McCLAIN v. SAV-ON DRUGSAmicus Curiae Brief of Howard Jarvis Taxpayers AssociationCal.April 20, 2018SUPREME COURT FILED APR 2.0 2018 Jorge Navarrete Clerk $241471 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA rF 4 veputy MICHAEL McCLAIN,et.al., Plaintiffs, Appellants and Petitioners, Vv. SAV-ON DRUGS,et.al., Defendants and Respondents. Review of a Published Decision of the Second Appellate District, Case Nos. B265011 and B265029 Affirming a Judgment of Dismissal Following An Order Sustaining a Demurrer Without Leave to Amend On Appeal from the Superior Court of the County of Los Angeles The Honorable John Shepard Wiley, Judge Case Nos. BC325272 and BC327216 HOWARD JARVIS TAXPAYERS ASSOCIATION’S APPLICATION FOR LEAVE TO FILE BRIEF OF AMICUS CURIAE AND BRIEF OF AMICUS CURIAE IN SUPPORT OF APPELLANTS Jonathan M. Coupal, SBN 107815 Trevor A. Grimm, SBN 34258 Timothy A. Bittle, SBN 112300 Laura E. Murray, SBN 255855 Howard Jarvis Taxpayers Foundation 921 Eleventh Street, Suite 1201 Sacramento, CA 95814 Telephone: (916) 444-9950 Facsimile: (916) 444-9823 Email: laura@hjta.org Counsel for Amicus TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES .........................0..... 3 CASES 2...eeeete e een ees 3 STATUTES 2.0.0.0... 0... ccceee eens 4 APPLICATION FOR LEAVE TO FILE .................... 5 AUTHORSHIP AND FUNDING .................... 6 BRIEF OF AMICUS CURIAE.....................0000... 8 INTRODUCTION ......... 0.0... 0c e eee eee 8 QUESTIONS PRESENTED ........................ 10 ARGUMENT...........0 00000. cee eee eee 11 I. As Prophesied by the Diamond National Dissent, the McClain Court of Appeal Has Imposed a Legal Obligation on the Purchaser To Pay the Tax or To Reimburse the Vendor .................. 11 II. Diabetic Consumers' Access To Medical Supplies Is Effectively Conditioned Upon Forfeiting Constitutional and Procedural Rights At Point of Sale ..............00.. 16 III. Per National Ice and Loeffler, Courts of Appeal Should Not Defer All Consumer Sales Tax Issues to the Legislature under Article 13 Section 32 of the California Constitution ............. 0.0.00 cee eee 19 CONCLUSION .......... 00... eee cee eens 23 WORD COUNT CERTIFICATION .................. 25 2 TABLE OF AUTHORITIES PAGE(S) CASES: Ardon v. City ofLos Angeles (2011) 52 Cal4th 241 20...ees22 Bates v. Franchise Tax Bd. (2004) 124 Cal.App.4th 367 ......0.00 00.0000 ee eee eee 22 Diamond National Corp. v. State Bd. ofEqualization (1976) 425 US. 268200spassim Flying Dutchman Park, Inc. v. City and County of San Francisco (2001) 93 Cal.App.4th 1129 ...... 0... ...0..0 00.000. 22 Helms Bakeries v. State Bd. ofEqualization (1942) 53 Cal.App.2d 417 2.0... ccc ccc nee eee 21 Honeywell, Inc. v. State Bd. ofEqualization (1975) 48 Cal.App.3d 907 ...... 00.00.00 cece eee eee 15 Javor v. State ofEqualization Bd. (1974) 12 Cal.8d 790 2.0...ceceees passim Koontz v. St. Johns River Mgmt. Dist. (2013) 570 U.S. 595, 1383 S.Ct.. 2586 ............000000. 17, 18 Loeffler v. Target Corp. (2014) 58 Cal. 4th 1081... 02... eee eee 8, 11, 19, 20 McClain v. Sav-on Drugs (2017) 9 Cal.App.5th 684 2.2.0... eee eee passim National Ice & Cold Storage Co. of California v. Pacitic Fruit Express Co. (1938) 11 Cal.2d 283 20.0...eeeeee passim Ritter v. Patch (1859) 12 Cal. 298 ..0eeeen 22 STATUES: Cal. Constitution Article XIII, Section 32 .... 0... 0... cee ee passim Article XTIITA ... 0... 0...eeeee eenas 5 Article XTIIB ww...e enna 5 Article XTIIC oo...ceeee nae 5 Cal. Code Regs Title 18, § 1591.1 2... 