LOEFFLER v. TARGET CORPORATION

Appellants’ Reply to Supplemental Brief

Cal.January 27, 2014

PUBLIC JUSTICE SUPREME COURT COPY . January:27, 2014 fn Hon. Tani Cantil-Sakauye, Chief Justice Associate Justices Supreme Court of the State of California 350 McAllister Street San Francisco, CA 94102-4797 Re: Loeffler, et al. v. Target Corporation Supreme Court No. $173972 Dear Chief Justice Cantil-Sakauye and Associate Justices: Pursuant to the Court’s order of December16, 2013, Plaintiffs- Appellants respectfully submit this letter brief in reply to Target’s Supplemental Brief of January 10, 2014 (“Target Jan. 10 Brief’). I. Theallegations in Plaintiffs’ operative complaint establish causes of action under the UCL and CLRA. Notwithstanding Target’s protestations that it has done nothing wrong, the central allegations in the operative complaint are to the contrary. Plaintiffs havealleged that Target systematically misrepresented to customers the taxability of a tax-exemptretail good, andthat it unlawfully imposed sales tax reimbursement charges on such goods. Asa result, Plaintiffs and the class they | represent were harmedbyvirtue of the fact they paid more moneyto Target than they otherwise would have been willing to pay. See Kwikset Corp. v. Super. Ct. (2011) 51 Cal. 4th 310, 330, 120 Cal.Rptr.3d 741 (economic injury exists where misrepresentation in label caused consumerto pay extra money). Asexplainedin Plaintiffs’ opening letter brief, those allegations, if true, are more than sufficient to state a cause of action under the UCL and CLRA. When reviewing an order sustaining a demurrer, the Court “is obliged to accept as true all well-pleaded allegations of the complaint.” Aryeh v. Canon Bus. Solutions, Inc. (2013) 55 Cal.4th 1185, 1189, 151 Cal.Rptr.3d 827. If the caseis allowed to go forward, Target will have ample opportunity to proveits now bald assertion that it has remitted “every penny” of the money it acquired by imposing false sales tax reimbursementcharges to the Board. Target Jan. 10 Br. 1. But even if that turns out to betrue, it would not defeat SUPREME COURT FILED JAN 2.7 2014 Frank A. McGuire Clerk ~ Deputy Nations! Headquartars 1825 K Street NW, Suite 200 Washington, DC 20006 ph: 202-797-8600 fax: 202-232-7203 West Coast Office 555 12th Street, Suite 1230 Oakland, CA 94607 ph: 510-622-8150 fax: 510-622-8155 wwwpublicjustica.netS Chief Justice Cantil-Sakauye Associate Justices January 27, 2014 the Plaintiffs’ causes of action. Regardless of whether Target kept the money or remitted it to the Board,it has violated the UCL and CLRAif it made misrepresentations to its consumers about whetherits sales were subject to sales tax and imposedsales tax reimbursement charges that are unauthorized underthe law. As explainedin Plaintiffs’ January 13 letter brief, whether Target in fact profited or stood to gain economically from its violations is legally beside the pointat this stage of the case. See Kwikset, 51 Cal.4th at 336 (unfair business practices “often involvea loss by the plaintiff without any corresponding gain by the defendant”).' In any event, Target’s repeated unsupported claimsthat it is an “honest business” that has engaged in “no wrongful conduct,” andthat thereis thus “no need for a consumerprotection statute” (Target Jan. 10 Brief 8) would never be valid grounds for sustaining a demurrer. See Appellants’ Reply Brief 22-23. It is black-letter law that “[t]the unsworn statements, factual assertions, and arguments of counsel are not evidence.” Penick v. Most Worshipful Prince Hall Grand Lodge F & A M ofAla., Inc. (Ala. 2010) 46 So. 3d 416, 431 (citation omitted); see also Cal. Rule of Court 8.204(a)(1)(C). “The only issue involved in a demurrer[ ] is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” SKFFarms v. Superior Court (1984) 153 Cal.App.3d 902, 905, 200 Cal.Rptr. 497. At this early stage of the case, a court is not concerned about how theplaintiff might prove the allegations contained in the complaint, nor that the facts may notbeclearly stated or may be intermingled with irrelevant facts. Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 572, 108 Cal.Rptr. 480. Indeed,if all that was required for dismissal of a case was an unsupported statement that the defendant has done nothing wrong, no cases would ever proceed past demurrer. In sum, Target has failed to make a single argumentthat calls into question the validity of Plaintiffs’ claims under the UCL and CLRA. Ml At most, Target’s unsupported assertion that it did not profit amounts to an attempt to assert a type of equitable defense. See Cortez v. Purolator Air Filtration Prods. Co. (2000) 23 Cal.4th 163, 179, 96 Cal.Rptr.2d 518. Equitable defenses may not wholly defeat a UCL claim, and may only “guide the court’s discretion in fashioning[ ] equitable remedies” underthestatute. Jd. 2 Chief Justice Cantil-Sakauye Associate Justices January 27, 2014 Il. The Court of Appeals decision, if permitted to stand, would also wipe awaycases involving a so-called “charlatan”retailer that keeps moneyit acquires by imposing tax-reimbursement charges on tax-exempt items. Although muchofTarget’s brief (at 8-11) repeats verbatim points madein its Answer Brief on the Merits (at 24-31), Target now takes the remarkable position that the opinion of the Court of Appeal “says nothing aboutthe situation posed by this Court’s current questions about a dishonest retailer who claimsto be charging sales tax reimbursementbutin fact does not remit the charged amount to the Board” (Target Jan. 10 Brief 2). That is dead wrong. The lower court’s sweeping interpretation of Article XIII, section 32 of the California Constitution and Tax Code § 6931 would render those provisions an absolute bar to consumer protection lawsuits alleging wrongful sales tax reimbursement charges. See Loeffler v. Target Corp. (2009) 93 Cal. Rptr.3d 515, 529 n.11. Cases involving retailers who illegally pocketed the purported sales tax reimbursement, as well as those involving retailers who paid it as tax to the State, would be equally barred by that rule. Notably, Target now concedesthat a cause of action may be brought by consumers under the UCL and CLRA based on anallegation that a retailer did not remit to the State the moneyit acquired by charging sales tax reimbursement. (Target Jan. 10 Brief 1.) This position is a stark departure from Target’s central argumentin this case: that Article XIII, section 32 gives retailers complete immunity from liability under consumerprotection lawsin all cases concerning purported sales tax reimbursement charges. Sincerely, / d/ f ( 4 : J Leslie“. Bailey” Staff Attornéy Public Justice Counsel for Plaintiffs/Appellants CERTIFICATE OF COMPLIANCE Counsel of Record hereby certifies that pursuant to Rule 8.204(c)(1) or 8.360(b)(1) of the California Rules of Court, the enclosed brief of Plaintiffs/Appellants is produced using 13-point Roman type including footnotes and contains approximately 1,009 words, whichis less than the total words permitted by the rules of court. Counsel relies on the word count of the computer program usedto preparethis brief. Dated: January 27, 2014 By f ” ; Ae Leslie A. Bailey” Counsel for Plaintiffs/Appellants PROOF OF SERVICE I, Kathleen Morris, declare as follows: I am employed in the County of Alameda, State of California. [ am over the age of eighteen and nota party to the within action. My businessaddressis 555 12™ Street, Suite 1230, Oakland, California, 94607. On January 27, 2014, I served the foregoing letter brief in reply to Target’s Supplemental Brief on the interested parties in this action as follows: Miriam Vogel Morrison & Foerster, LLP 707 Wilshire Blvd., Suite 