Title: McClain v. Sav-On Drugs
Citation: N/A
Docket Number: S241471
State: California
Issuer: California Supreme Court
Date: March 4, 2019

IN THE SUPREME COURT OF 
CALIFORNIA 
 
MICHAEL MCCLAIN et al., 
Plaintiffs and Appellants, 
 
v. 
 
SAV-ON DRUGS et al., 
Defendants and Respondents. 
 
AND CONSOLIDATED CASE. 
S241471 
 
Second Appellate District, Division Eight 
B265011 and B265029 
 
Los Angeles County Superior Court 
BC325272 and BC327216 
 
March 4, 2019 
Justice Liu authored the opinion of the court, in which Chief 
Justice Cantil-Sakauye and Justices Chin, Corrigan, Cuéllar 
Kruger, and O’Leary* concurred. 
Justice Kruger filed a concurring opinion in which Justices 
Chin, Corrigan, and O’Leary concurred. 
__________________________________________________________ 
                                        
*  
Presiding Justice of the Court of Appeal, Fourth Appellate 
District, Division Three assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution. 
 
MCCLAIN v. SAV-ON DRUGS 
S241471 
 
Opinion of the Court by Liu, J. 
 
California retailers are generally required to pay the state 
a sales tax on the retail sale of any “tangible personal property.”  
(Rev. & Tax. Code, § 6051.)  Retailers submit payment to the 
California Department of Tax and Fee Administration (CDTFA 
or Department) as a percentage of their gross receipts under a 
rebuttable presumption that all gross receipts are subject to the 
sales tax.  (Id., §§ 6051, 6091.)  Retailers may charge customers 
a “sales tax reimbursement to the sales price” for sales subject 
to the tax, or they may absorb the tax and opt to build it into the 
price charged to consumers.  (Civ. Code, § 1656.1; see Loeffler v. 
Target Corp. (2014) 58 Cal.4th 1081, 1103, 1117 (Loeffler).) 
If a retailer believes it has paid sales tax in excess of the 
amount legally due, it can file an administrative claim with the 
Department for a refund of any amount not required to be paid.  
(Rev. & Tax. Code, § 6901.)  If it “has been ascertained” that a 
customer has paid a retailer more sales tax reimbursement than 
the amount of sales tax the retailer owes, the retailer upon 
notice by the Department or the customer “shall . . . return[]” 
the excess sales tax reimbursement to the customer; if the 
retailer “fail[s] or refuse[s] to do so,” the retailer “shall . . . 
remit[]” the funds to the state.  (Id., § 6901.5.)  A customer who 
has paid excess sales tax reimbursement has no statutory 
remedy to obtain a refund from the Department directly.  (See 
Javor v. State Bd. of Equalization (1974) 12 Cal.3d 790, 800 
(Javor).) (The Legislature created the CDTFA in 2017 and 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
2 
 
transferred to it most of the tax-related duties and powers 
previously vested in the Board of Equalization (Board).  (Assem. 
Bill. No. 102 (2017–2018 Reg. Sess.) § 1.)  In this opinion, the 
terms 
“Department” 
and 
“Board” 
refer 
to 
the 
same 
administrative entity.) 
The question here is whether customers who have paid 
sales tax reimbursement on purchases they believe to be exempt 
from sales tax may file suit to compel the retailers to seek a tax 
refund from the Department when there has been no 
determination by the Department or a court that the purchases 
are exempt.  In Javor, we authorized a customer suit where the 
Board, upon determining that certain retailers had collected 
excess sales tax reimbursement, had promulgated rules to 
provide refunds to overpaying customers.  The trial court 
declined to extend Javor to authorize a similar judicial remedy 
in this case, and the Court of Appeal affirmed.  (McClain v. Sav-
On Drugs (2017) 9 Cal.App.5th 684, 700–702 (McClain).)  We 
agree with the courts below in refusing to extend Javor and 
affirm the judgment sustaining defendants’ demurrer. 
I. 
Section 6369, subdivision (e) of the Revenue and Taxation 
Code exempts “[i]nsulin and insulin syringes” from sales tax if 
“furnished by a registered pharmacist to a person for treatment 
of diabetes as directed by a physician.”  (All undesignated 
statutory references are to the Revenue and Taxation Code.)  In 
2000, the Board issued a regulation interpreting the exemption 
in section 6369, subdivision (e) to cover “[g]lucose test strips and 
skin puncture lancets furnished by a registered pharmacist” for 
use by a diabetic patient “in accordance with a physician’s 
instructions.”  (Cal. Code Regs., tit. 18, § 1591.1, subd. (b)(5) 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
3 
 