0...eee13 Title 18, § 1591.10b)(5) oo.cee eee ee eee 16 Civil Code §§ 1636-1663 00...ec ec eee cence eeeeeneees 10 § 1656.1 2.0. ccc ctrneneeeees 9,11 § 1656.1) oo.cece eee eens 12, 22 § 3523.00.00. eee eaeSec e eens eveenteveeeeeeres 10, 22 Government Code § 113500b)) 2.cece cece eee ees 15 Revenue & Taxation Code §6012eeeteen e nes 8, 10 18, 10 § 6369(e) cee ee tne tenes 16 § 6901.5 2.eeeteen eens 13, 21 §§ 6931-6937 0...eee cece eect eeetentenney 8 APPLICATION FOR LEAVE TO FILE Howard Jarvis Taxpayers Association (“HJTA”) is a - California nonprofit public benefit corporation with over 200,000 members. Thelate Howard Jarvis, founder of HJTA, utilized the People’s reserved powerof initiative to sponsor Proposition 13 in 1978. Proposition 13 was overwhelmingly approved by California voters, and added Article XIIIA to the California Constitution. By limiting the rate and annual escalation of property taxes, Proposition 13 has madeit affordable for millions of fixed-income Californians to continue living in their own homes. Inthis case, HJTAfeels concerned about the affordability of another essential aspectof life - medical care. In 1996, HJTA authored and sponsored Proposition 218, the Right to Vote on Taxes Act. California voters passed Proposition 218, which added Articles XIJIC and XIIID to the California Constitution and placed strict limitations on local governmental entities’ authority to levy taxes, fees, and charges for property-related services. HJTA also participated in the drafting process of Proposition 26 which, in 2010, amended Articles XIIIA and XIJIC to expand and simplify the definition of a “tax.” Because HJTAis routinely in court enforcing Propositions 13, 218, and 26, HJTA has a vested interest in the determination of basic rights and remedies essential to all taxpayerlitigation. The functioning of the “payfirst, litigate later” rule of Article 13 section 32 of the California Constitution, along with the deference to the legislative branch as the general authority on tax refund procedures,is of regular interest to HJTA. While the rule serves the purpose of ensuring stable government revenues, this case reachesits outer limits. In this case, HJTA is deeply concerned that the true taxpayer does “pay first,” but has no option to “litigate later.” | On the general merits of this case, HJTA supports Plaintiffs and Appellants and encourages this Court to overturn the decision of the Second District, Division Two, Court of Appeal. HJTA requests leave from this Courtto file the accompanying Brief of Amicus Curiae in order to lend its expertise and perspective as taxpayer advocates. AUTHORSHIP AND FUNDING No party or attorney to this litigation authored the proposed amicusbrief or any part thereof. No one other than HJTA made a monetary contribution toward the preparation or 6 submission of the brief. For the foregoing reasons, HJTA respectfully requests this Court’s permissionto file the attached Brief of Amicus Curiae. Dated: April 12, 2018 Respectfully submitted, JONATHAN M. COUPAL TREVOR A. GRIMM TIMOTHYA. BITTLE LAWRA E. MURRAY Stun. € /7 LAURA E. MURRAY Counsel for Amicus BRIEF OF AMICUS CURIAE INTRODUCTION California's Statutory Myth: The legal incidence of sales tax is on the retailer. (Rev. & Tax. Code, § 6051; McClain v. Sav-on Drugs (McClain’)(2017) 9 Cal.App.5th 684, 698, 705 [admitting the consumeris the “economic taxpayer” who hasthe obligation to pay, “but not the right to seek a refund,” while the vendoris the “legal taxpayer”].) Constitutional, Functional and Statutory Reality: The purchaseris the taxpayer. (Rev. & Tax. Code, § 6012'; National Ice & Cold Storage Co. of California v. Pacific Fruit Express Co. (“National Ice’)(1938) 11 Cal.2d 283, 292 [Regarding the original statute wherein “tax hereby imposedshall be collected by the ‘Amicus refers to the last sentence of this section which explains that if the retailer “absorbs” the “sales tax” paid by the customer,the retailer’s taxable gross receipts are deemed to equal the total amount charged to the customer without any credit for the tax. In other words, the retailer would then pay tax on the sales price plus the “sales tax,” so that the tax the retailer would pay is now slightly more than whatthe customer would have thought he hadpaid in “sales tax.” (See Loeffler v. Target Corp. (2014) 58 Cal. 4th 1081, 1109.) Thus,if the retailer were the true taxpayer, the amount the retailer would pay would be a different andslightly greater amount. What the customer would pay would simply be a higher actual sales price whichresults in almost compensating the retailer. Unless, in the rare instance, the retailer “absorbs” the tax which then createsa different “amount”of tax, the retailer is nothing more than a pass-through device of the real tax paid by the customer. (See National Ice, supra, 11 Cal.2d at pp. 290;292.) That the “amount” of tax (See Rev. & Tax. Code, §§ 6931-6937) is different depending on whetherit was paid by the customeras “sales tax reimbursement”or by the retailer as “absorbed” demonstrates that the customeris the real taxpayer when paying what we have termed in California “sales tax reimbursement.” 