ann.Cal. Const. Art. 13, § 32. [7] Taxation 371 ©3764 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 371EX(H) Payment 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases The sole legal avenue for resolving tax disputes is a postpayment refund action. West's Ann.Cal. Const. Art. 13, § 32. {8] Taxation 371 €=>3700 371 Taxation 371IX Sales, Use, Service, and Gross Receipts Taxes 3710X(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Retail customers who pay sales tax reimbursement lack standing to assert a claim with the State Board of Equalization for a determination of excess col- lection of sales tax, since the customers are not the taxpayers. West's Ann.Cal.Rev. & T.Code §§ 6901, 6902. [9] Taxation 371 €->3704 371 Taxation 371TX Sales, Use, Service, and Gross Receipts Taxes 37 11X(H) Payment 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases Retail customers who pay sales tax reimbursement lack standing to maintain a suit for a sales tax re- © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 3 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) fund, becausethefiling of aclaim with the State ~~ Board of Equalization is a prerequisite to such a suit, and only the taxpayers may file such a claim. West's Ann.Cal.Rev. & T.Code §§ 6901, 6902. [10] Action 13 €=53 13 Action . 13] Grounds and Conditions Precedent 13k3 k. Statutory Rights of Action. Most Cited Cases A statute creates a private right of action only if the enacting body so intended. [11] Action 13 33 13 Action 131 Grounds and Conditions Precedent 13k3 k. Statutory Rights of Action. Most Cited Cases For a statute to create a private right of action,its intent to do so need not necessarily be expressed explicitly, but if not it must be strongly implied. [12] Action 13 €=>3 13 Action 13] Grounds and Conditions Precedent 13k3 k. Statutory Rights of Action. Most Cited Cases When regulatory statutes provide a comprehensive scheme for enforcement by an administrative agency, the courts ordinarily conclude that the Le- gislature intended the administrative remedy to be exclusive unless the statutory language or legislat- ive history clearly indicates an intent to create a private right of action. [13] Taxation 371 €-23704 371 Taxation 371EX Sales, Use, Service, and Gross Receipts Taxes 3711X(H) Payment _ 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases ~ Statute authorizing administrative claims for re- funds of excess sales tax reimbursement payments does not authorize a private action by a customer against a retailer for such reimbursement without a determination by the State Board of Equalization of whether excess sales tax reimbursement mustbere- funded. West's Ann.Cal.Rev. & T.Code § 6901.5; 18 CCR § 1700. See Cal. Jur. 3d, Sales and Use Taxes, §¢§ 12, 43, 81; 9 Witkin, Summary of Cal. Law (10th ed. 2005) Taxation, § 376. [14] Taxation 371 €23700 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 37 11X(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Only the State Board of Equalization, not the tax- payer's customer, may “ascertain” overpaymentof a sales tax reimbursement, as would support adminis- trative claim for refund. West's Ann.Cal.Rev. & T.Code § 6901.5; 18 CCR § 1700. [15] Taxation 371 €=>3710 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(D Collection and Enforcement 371k3710 k. Remedies for Wrongful En- forcement. Most Cited Cases Constitutional and statutory prohibitions on injunc- tions against collection of taxes prohibited custom- ers from obtaining injunctions against a retailer's collection of sales tax reimbursement, pursuant to the Unfair Competition Law (UCL) or the Con- sumers Legal Remedies Act (CLRA). West's Ann.Cal. Const. Art. 13, § 32; West's Ann.Cal.Rev. & T.Code § 6931; West’s Ann.Cal.Civ.Code § 1750 et seq. {16} Antitrust and Trade Regulation 29T ¢— 283 © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 4 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) 29TAntitrust and Trade Regulation =———C—™S 29TIT Statutory Unfair Trade Practices and ConsumerProtection 29TILKE) Enforcement and Remedies 29TILKE)1 In General 29Tk281 Exclusive and Concurrent Remedies or Laws 29Tk283 k. Judicial Remedies Prior to or Pending Administrative Proceedings. Most Cited Cases Taxation 371 €=>3704 371 Taxation 