Interplay between UCL and tax code: McClain v. Sav-On Drugs and Loeffler v. Target Corp.

Last month (on March 4, 2019), the Supreme Court decided McClain v. Sav-On Drugs, 6 Cal.5th 951 (2019), which includes this passage pertaining to the UCL: 

In [Loeffler v. Target Corp., 58 Cal.4th 1081 (2014)], we held that consumers could not bring actions under the Unfair Competition Law or the Consumer Legal Remedies Act to challenge a retailer’s alleged misrepresentation of the taxability of hot coffee.  (Loeffler, supra, 58 Cal.4th at p. 1092.)  We said “it is clear that a remedy that is directed at requiring the taxpayer to make a claim for refund from the Board, rather than one involving a direct claim by the consumer against the retailer, is the remedy that is consistent with the current governing statutory scheme.”  (Id. at p. 1133.)  We explained that “a Javor-type remedy for consumers,” which compels retailers to file a refund claim with the Department, is “an appropriate means to vindicate a consumer interest in a refund of a reimbursement charge” and that Javor “do[es] not suggest” that taxability issues “should be resolved in a consumer action” against the retailer.  (Ibid.)

McClain, 6 Cal.5th at 962 (citing Javor v. State Board of Equalization, 12 Cal.3d 790 (1974)).

This reminded me that I had never done a post on the Supreme Court's Loeffler opinion, although I reported on the oral argument setting back in early 2014.  (I can't believe it has been five years.)  Essentially, in a 4-3 opinion, with a dissent by Justice Liu, the Supreme Court affirmed the Court of Appeal's judgment, reasoning that the tax code provides the exclusive remedies for the tax-related UCL/CLRA violations asserted in the case, and created a "safe harbor."  Loeffler v. Target Corp., 58 Cal.4th 1081 (2014).