8 retailer from the consumerin so far as the same can be done” and which could not be “absorbed,” the Court held that allowing the retailer to force the purchaser to pay theretailer’s tax debt is unconstitutional, but allowing the “retailer to ‘pass on’ the tax to a purchaser with the latter’s consent thereto” is acceptable.]; Civ. Code, § 1656.1; Diamond National Corp. v. State Bd. of Equalization (‘Diamond National’)(1976) 425 U.S. 268 [“We are not boundby the California court's contrary conclusion and hold that the incidenceof the state and local sales taxes falls upon the national bank as purchaserand not upon the vendors.”].) Grappling with the statutory myth, the Court of Appeal in McClain rests its decision on little-bit-pregnant foundation of purchasers as “economic taxpayers,” but not legal taxpayers. (McClain, supra, 9 Cal.App.5th at pp. 698; 705.) Yet, the United States Supreme Court had held in Diamond National! that the purchaseris the real taxpayer. (425 U.S. 268.) This court in National Ice likewise had acknowledgedthat the tax is “passl[ed] on” to the customer. (11 Cal.2d at pp. 290; 292.) Does the tax’s nature truly change once “passed on”? This Court declared: [Tlo baldly legislate that without, and in absenceof either due or any processof law, a legal debt thatis owed by one person must be paid by another,is quite 9 at variance with ordinary notions of that which may be termed the administration ofjustice. (11 Cal.2d at p. 291, emphasis added.) There is neither due nor “any processof law” available here to the diabetic customers whohavepaid the sales tax for eighteen years. As interpreted by the California cases, which have enforced both Revenue & Taxation Code section 6051 (denying customers a remedy against the State on the theory that theseller, not the customer, is the taxpayer) and section 6012 (denying customers a remedy againstthe seller on the theory that the tax was due and the customer agreed to reimbursetheseller at the point of sale), the tax codeis in irreconcilable conflict with Civil Code section 3523, which promisesthat "[flor every wrong there is a remedy.” (See also Title 3 Interpretation of Contracts, Civ. Code, §§ 1636- 1663.) This conflict results in constitutional and procedural deprivationsto the true taxpayer recognized by this Court in National Ice and by the United States Supreme Courtin Diamond National. QUESTIONS PRESENTED The issue as summarized by this Court is: “Can a purchaser of products allegedly exempt from sales tax but for which the retailer collected sales tax reimbursementbring an action to 10 compeltheretailer to seek a sales tax refund from the State Board of Equalization and remit the proceeds to purchasers?” Specifically, the issues are: 1) Is McClain inconsistent with this Court’s holdings in National Ice & Cold Storage Co.v. Pacific Fruit Express Co. (“National Ice’)(1938) 11 Cal.2d 283, Javor v. State Equalization Bd. (Javor’)(1974) 12 Cal.3d 790, and Loeffler v. Target Corp. (“Loeffler’(2014) 58 Cal.4th 108?, and2) Is it possible to harmonize Civil Code section 1656.1 with the tax code without harmingthe diabetic consumers’ constitutional or proceduralrights? ARGUMENTS I. As Prophesied by the Diamond National Dissent, the McClain Court of Appeal Has Imposed a Legal Obligation on the Purchaser To Pay the Tax or To Reimburse the Vendor. The dissent in Diamond National! declared that “it is only if the State imposesa legal obligation on the purchasereither to pay the tax, or to reimburse the vendorfor a tax payment, that the