371IX Sales, Use, Service, and Gross Receipts Taxes 3711X(H) Payment 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases Customers could not assert Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), or money had and received claims against retailer for damages orrestitution for retailer's col- lection of allegedly excessive sales tax reimburse- ment, since doing so would circumvent the state constitution's limitation on remedies for allegedly illegal taxes and the statutory procedure for chal- lenges to sales taxes, where the State Board of Equalization had not administratively determined the applicability of the tax; circumventing the ad- ministrative process could involve the Board,retail- ers, and customers in unnecessary litigation. West's Ann.Cal. Const. Art. 13, § 32; West's Ann.Cal.Rev. & T.Code §§ 6931, 6932; West's Ann.Cal.Civ.Code § 1750 et seq. [17] Statutes 361 €==219(10) 361 Statutes 361 VI Construction and Operation 361V1(A) General Rules of Construction 361k213 Extrinsic Aids to Construction 361k219 Executive Construction 361k219(9) Particular State Statutes 361k219(10) k. Licenses and ~ Taxes. MostCitedCases Although the State Board of Equalization's inter- pretation of the sales tax laws does not bind the courts, the Board has expertise regarding sales tax issues that is entitled to consideration and respect. West's Ann.Cal.Rev. & T.Code § 6901 et seq. [18] Taxation 371 €=>3700 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 371LX(H) Payment 371k3699 Refunding Taxes Paid 371k3700 k. In General. Most Cited Cases Taxation 371 €->3704 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(H) Payment 371k3702 Recovery of Taxes Paid 371k3704 k. Actions. Most Cited Cases If a retailer, after exhausting its administrative rem- edies, prevails in a sales tax refund action against the State Board of Equalization, the retailer must refund associated sales tax reimbursement to cus- tomers. [19] Taxation 371 €->3623 371 Taxation 3711X Sales, Use, Service, and Gross Receipts Taxes 3711X(B) Regulations 371k3622 Statutory Provisions and Ordin- ances 371k3623 k. In General. Most Cited Cases The sales tax law employsrelatively artificial, rel- atively self-contained, concepts, and thus does not lenditself to interpretation with the use of concepts and policies from other, distinct areas of law. © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal. Rptr.3d 515 Page 5 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) West's Ani-Cat-Rev. & TCode § 690T et seq: *517 Lange & Koncius, Joseph J.M. Lange and Jef- frey A. Koncius, El Segundo,for Plaintiffs and Ap- pellants. The Kick Law Firm, Taras Kick, Los Angeles, and G. James Strenio for Michael McClain, Avi Feigen- blatt and Gregory Fisher, as Amici Curiae on behalf of Plaintiffs and Appellants. Morrison & Foerster, Miriam A. Vogel, David F. McDowell, and Samantha P. Goodman, Los Angeles, for Defendant and Respondent. Alston & Bird, Andrew E. Paris, Ethan D. Millar and Joann M. Wakana, Los Angeles, for The Dir- ectv Group, Inc. as.Amicus Curiae on behalf of De- fendant and Respondent. Edmund G. Brown Jr., Attorney General, David S. Chaney and Matt Rodriquez, Chief Assistant Attor- neys General, and Al Sheiden, Assistant Deputy At- torney General, as Amicus Curiae. *518 Kristine Cazadd,Robert W. Lambert and John L. Waid, Sacramento, for California State Board of Equalization as Amicus Curiae. KITCHING,J. INTRODUCTION In California, retailers are obligated to pay sales taxes to the state on their gross receipts, subject to certain exemptions. Retailers may, however, seek sales tax reimbursement from their customers. In this case, plaintiffs and appellants Kimberly Loeffler and Azucena Lemus contend that defend- ant and respondent Target Corporation ( Target) was not entitled to collect sales tax reimbursement on purchases of hot coffee “to go” becausesales tax was allegedly not due on such purchases. Plaintiffs seek a refund of sales tax reimbursement from Target on their own behalf and on behalf of the class they purport to represent. They also seek an injunction prohibiting Target from collecting ~~ sales tax reimbursement on purchases of hot coffee “to go.” The trial court sustained without leave to amend Target's demurrers to plaintiffs’ pleadings and entered