(hereafter regulation 1591.1(b)(5)); see § 7051 [“The board . . . 
may prescribe, adopt, and enforce rules and regulations relating 
to the administration and enforcement” of the sales tax].)  The 
Board’s Final Statement of Reasons explained that the test 
strips and lancets are “so integrated with the operation of 
insulin and insulin syringes (the syringes cannot be used until 
the patient has first tested his blood sugar using the lancets and 
test strips) that the Legislature intended that their sales be 
exempt from tax as part and parcel of the exemption for sales of 
insulin syringes under section 6369(e).”  (State Bd. of 
Equalization, Final Statement of Reasons/Plain English: 
Regulations 1591, 1591.1, 1591.2, 1591.3 & 1591.4 (Dec. 28, 
1999) p. 4.) 
In 2003, in response to “inconsistencies” in how regulation 
1591.1(b)(5) was being applied, the Board’s Program Planning 
Manager sent a letter to California retail pharmacies setting 
forth the conditions for when the sale of a test strip or lancet is 
exempt from tax.  (State Bd. of Equalization Program Planning 
Manager Charlotte Paliani, letter to Albertson’s re regulation 
1591.1, June 18, 2003 (hereafter Paliani Letter).)  The letter 
explained that the retailer must be provided with a copy of the 
patient’s physician instructions, that the retailer must maintain 
a copy of the instructions in its records, and that the lancet or 
test strip must be kept in a secure location and dispensed by a 
registered pharmacist.  Only then, according to the letter, is the 
sale exempt from tax.  (Paliani Letter, supra [“However, if your 
customers are able to remove the items directly off the shelf and 
pay for them at your store’s registers, without a pharmacist’s 
intervention, the sales are subject to tax.”].) 
Plaintiffs Michael McClain, Avi Feigenblatt, and Gregory 
Fisher bought glucose test strips and skin puncture lancets from 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
4 
 
retail pharmacies owned or operated by defendants Sav-On 
Drugs, 
Gavin 
Herbert 
Company, 
Longs 
Drug 
Stores 
Corporation, Longs Drug Stores California, Inc., Rite Aid 
Corporation, Walgreen Co., Target Corporation, Albertson’s 
Inc., The Vons Companies, Inc., Vons Food Services, Inc., and 
Wal-Mart Stores, Inc. (collectively, pharmacy defendants).  
These defendants charged plaintiffs sales tax reimbursement on 
those sales and remitted the amounts they collected to the 
Department.  Plaintiffs contended that their purchases of test 
strips and lancets were exempt from sales tax, and they filed a 
class complaint against the pharmacy defendants and the 
Department for a refund of the sales tax reimbursement they 
paid.  In particular, plaintiffs maintained that all pharmacy 
sales of test strips and lancets were exempt and that the 
conditions for application of the exemption set forth in the 
Paliani Letter were void.  In addition to claims alleging breach 
of contract, negligence, and violations of consumer protection 
statutes, the operative complaint sought declaratory and 
injunctive relief compelling the pharmacy defendants to file a 
tax refund claim with the Department and ordering the 
Department to award refunds to be passed on to consumers.  The 
pharmacy defendants and the Department demurred. 
The trial court sustained the demurrer without leave to 
amend.  Rejecting plaintiffs’ reliance on Javor, the trial court 
said:  “What was so unique about the Javor circumstance is, ‘The 
Board has admitted it must pay these refunds to retailers.’  
That’s something the Board has certainly not admitted in this 
case.”  The court explained that “[t]his case is more like Loeffler 
than Javor” because whether the sales at issue met or had to 
meet the conditions for tax exemption was “very hotly in 
dispute.”  The Court of Appeal affirmed, although it noted that 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
5 
 