legal incidence is on the purchaser.” (Diamond National, supra, 425 U.S.at p. 270 (dis. opn. of Stevens, J.).) Even that has now occurred. Purchasers no longer haveaneffective opportunity to rebut the presumption of their agreement to pay the sales tax 1] reimbursement. (See Civ. Code, § 1656.1(d).) In the Court of Appeal’s own words, the customer has but “the practical equivalent of allowing them to tug (albeit persistently) at the Board's sleeve.” (McClain, supra, 9 Cal.App.5th at p. 706.) Civil Code section 1656.1(d) is now meaningless. The purchaser is the real taxpayer under the majority opinion of Diamond National which clearly acknowledges that “the incidence of the state and local sales taxes falls upon the national bank as purchaser and not upon the vendors.” (425 U.S. at p. 268.) Following the literal California statute declaring the retailer the taxpayer, the McClain Court of Appeal now obligates the purchaserto pay the tax or reimburse the vendor. Thus, even applying the Diamond National dissent, the purchaser should have standing in a refund action because the legal incidence of taxation is squarely upon him. McClain rests on the premise that the customer will have no rights unless the Department of Tax and Fee Administration (“CDTFA”) determinesthat the glucose test trips and lancets are exempt from sales tax. (9 Cal.App.5th at p. 690.) Such absolute poweris inimical to due process of law because the CDTFA could choose never to make orfinalize that determination. In this case, 12 the regulation has been operative since March 10, 2000. (Cal. Code Regs., tit. 18, § 1591.1.) The CDTFAhasyet to make any determination. (See Resp. CDTFA’s ABMatp. 34.) Governor Gray Davis vetoed legislation to create an express statutory exemption under the stated impression that diabetics are already exempt, presumablyper the regulation. (See Resp. CDTFA’s ABMatpp.42-43.) The Court of Appeal in McClain claimsthereis no due process problem because there is no state action. (9 Cal.App.5th at pp. 704; 706.) However, either the State is acting against the customerto collect tax from him as the true taxpayer with no recourse or the State is acting against the customerby setting up a permanentescheat of the customer’s funds with no recourse because ofthe retailer’s safe harbor. (Rev. & Tax. Code, § 6901.5.) Either way, there is a due process problem,or, at minimum,a “process of law” deprivation. (National Ice, supra, 11 Cal.2d at p. 291.) If the moneyis not a tax, thereis additionally a takings problem. First, not only may the Court reject California’s statutory definition of the retailer as the true taxpayer (see Resp. CDTFA’s ABMatp.47), but it must. Where due process is now non- 13 existent for the true taxpayers, the United States Supreme Court holding in Diamond National, where the dissent would concur, must control. No further analysis or argument is necessary. Second, none of the remedies suggested by CDTFA guarantee any meaningful opportunity for hearing and review. Petitioning to amendorrepeal the regulation would only delay matters, not resolve them. Since there is no guarantee that the petition would be granted or even acted upon, a petition to amend or repeal the regulation is not a remedy. Shifting responsibility to diabetics totry to harmonize the law when they themselves have no law-making poweris also an unreasonable hurdle to due process. If CDTFA concedes that the regulation is in need of amendmentor repeal, then there is no reason to delay action until diabetics first file a petition. However, amicus submits that the regulation does not need to be amended. It already permits a remedy. Not only should amendments be unnecessary, but there would remain the samelack of guarantee that any amendment would be enforced. (See Resp. CDTFA’s ABMatpp. 41-42.) Further, while describing how diabetics should be able to influence the regulations, Respondents state no mechanism for customers to have a chance at refunds. Similarly, the suggested 14 use of Government Code section 11350(b)(1) is misdirected and inadequate. (See Resp. CDTFA’s ABMatp. 