judgment in favor of Target on the ground, among others, that article XIII, section 32 of the California Constitution (article XIII, section 32) bars plaintiffs' action. We affirm. [1] Article XIHI, section 32 prohibits injunctions against the collection of state taxes and provides that refunds of taxes may only be recovered in a manner provided by the Legislature. As our Su- preme Court explained in Woosley v. State of Cali- fornia (1992) 3 Cal.4th 758, 792, 13 Cal.Rptr.2d 30, 838 P.2d 758 (Woosley ), under Article XII, section 32, the courts cannot expand the methods for seeking tax refunds expressly provided by the Legislature. The purpose of this constitutional pro- vision is to ensure that governmental entities may engage in fiscal planning so that essential public services are not unnecessarily interrupted. The Legislature has enacted a statutory scheme for sales tax and associated sales tax reimbursementre- funds. The only way to litigate a sales tax refund dispute under this schemeis for the retailer, as the taxpayer, to pay the tax, exhaust its administrative remedies by filing a claim for a refund with the State Board of Equalization (Board), and if the claim is denied or not acted upon,to file a suit for a sales tax refund. Because they are not the taxpay- ers, plaintiffs cannot file a claim for a sales tax re- fund and thus cannot file a suit for a sales tax re- fund. In other words,plaintiffs do not have standing to commencea sales tax refundsuit. Customerslike plaintiffs, however, may obtain a re- fund of excess sales tax reimbursementcollected by a retailer. Under Revenue and Taxation Code sec- tion 6901.5 FNI and a related regulation (Cal.Code Regs., tit. 18, § 1700), retailers must refund excess sales tax reimbursementif (1) the Board ascertains, in responseto a claim filed by a retailer (§ 6904) or as a result of an audit (§ 7054) or other review (e.g., § 6481) by the Board, that excess sales tax re- © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 6 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) imbursementwascollected,or(2)the retailer pre- ~~ vails in a suit against the Board for a refund of overpaid sales taxes (§ 6933). Neither of these cir- cumstances exists here. Plaintiffs therefore are not entitled to a refund of alleged excess sales tax reim- bursement collected *519 by Target under thestat- utory scheme enacted bythe Legislature. FN1. Except as otherwise indicated, all references-to sections are to the Revenue and Taxation Code. Plaintiffs contend that they have a private right of action against Target for a refund of sales tax reim- bursement pursuant to section 6901.5, without giv- ing the Board an opportunity to resolve the sales tax issue presented here. We reject this argument. Section 6901.5 provides for a refund ofsales tax re- imbursement after the Board ascertains that such a refund is due. In this case, the Board has not ascer- tained whether or not sales tax was due on pur- chases of hot coffee “to go” at Target, nor has it de- termined that a sales tax reimbursement refund is due. Section 6901.5 therefore does not support plaintiffs' claims against Target. The complaint also alleges causes of action under unfair business practices and consumer protection statutes and a cause of action for money had andre- ceived. Plaintiffs seek damages, restitution and in- Junctive relief pursuant to these causes of action. However,plaintiffs are attempting to resolve a sales tax dispute by using consumer and common law remedies rather than the procedure set forth by the Legislature. This they cannot do underarticle XIII, section 32. Plaintiffs argue that they are not violating article XIfl, section 32, because they do notseek to enjoin the state from collecting sales taxes. Rather, plaintiffs contend, they seek to enjoin a private company from collecting sales tax reimbursement. Plaintiffs further contend that article XIII, section 32 is not implicated because they only seek a re- fund of sales tax reimbursement, not a refund of sales taxes. Wereject plaintiffs" argument and find that a court may not directly or indirectly enjoin or prevent the collection of a sales tax. As we will explain, the statutory scheme for sales taxes and sales tax reim- bursement is intertwined. A determination