the result “is not an entirely satisfying one. . . .  [O]ur 
Constitution chiefly assigns the task of creating tax refund 
remedies to our Legislature, and our Legislature has yet to 
address the situation that arises when the legal taxpayer has no 
incentive to seek a direct refund and the economic taxpayer has 
no right to do so.  It is a topic worthy of legislative 
consideration.”  (McClain, supra, 9 Cal.App.5th at p. 706.) 
We granted plaintiffs’ petition for review on the dismissal 
of their claims for breach of contract and relief under Javor. 
II. 
Article XIII, section 32 of the California Constitution 
states that a taxpayer may bring an action to challenge a tax 
only “[a]fter payment” and “in such manner as may be provided 
by the Legislature.”  The Legislature has enacted a 
comprehensive scheme “to resolve . . . tax questions and to 
govern disputes between the taxpayer and the [Department].”  
(Loeffler, supra, 58 Cal.4th at p. 1103.)  A taxpayer may 
challenge the imposition of sales tax by paying the tax and then 
filing with the Department an administrative claim for a refund.  
(§ 6901.)  In the context of the sales tax, “[t]he retailer is the 
taxpayer, not the consumer.”  (Loeffler, at p. 1104, fn. omitted; 
see City of Pomona v. State Bd. of Equalization (1959) 53 Cal.2d 
305, 309 [sales tax is a tax on the “ ‘privilege of conducting a 
retail business,’ ” not a tax on the goods sold].) 
As noted, the Legislature has provided no mechanism for 
consumers to obtain directly from the Department a refund of 
excess sales taxes that retailers have paid and for which 
retailers have charged sales tax reimbursement to consumers.  
In Javor, supra, 12 Cal.3d 790, we addressed whether customers 
may bring suit to compel retailers to seek a refund of sales taxes 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
6 
 
paid in excess of the amount owed.  In that case, the repeal of a 
federal excise tax on motor vehicles entitled retail car dealers to 
a partial refund of sales tax on cars sold because the excise tax 
had been included in the price of the cars on which sales tax had 
been assessed.  (Id. at pp. 794, 801–802.)  The Board agreed that 
a refund was due and promulgated rules to effectuate the 
refunds.  (Id. at p. 794.)  But retail car dealers had “no particular 
incentive to request the refund” since they would have been 
required to pass on any refunds to customers.  (Id. at p. 801.)  
We held that a customer suit against the retailer was an 
appropriate remedy, and we allowed customers to join the Board 
as a party to such suits.  (Id. at p. 802.)  In so holding, we 
observed that the Legislature had “provide[d] no procedure by 
which [the customers] can claim the refund themselves” (id. at 
p. 797) and that allowing such a lawsuit was “consonant with 
existing statutory procedures” (id. at p. 800).  We further noted 
that this judicially crafted remedy was “based on broad 
principles of restitution” that took into account relevant 
equitable factors.  (Id. at 797.)  The remedy, we said, “is clearly 
mandated by the Board’s duty to protect the integrity of the 
sales tax by ensuring that the customers receive their refunds.  
The integrity of the sales tax requires not only that the retailers 
not be unjustly enriched . . . , but also that the state not be 
similarly unjustly enriched.”  (Id. at p. 802, citation omitted.) 
Javor authorized a judicial remedy in light of a prior 
determination by the Board that a refund was appropriate.  As 
the Court of Appeal in this case correctly understood, the fact 
that the Board had already determined that consumers were 
entitled to a refund was a key premise of our reasoning in Javor.  
(McClain, supra, 9 Cal.App.5th at p. 700; see Javor, supra, 12 
Cal.3d at p. 794.)  The remedy we authorized in Javor was 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
7 
 