42.) Section 11350(b)(1) serves to invalidate a regulation. The customers do not need to invalidate the regulation, but to enforceit. Declaratory relief, if there were a valid mechanism, might be appropriate if diabetics did not need to purchase their supplies for daily use andif their health could afford to litigate the issue quickly before taking part in any taxable event. Unfortunately, “[wlhen the taxpayer has completed a transaction, resort to declaratory relief is no longer necessary or appropriate since the tax liability, if any, has accrued and therefore normal administrative processes, subject to judicial review, are adequate and accomplish the sameresult.” (Honeywell, Inc. v. State Board ofEqualization (1975) 48 Cal.App.3d 907, 912). The customer here would resort to the administrative processoffiling a claim for refund, but we return to the statutory myth that the customer is not the legal taxpayer and thus cannotfile one. California’s statutory schemetreating the vendor as the taxpayeris a troublesome myth. After the McClain decision, the California Supreme Court decision in National Ice and the U.S. Supreme Court decision in Diamond National (andits dissent) 15 are violated. Il. Diabetic Consumers’ Access To Medical Supplies Is Effectively Conditioned Upon Forfeiting Constitutional and Procedural Rights At Point of Sale. HJTA will refrain from briefing the effects of the presumptionsestablished under Regulation 1591.1(b)(5) of the California Code of Regulations exempting glucosetest strips and lancets from tax. This has been thoroughly addressed by Petitioners. (See Petitioners’ AOB,at pp. 14-16.) In short, it is established and obvious that no one would buy glucosetest trips and lancetsif not for medical purposes, and that physician supervision is presumed. (/bid.) As the Board itself declared in its “Final Statement of Reasons” when adopting the regulation,it had itself calculated the regulation to result in a 100% lossof tax: [Tlhese items are so integrated with the operation of insulin and insulin syringes (the syringes cannot be used until the patient hasfirst tested his blood sugar using the lancets andstrips) that the Legislature intended that their sales be exempt from tax as part and parcel of the exemption for sales of insulin syringes under[Rev. & Tax. Code] section 6369(e). (Id. at p. 16, citing AA 200; 068-071 9924-27(b).) Respondent CDTEAoffers that a consumer “may choose to purchase the item from a retailer that takes a more liberal view of the exemption.” (Resp. CDTFA AnswerBrief, at p. 40.) Not 16 only would this require a greater amountof time than a diabetic will have to make her purchase without imperiling her health, but this suggestion would vest judicial and administrative authority in retailers to make inconsistent conclusionsof law’. Diabetics should not have to shop for different laypersons’ interpretation of law. A government agency violates the unconstitutional conditions doctrine by “pressuring someoneintoforfeiting a constitutional right” by “coercively withholding benefits.” (Koontz v. St. Johns River Water Mgmt. Dist. (“Koontz’)(2013) 570 U.S. 595, 133 S.Ct. 2586, 2595.) Healthcare benefits are recognized direct objects of the unconstitutional conditions doctrine. (Ibid) The benefits of the sales tax exemption are essentially healthcare benefits for diabetics. These benefits are intended to help diabetics afford to sustain their health, not for retailers to continue engaging in the privilege of doing business. In this case, the diabetic consumersare coerced into giving up healthcare benefits and constitutional rights. They have *Naturally, 99% of California’s pharmacies,if not 100%, could be expected to err on the side of caution in responseto the Charlotte Paliani letter and charge the sales tax. (See Petitioners’ AOB, at pp. 16-22.) A diabetic who would choose to shop for a pharmacy with “a moreliberal view of the exemption” wouldhave no luck. 17 neither the sales tax exemption northe right to challenge the lack of exemption. As such, they