by a courtthat sales tax is not due on “to go” hot coffee purchases from Target, and an injunction against the collection of sales tax reimbursement by Target on such purchases, is effectively an injunction against the collection of sales tax by the state. Fur- ther, under article XLII, section 32, plaintiffs cannot circumventthe statutory schemefor sales tax reim- bursement refunds by asserting causes of action not contemplated by that scheme. Wetherefore affirm the judgment and hold that plaintiffs' action is barred by article XIIJ, section 32 and the sales tax statutes in the Revenue and Taxation Code. PROCEDURAL AND FACTUAL BACK- GROUND 1. Procedural History Plaintiffs commenced this action in October 2006, and in November 2006filed a First Amended Com- plaint (FAC) for six causes of action. In February 2007, the trial court sustained Target's demurrer to plaintiffs' fourth cause of action for money had and received without leave to amend. In addition, the court granted plaintiffs’ request to add the Board as a new defendant. In March 2007, plaintiffs filed a second amended complaint (SAC) for (1) violation of the Unfair Competition Law (UCL) (Bus. & Prof.Code, § 17200 et seq.), (2) violation of the Consumers Leg- al Remedies Act (CLRA) (Civ.Code, § 1750 et seq.), and (3) violation of section 6359 and *520 California Code of Regulations, title 18, sec- tion 1603 (regulation 1603). The second amended complaint did not name the Board as a de- fendant. FN2. Section 6359, subdivision (a) provides a sales tax exemption for “the © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 7 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 CalRptr.3d 515) “—————grossreceiptsof,theEa:39,43,9620-354rr storage, use, or other consumption in this state of, food products for human con- sumption.” This exemption, however, does not apply when “the food products are served as meals on or off the premises of the retailer” (§ 6359, subd. (d)(1)) or when “the food products are sold as hot prepared food products.”(§ 6359, subd. (d)(7).) The exemption also does not apply when “the food products sold are furnished in a form suitable for consumption on the seller's premises, and both of the following apply: [1] (A) Over 80 percentofthe seller's gross receipts are from the sale of food products. {{] (B) Over 80 percentof the seller's retail sales of food products are sales subject to tax pursuant to paragraph (1), (2), (3), or (7).” (§ 6359, subd. (d)(6).) FN3. Regulation 1603 sets forth specific rules regarding the application of sales tax to the sale of food products. We do not de- cide whetherthe sale of hot coffee “to go” at Target violated section 6359 or regula- tion 1603. In April 2007, the court sustained Target's demurrer to all causes of action of the SAC without leave to amend, and entered judgment in favor of Target. Plaintiffs filed a timely notice of appeal. 2. Allegations in Plaintiffs' Pleadings Plaintiffs bring this action on behalf of themselves and “all persons who are California residents who paid sales tax” to Target “for the purchase of hot coffee drinks ‘to go’ or for ‘take-out’ ” (the class). In their FAC and SAC,plaintiffs made the follow- ing allegations. FN4. For purposes of this appeal, we as- sume that the material facts in plaintiffs FAC and SACare true. (Rakestrawv. Cali- fornia Physicians’ Service (2000) 81 (Rakestraw).) Target “charged and collected sales tax” on pur- chases of “to go” and “take-out” hot coffee. These charges were prohibited by California law, specific- ally section 6359 and regulation 1603. As a result, plaintiffs suffered monetary loss. For example, in May 2006, plaintiff Azucena Lemus purchased hot coffee “to go” from a Target store located in Man- hattan Beach, California. On that occasion, Target uniawfully charged Ms. Lemus “$0.71 in sales taxes.” A. Allegations Regarding Money Had and Received Target “exacted” money from plaintiffs it “had no legal right” to receive. The money was“intended to be used for the benefit” of plaintiffs but was not used for plaintiffs’ benefit. Further, Target has not given the moneybackto plaintiffs, thereby causing plaintiffs damage. B. Allegations Regarding Unfair Competition Law Target is engaged in “unfair” and “unlawful” busi- ness acts or practices. By imposing