6000 Los Angeles, CA 90017-3543 Attorneysfor: Target Corporation, Defendant and Respondent David Frank McDowell Morrison & Foerster, LLP 707 Wilshire Blvd., Suite 6000 Los Angeles, CA 90017-3543 Attorneysfor: Target Corporation, Defendant and Respondent Phillip Jon Eskenazi Hunton and Williams LLP 550 W. HopeStreet, Suite 2000 Los Angeles, CA 90071 Albertson’s, Inc., Amicus curiae Barry Dion Keene Attorney at Law 1047 - 56th Street Sacramento, CA 95819 William T. Bagley, Amicus curiae; Barry Dion Keene, Amicus curiae Samantha Perrette Goodman Morrison & Foerster, LLP 707 Wilshire Blvd., Suite 6000 Los Angeles, CA 90017-3543 Attorneysfor: Target Corporation, Defendant and Respondent Benjamin Israel Siminou Thorsnes Bartolotta McGuire LLP 2550 Fifth Avenue, 11th Floor San Diego, CA 92103 Carmen Herr, Amicus curiae Heidi Spurgin, Amicus curiae Mark Hegarty, Amicuscuriae Joseph Thompson, Amicus curiae J. Bruce Henderson Attorney at Law 4294 Kendall Street San Diego, CA 92109 Association of Concerned Taxpayers, Amicus Curiae John Lee Waid California State Board of Equalization 450 N. Street, MIC 82 © Sacramento, CA 95814 Board of Equalization, Amicus curiae Sharon J. Arkin The Arkin Law Firm 333 S. Grand Avenue, 25th Floor Los Angeles, CA 90012 Consumer Attorneys of California, Amicus curiae Richard Thomas Williams Holland and Knight LLP 633 W.Fifth Street, 21st Floor Los Angeles, CA 90013 CVS Caremark Corp, Amicus curiae CVSPharmacy, Inc., Amicus curiae ThomasAlistair Segal Taras Peter Kihiczak The Kick Law Firm APC 201 Wilshire Boulevard, Suite 350 Santa Monica, CA 90401 AviFeigenblatt, Amicus curiae Gregory Fisher, Amicus curiae Michael McClain, Amicus curiae Alexandra Robert Gordon Office of the Attorney General 455 Golden Gate Avenue, Suite 11000 San Francisco, CA 94102 Kamala Harris, Amicus curiae Albert Norman Shelden Office of the Attorney General 110 West "A" Street, Suite 1100 Pamela Pressley Foundation for Taxpayer and Consumer Rights 1750 Ocean Park Boulevard, Suite 200 Santa Monica, CA 90405 Consumer Watchdog, Amicus curiae Consumeraffairs.com, Amicus curiae National Association of Consumer Advocates, Amicus curiae Public Good, Amicus curiae Andrew Eugene Paris Alston and Bird LLP 333 S. HopeStreet, 16th Floor Los Angeles, CA 90071 DirecTV, Inc., Amicus Curiae Albert Douglas Mastroianni Mastoianni Law Firm 633 WestFifth Street, 28th Floor Los Angeles, CA 90013 Jason Frisch, Amicus curiae Joyce E. Hee Office of the Attorney General 1515 Clay Street, Suite 2000 P.O. Box 70550 Oakland, CA 94612 Kamala Harris, Amicus curiae Frederick W. Kosmo Theresa Osterman Stevenson Wilson Turner Kosmo LLP 550 West "C" Street, Suite 1050 San Diego, CA 92101 San Diego, CA 92101 Kamala Harris, Amicus curiae §=PETCO Animal Supplies Stores, Inc., Amicus curiae Judith Esther Posner Margaret Anne Grignon Reed Smith LLP Reed Smith LLP 355 S. Grand Avenue, Suite 355 S. Grand Avenue, Suite 2900 2900 Los Angeles, CA 90071 Los Angeles, CA 90012 Walgreen Company, Amicus curiae Rite Aid Corp., Amicus curiae [X] BY MAIL: Byplacing a true copy thereofenclosedin a sealed envelope addressed as above, with postage thereon fully prepaid in the United States mail, at Oakland, California. I am readily familiar with the firm’s practice for collection and processing of correspondence for mailing. Underthat practice,it would be deposited with the US Postal Service on the same day with postage thereon fully prepaid at Oakland, California, in the ordinary course of business. I am aware that on motion ofthe party served, service is presumed invalid if the postal cancellation date or postage meter date is more than one dayafter the date of deposit for mailing containedin this affidavit. CCP § 1013a(3). I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on January 27, 2014, at Oakland, California. MitesDp SenMortis