have neither the healthcare affordability benefit nor the constitutional rights of due process or judicial review for a taking. They do not even have the minimum “any process of law” per this Court's statement in National Ice. (11 Cal.2d at p. 291.) Because the prophesy of the dissent in Diamond National has occurred, diabetics suffer ongoing due processviolations as they are forced to pay the “retailer’s” tax obligations with no meaningful opportunity for hearing or review. Additionally, the confiscation of a financial obligation is a per se taking. (Koontz, supra, 133 S.Ct. at p. 2601.) The ability to purchase medical supplies is being conditioned upon the consumerpaying “sales tax reimbursement” andrelinquishing meaningful rights to make theseclaims. During the manyyearsof no opportunity to enforce the regulation exempting glucose test strips and lancets from sales tax, diabetics have had no choice but to surrendertheir constitutional rights in order to sustain their health. When they stand at the register at their local pharmacy, they lose their claims for refund instantly at pointofsale. 18 III. Per National Ice and Loeffler, Courts of Appeal Should Not Defer All Consumer Sales Tax Issues to the Legislature under Article 13 Section 32 of the California Constitution. Unconstitutionality is “made to appear” when “by the termsof the statute [the retailer] is authorized to compel the purchaser to assumetheretailer's direct liability.” (National Ice, supra, 11 Cal.2d at p. 292.) This has happened here. The Court of Appeal makes no mention of National Ice, however, inits discussion of due or other legal process. (McClain, supra, 9 Cal.App.5th at pp. 703-705.) Respondents avoid NationalIce. In Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, this Court recently found that taxability should be determinedfirst by the Board of Equalization, its relevant organizational counterpart now titled the Department of Tax and Fee Administration. Specifically, this Court has stated that a question of taxability is “committed in the first instance to the Board, subject to judicial review under therestrictions and pursuant to the procedures provided by the tax code.” Ud. at p. 1100.) Further, what is known as the “/Javor remedy”is appropriate because it “invokes, rather than avoids, tax code procedures.” (/d. at p. 1101.) As the plaintiffs in Loeffler did not 19 pursue a Javor remedy, they did not pursue their claim through appropriate procedures. This Court then found it unnecessary to address constitutional questions because the case wasresolvable under the tax code. Implicitly, Loeffler left the Javor remedy as available as it had been before. Hence, the constitutional and procedural rights of consumersvis-a-vis sales tax reimbursement did not comebefore this Court until McClain. In Loeffler, this Court did not defer myopically to the Court of Appeal’s emphasis on Article 13 section 32 of our constitution, but sought harmonyin the tax code. (Loeffler, supra, 58 Cal.4th at pp. 1101-1103.) Unfortunately, like the Loeffler Court of Appeal, the McClain Court of Appeal defers simply to legislative power underArticle 13 section 32 (9 Cal.App.5th at pp. 695-699), with little analysis of the tax code and an incorrect analysis of the resulting constitutional and procedural issues. The McClain Court of Appeal skirts the constitutional and procedural issues by characterizing the moneycollected from customers as not taxes, and concluding therefore that no state action exists. To avoid the takings claim, however,it then characterizes the customers’ money as taxes and concludes that 20 taxes are not takings. Specifically, the Court of Appeal reasons as follows: The retailer takes the money. Theretailer is not the government, so there is no government action. The State then takes the money as taxes from the retailer, and the taxes can’t be a taking. (McClain, supra, 9 Cal.App.5th at p. 704.) This is irreconcilable with this Court’s view of the money in National Ice. In National Ice, the tax is “passled] on” to the customer, with no