sales tax on the purchase of hot coffee “to go” or for “take-out,” Target “unfairly and unlawfully increased the costs to Class members in direct contradiction to law.” Plaintiffs seek to enjoin Target from “improperly charging sales taxes to consumers who purchase hot coffee drinks ‘to go’ and for ‘take-out’,” and “restitution of any monies wrongfully acquired or retained” by Target as a result of its “ill-gotten gains” obtained by “unfair practices.” C. Allegations Regarding Consumers Legal Remed- ies Act The coffee purchased by plaintiffs and class mem- bers constituted goods purchased primarily for per- sonal, family or household purposes. Target viol- ated Civil Code section 1770, subdivisions (a)(2), © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 8 93 Cal.Rptr.3d 515,09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) (a)(3), and (a)(14) by misrepresenting that it had the legal right to charge consumers “sales taxes” on coffee purchased “to go” *521 or for “take-out.” It also violated Civil Code section 1770, subdivision (a)(19) when it inserted “an unconscionable provi- sion into contracts” by improperly charging sales tax on certain coffee purchases. Plaintiffs notified Target of their violations of the CLRA and demandedthat Target remedy its viola- tions. Target failed to do so within 30 days. As a result of Target's violations of the CLRA,plaintiffs and class members have suffered damages in “the amountof sales taxes wrongfully collected” by Tar- get from plaintiffs and other class members for the purchase ofhot coffee “to go” or for “take-out.” D. Allegations Regarding Revenue and Taxation Code Section 6359 and Regulation 1603 Target violated section 6359 and regulation 1603 “by charging the general public sales taxes for the sale of hot coffee drinks ‘to go’ or for ‘take-out’....”"Section 6901.5“provides a private right of action for consumers to bring suit against retailers such as Target to recoverillegally imposed sales taxes...” Plaintiffs pray for, inter alia, restitution and dam- ages in unspecifiedamounts, an injunction prohibit- ing Target from continuing its violations of the UCL and CRLA, and an award of attorney's fees and costs. CONTENTIONS Plaintiffs contend that the trial court erroneously sustained Target's demurrer to their cause of action for money had and received in their FAC and their three causes of action in their SAC. They contend that they can pursue a cause of action against Tar- get under section 6901.5, and that article XIII, sec- tion 32 does not bar their UCL, CLRA, and money had andreceived causes of action. 1. Standard ofReview “A demurrertests the legal sufficiency of factual al- legations in a complaint.” (Rakestraw, supra, 81 Cal.App.4th at p. 42, 96 Cal.Rptr.2d 354.) “On ap- peal, a plaintiff bears the burden of demonstrating that the trial court erroneously sustained the demur- rer as a matter of law. This court thus reviews the complaint de novo to determine whetherit alleges facts stating a cause of action under any legal the- ory.” (Ud. at p. 43, 96 Cal.Rptr.2d 354.) 2. Overview ofthe California Sales Tax A. The Retailer's Obligation to Pay Sales Tax and Ability to Obtain Reimbursement From Its Custom- ers The California sales tax is an excise tax imposed on retailers for the privilege of selling tangible person- al property in this state. (§ 6051; City ofPomonav. State Bd. of Equalization (1959) 53 Cal.2d 305, 309, 1 Cal.Rptr. 489, 347 P.2d 904.) It is presumed that all of a retailer's gross receipts are subject to the sales tax unless the retailer establishes that pur- chases fall under one of many specified exemp- tions. (§ 6091, § 6351 et seq.) Retailers are required to file quarterly sales tax returns and make quarterly payments to the state. (§§ 6451-6459.) If a retailer wrongfully evadessales taxes,it is subject to civil and criminal penalties. (§§ 7152-7155.) [2](3] Although retailers commonly refer to “sales tax” on their invoices to customers, it is important to keep in mindthat “[t]he sales tax is imposed on the *522 seller, not upon the buyer.” (Gen. Elec. Co. v. State Bd. of Equalization ie) 1} Cal.App.2d 180, 185, 244 P.2d 427.) In other words, “[t}]he tax relationship is between theretailer only and the state; and is a direct obligation of the former.” (Livingston Rock & Gravel Co. v. De Salvo (1955) 136 Cal.App.2d 156, 160, 288 P.2d 317 (Livingsion).) © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 9 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) FNS. By contrast, the use tax is tevied upon the purchaser. (Bank of America v. State Bd. of Equal.(1962) 209 Cal.App.2d 780, 799, 26 Cal.Rptr. 348; § 6202.) A use tax is an excise tax imposed on tangible personal property purchased from any re- tailer for storage, use or other consumption in California. (§ 6201.) Property subject to sales tax is exempt from use tax. (§ 6401.) A retailer, however, may seek sales tax reimburse- ment from a purchaser. “Whethera retailer may add sales tax reimbursement to the sales price of the tangible personal property sold at retail to a pur- chaser depends solely upon the terms of the agree- ment of sale.” (Civ.Code, § 1656.1, subd. (a).) Un- der certain circumstances, it is presumed that the purchaser agreed to pay the retailer sales tax reim- bursement. For example,if sales tax reimbursement is shown onthe sales check or other proofof sale,it is presumed that the contract between the retailer and the purchaser provides that the purchaser will reimburse the retailer for the sales tax the retailer must pay the state. (/d. at § 1656.1, subd. (a)(2).) B. The Board is Charged With Administrating and Enforcing the Sales Tax Statutes The Board is charged with administrating and en- forcing the sales tax statutes. (See §§ 7051-7060.) Amongother duties, the Board enacts sales tax reg- ulations (§ 7051), reviews sales tax returns and re- ports by retailers and others (§§ 6481, 7055), and conducts audits of retailers (§ 7054). C. The Legislature Has Created a Comprehensive System for Sales Tax and Sales Tax Reimbursement Refunds The Legislature has created a comprehensive sys- tem for seeking sales tax refunds and associated sales tax reimbursement refunds. Sections 6901 to 6908 set forth the provisions for filing a claim with the Board. Sections 6931 to 6937 set forth the pro- visions forfiling a lawsuit for sales tax refunds. ~~Under this statutory scheme, a réfailer, as the tax- payer, can file a sales tax refund claim with the Board. (See §§ 6901-6908, 6932.) There are certain statutory requirements for and limitations on claims with the Board. Forinstance, a claim filed for or on behalf of a class of taxpayers must, inter alia, be “accompanied by written authorization from each taxpayer sought to be included in the class.”(§ 6904, subd. (b)(1).) The Board has promulgated regulations governing claims for tax refunds with the Board, including claims for refunds of erroneously coilected sales tax. (See Cal.Code Regs., tit. 18, § 5230 et seq.) These regulations specify the means by which re- tailers, as taxpayers, may file a claim with the Board for overpaid sales taxes. [4] The Legislature has provided that filing a claim with the Board is a prerequisite to maintaining a suit for a refund of sales taxes. (4 & MRecords, Inc. v. State Bd. of Equalization (1988) 204 Cal.App.3d 358, 367, 250 Cal.Rptr. 915 (4 & M Records ), disapproved on another ground in *§23Preston v. State Bd. Of Equalization (2001) 25 Cal.4th 197, 220, fn. 7, 105 Cal.Rptr.2d 407, 19 P.3d 1148 (Preston ).) Section 6932 states: “No suit or proceeding shall be maintained in any court for the recovery of any amount alleged to have been er- roneously or illegally determined or collected un- less a claim for refund or credit has been duly filed pursuant to Article 1 (commencing with Section 6901.)” [5] The purpose of requiring a taxpayer to file a claim with the Board before commencing a tax re- fund lawsuit is to give the Board an opportunity to correct any mistakes. (Preston, supra, 25 Cal.4th at p. 206, 105 Cal.Rptr.2d 407, 19 P.3d 1148.) This,in turn, helps the parties and the courts avoid unneces- sary litigation (ibid.), and “delineates and restricts the issues to be considered in a taxpayer's refund action.” (Atari Inc. v. State Bd. of Equalization (1985) 170 Cal.App.3d 665, 672, 216 Cal.Rptr. 267; see also A & M Records, supra, 204 Cal.App.3d at p. 367, 250 Cal.Rptr. 915 [a refund © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal.Rptr.3d 515 Page 10 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) suitis “confined to thegrounds set forth” in the claim with the Board].) As part of its comprehensive scheme, the Legis- lature has provided a means for customers such as plaintiffs to obtain a refund of collected sales tax reimbursement. Section 6901.5 provides that a re- tailer who has collected excess sales tax reimburse- ment from a customer must return the moneyto the customer whopaidit or remit the fundsto thestate. Specifically, section 6901.5 states: “When an amount represented by a person [retailer] to a cus- tomer as constituting reimbursement for taxes due under this part is computed upon an amountthat is not taxable or is in excess of the taxable amount and is actually paid by the customer to the person [retailer], the amount so paid shall be returned by the person [retailer] to the customer upon notifica- tion by the Board of Equalization or by the custom- er that such excess has been ascertained. In the event of his or her failure or refusal to do so, the amount so paid, if knowingly or mistakenly com- puted by the person [retailer] upon an amountthat is not taxable or is in excess of the taxable amount, shall be remitted by that person [retailer] to this state.” The Board has promulgated California Code of Regulations, title 18, section 1700 (regulation 1700) relating to the administration and enforce- ment of section 6901.5. Under regulation 1700, a customer has paid “excess tax reimbursement” when, inter alia, “an amount represented by a per- son [retailer] to a customer as constituting reim- bursement for sales tax is computed upon an amountthat is not taxable....” (Cal.Code Regs., tit. 18, § 1700, subd. (b)(1).) That is precisely the situ- ation plaintiffs claim exists here. Regulation 1700 further provides, inter alia: “Whenever the board ascertains that a person [retailer] has collected excess tax reimbursement, the person [retailer] will be afforded an opportunity to refund the excess collections to the customers from whom they were collected. In the event of failure or refusal of the person [retailer] to make suchrefunds, the board will make a determination against the person [retailer] for the amount of the excess tax reimbursement collected and not previ- ously paid to the state, plus applicable interest and penalty.” (Cal.Code Regs., tit. 18, § 1700, subd. (b)(2).) 3. Article XI, Section 32 and Its Underlying Policies Article XIII, section 32 states: “No legal or equit- able process shall issue in any proceeding in any court against this State or any officer thereof to pre- vent or enjoin the collection of any tax. After pay- ment of a tax claimed to be illegal, an action may be maintained to recover the tax paid, with interest, in such manner as may be provided by the Legis- lature.” *524 [6][7] The first sentence of article XIII, sec- tion 32 bars injunctions against the collection of state taxes. The second sentence ofarticle XUI, sec- tion 32 precludes, inter alia, courts “from expand- ing the methods for seeking tax refunds expressly provided by the Legislature.” (Woosley, supra, 3 Cal.4th at p. 792, 13 Cal. Rptr.2d 30, 838 P.2d 758.) The two provisions together “establish that the sole legal avenue for resolving tax disputes is a postpay- ment refund action.” (State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638, 217 Cal.Rptr. 238, 703 P.2d 1131.) The underlying policy behind article XII, section 32 is that “strict legislative control over the manner in which tax refunds may be sought is necessary so that governmententities may engage in fiscal plan- ning based on expected tax revenues.” (Woosley, supra, 3 Cal.4th at p. 789, 13 Cal. Rptr.2d 30, 838 P.2d 758.) The state needs to engage in such plan- ning and revenue collection even during litigation “so that essential public services dependent on the funds are not unnecessarily interrupted. [Citation.] ‘Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and © 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works. 93 Cal. Rptr.3d 515 Page 11 93 Cal.Rptr.3d 515, 09 Cal. Daily Op. Serv. 5834, 2009 Daily Journal D.A.R. 6875 (Cite as: 93 Cal.Rptr.3d 515) thereby cause serious detriment fo the public.” ” (Pacific Gas & Electric Co. v. State Bd. ofEqualiz- ation (1980) 27 Cal.3d 277, 283, 165 Cal. Rptr. 122, 611 P.2d 463 (Pacific Gas & Electric ).) “«