indication that this changes its character. (National Ice, supra, 11 Cal.2d at pp. 290; 292.) If not taxes, then the customers’ moneyis being escheated to the State indefinitely, and thus presumably permanently, since the customer can only “tug at the sleeve” of the CDTFA. (McClain, supra, 9 Cal.App.5th at p. 705; Rev. & Tax. Code, § 6901.5.) No meaningful review being available, the customers’ moneyis taken without due or any process. If taxes, then there is state action, and thus a due processissue asto its collection. Either way, the Court of Appeal was wrongto find no constitutional issue. If there is no remedyfor the injured diabetic consumers as they indefinitely await the Legislature post-McClain, irreparable injury exists which begs for a judicial solution. (Helms Bakeries 21 v. State Bd. ofEqualization (1942) 53 Cal.App.2d 417, 421; Ritter v. Patch (1859) 12 Cal. 298.) As this Court stated in Javor, supra, 12 Cal.3d at p. 799: “It is still left to the courts to adopt appropriate remedies when excessive reimbursements have been collected by mistake and paid to the State.” (See also Ardonv. City ofLos Angeles (2011) 52 Cal.4th 241, 252; Flying Dutchman Park, Inc. v. City and County ofSan Francisco (2001) 93 Cal.App.4th 1129, 1141.) In Bates v. Franchise Tax Board (2004) 124 Cal.App.4th 367, 379, the Second District Court of Appeal found that Article 13 Section 32 did not bar a claim underthe Information Practices Act. Similarly here, Article 13 Section 32 should not preclude a court from enforcing a claim under a contractual obligation in the Civil Code. (Civ. Code, § 1656.1(d).) Unfortunately, disharmony in the tax code led the Court of Appealto believe it was being askedto judicially manufacture a remedy the Legislature had not provided. Whether a remedyis truly missing, or the Court is simply being asked to harmonize conflicting statutes so that an existing remedy can be pursued, this Court may act. The Legislature has declared that “{flor every wrong there is a remedy.” (Civ. Code § 3523.) That 22 AW S A S M A S R E Ra ye declaration serves as a guidingprinciple for interpreting the entire California Code. As a “maxim ofjurisprudence,”it also empowersthe Court to provide a remedy where noneexists. Therefore, the Constitution does not require that diabetic customers be turned away empty-handed, but rather that a remedy be recognized for the violation of their rights. CONCLUSION HJTA does not encourage undermining the tax code nor the policy of Article 13 section 32 of the California Constitution. (See Respondent CDTFA AnswerBrief, at pp. 34-35.) Order and stability are necessary. The McClain Court of Appeal, however, has eliminated the Javor remedy which hadprotected the constitutional and procedural rights of consumers,the true sales tax payers, and had also simultaneously protected consumers from compelled permanentescheat of their moneyto the State, supposing they are not the true sales tax payers. The statutory myth versus reality has created a paradox, but undereither characterization of the customer as taxpayer or not, the consumer has no remedy remainingto dispute improper sales tax reimbursement paid in exchange for necessary medical 23 supplies. The consumerhas no accessto judicial review, whether to pursue impropersales tax collections or escheat of mere sales tax reimbursement. McClain must be reversed with instructions on these constitutional questions, and the Javor remedy re-instated in a practically useful manner. 24 WORD COUNTCERTIFICATION I certify, pursuant to Rule 8.204(c), of the California Rules of Court, that the attached brief, including footnotes, but excluding the caption pages, tables, and this certification, as measured by the word count of the computer program used to prepare thebrief, contains 3,480 words. Dated: April 12, 2018 Respectfully submitted, JONATHAN M. COUPAL TREVOR A. GRIMM TIMOTHYA. BITTLE yiEK. MURRAY j y Kira E/ Vara LAURA E. MURRAY Counsel for Amicus 25 PROOF OF SERVICE SUPREME COURT OF CALIFORNIA I am employed in the County of Sacramento, California. I am over the age of 18 years and not a party to the within action. My business addressis: 921 11" Street, Suite 1201, Sacramento, California, 95814. On April 12, 2018, I served the attached document described as: HOWARD JARVIS TAXPAYERS ASSOCIATION'S APPLICATION FOR LEAVE TO FILE BRIEF OF AMICUS CURIAE AND BRIEF OF AMICUS CURIAE IN SUPPORT OF APPELLANTSonthe interested parties below,using the following means: BY UNITED STATESMAILI enclosed the documentsin a sealed envelope or package addressedto the interested parties at the addresses listed below and on the attached page. I deposited the sealed envelopes with the United States Postal service, with the postage fully prepaid. I am employed in the county where mailing occurred. The envelope or package wasplaced in the mail at Sacramento, California. I declare under penalty of perjury under the lawsof the State of California that the aboveis true and correct. Executed on April 12, 2018, in Sacramento, California. hiJE7 he Ve Taras P. Kick Robert J. Dart ThomasA.Segal Gerald J. Strenio THE KICK LAW FIRM, APC 201 Wilshire Blvd., Ste. 350 Santa Monica, CA 90401 (Plaintiffs and Appellants: Michael McClain, Avi Feigenblatt, and Gregory Fisher) LORICEA. STREM Douglas C. Rawles James C. Martin Kasey J. Curtis REED SMITH LLP 355 South Grand Avenue, Suite 2900 Los Angeles, CA 90071 (Defendants and Respondents: Walgreen Co. and Rite Aid Corporation) Bruce R. Macleod ShawnaL. Ballard MCKOOL SMITH HENNIGAN 255 Shoreline Drive, Suite 510 Redwood Shores, CA 94065 (Plaintiffs and Appellants: Michael McClain, Avi Feigenblatt, and Gregory Fisher) Steven J. Bernheim THE BERNHEIM LAW FIRM 6220 West 3rd Street, Apt. 423 Los Angeles, CA 90036 (Plaintiffs and Appellants: Michael McClain, Avi Feigenblatt, and Gregory Fisher) Robert P. Berry Carol M.Silberberg BERRY & SILBERBERG LLC 16150 Main Circle Drive Suite 120 St. Louis, MO 63017 (Defendant and Respondent: Wal-Mart Stores, Inc.) Joseph Duffy Joseph H.Bias MORGANLEWIS & BOCKIUS, LLP 300 South Grand Avenue 22nd Floor Los Angeles, CA 90071 (Defendants and Respondents: Walgreen Co. and Rite-Aid Corporation) David F. McDowell Miriam A. Vogel MORRISON & FOERSTER, LLP 707 Wilshire Boulevard, Suite 6000 Los Angeles, CA 90017 (Defendant and Respondent: Target Corporation) Richard T. Williams Shelley G. Hurwitz HOLLAND & KNIGHT LLP 400 South HopeStreet, 8th Floor Los Angeles, CA 90071 (Defendants and Respondents: CVS Caremark Corporation, Longs Drug Stores Corporation, and Longs Drug Stores California, Inc.) Theodore K.Bell Senior Corporate Counsel SAFEWAY,INC. Legal Division, Trial Group 5918 Stoneridge Mall Road Pleasanton, CA 94588 (Defendants and Respondents: The Vons Companies, Inc. and Vons Food Services, Inc.) Phillip J. Eskenazi Kirk A. Hornbeck,Jr. HUNTON & WILLIAMS LLP 550 S. Hope Street, Suite 2000 Los Angeles, CA 90071 (Defendants and Respondents: Albertson’s, Inc. and Sav-On Drugs) Daniel Berko LAW OFFICE OF DANIEL BERKO 819 Eddy Street San Francisco, CA 94109 (Pub/Depublication Requestor: The Law Office ofDaniel Berko) Kamala D.Harris, Attorney General of California Nhan T. Vu, Deputy Attorney General Office of the Attorney General 300 South Spring Street, #1702 Los Angeles, CA 90013 (Attorneyfor Non-Title Respondent CA Dept. ofFee and Tax Administration) Mark A. Chavez Chavez & Gertler, LLP 42 Miller Avenue Mill Valley, CA 94941 (Amicus Curiae: Public Citizens, Inc.) Appellate Coordinator Consumer Law Section Office of the Attorney General 300 S. Spring Street Los Angeles, CA 90013-1230 Appellate Coordinator Office of the Attorney General Consumer Law Section 455 Golden Gate Ave., Ste. 11000 San Francisco, CA 94102 Appellate Division Consumer Law Section Office of the District Attorney 320 W. Temple St. #540 Los Angeles, CA 90012 California Court of Appeal Second Appellate District, Div. 2 Ronald Reagan State Building 300 S. Spring Street 2nd Floor, North Tower Los Angeles, CA 90013 Honorable John Shepard Wiley Department 311 Central Civil West Courthouse Los Angeles Co. Superior Court 600 South Commonwealth Ave. Los Angeles, CA 90005