designed to facilitate a refund to consumers of excessive sales 
tax reimbursement that all parties acknowledged was 
“erroneously collected” (Javor, at p. 795); it was not designed to 
facilitate resolution of whether sales tax reimbursement charged 
on a particular item was erroneously paid.  Although additional 
factors may be relevant in determining the availability of a 
Javor remedy, we hold that in order to be eligible for a Javor 
remedy, plaintiffs must show, as a threshold requirement, that 
a prior legal determination has established their entitlement to 
a refund. 
This requirement means that a judicially created remedy 
is available only when the issue of taxability has already been 
resolved.  In Javor, “[t]he Board ha[d] admitted that it must pay 
these refunds to retailers.”  (Javor, supra, 12 Cal.3d at p. 802.)  
The customers were “unequivocally entitled” to the refunds; 
without a remedy, the state would have been unjustly enriched.  
(McClain, supra, 9 Cal.App.5th at p. 698.)  “[I]t was the certainty 
of this unjust enrichment that offended the Board’s ‘vital 
interest in the integrity of the sales tax’ and warranted judicial 
intervention.”  (Ibid.)  Further, our characterization of this 
prerequisite as a threshold requirement underscores that even 
when it has been satisfied, additional legal and equitable 
hurdles still may lie between a consumer and a Javor remedy.  It 
bears repeating that a Javor remedy is available “in limited 
circumstances” (Loeffler, supra, 58 Cal.4th at p. 1122) — in 
other words, only rarely.  (Cf. Javor, at p. 802 [noting “the 
unique circumstances” before the court that justified crafting a 
judicial remedy].)  This said, eligibility to pursue a judicially 
created remedy as a matter of law does not depend on a finding 
at the outset that the particular person seeking the remedy is 
entitled to a refund.  Whether any particular individual is 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
8 
 
entitled to a refund will require an evidentiary determination 
specific to that individual.  (Cf. Javor, supra, 12 Cal.3d at p. 802 
[recognizing the possibility that some retailers may have 
“already claimed and received a refund from the Board”]; id. at 
p. 794 [sales tax “will be refunded to the retailer, provided he 
also repays to the consumer the amount collected from him as 
sales tax reimbursement”].) 
Plaintiffs do not dispute that no prior legal determination 
has been made as to whether sales tax was owed on the goods at 
issue here.  Instead, they contend that Javor should not be read 
to require such a prior determination because Javor authorized 
a remedy where it was not certain but only “very likely” that the 
Board would “become enriched at the expense of the customer.”  
(Javor, supra, 12 Cal.3d at p. 802.)  But Javor’s use of the term 
“very likely” in no way suggested that the underlying issue of 
taxability was an open question.  We repeatedly observed that 
the Board had already determined that a refund was due.  
(Javor, at pp. 794, 802.)  “All that plaintiffs [sought in Javor 
was] to compel defendant retailers to make refund applications 
to the Board and in turn to require the Board to respond to these 
applications by paying into court all sums, if any, due defendant 
retailers.”  (Id. at p. 802.)  The plaintiffs in Javor sought no 
ruling by the Board or the court on any taxability question.  The 
terms “very likely” and “if any” simply signaled the possibility 
that some retailers “had already claimed and received a refund 
from the Board,” a factual issue that had not yet been 
determined in the suit.  (Ibid.)  
Plaintiffs further contend that foreclosing a Javor remedy 
where the taxability issue has not already been resolved is at 
odds with the Department’s “duty to protect the integrity of the 
sales tax.”  (Javor, supra, 12 Cal.3d at p. 802.)  Without any 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
9 
 
means of obtaining a determination on the taxability question, 
plaintiffs argue, the state will be unjustly enriched to the extent 
that the purchases at issue actually are not subject to sales tax. 
But it is not clear that plaintiffs have no other recourse.  
“[C]onsumers who believe they have been charged excess 
reimbursement . . . may complain to the Board, which may in 
turn initiate an audit” or a “deficiency determination.” (Loeffler, 
supra, 58 Cal.4th at pp. 1103–1104; see §§ 6481, 6483, 7054.)  
Consumers, as “interested person[s],” also have the ability to 
“obtain a judicial declaration as to the validity of any regulation” 
promulgated by the Department.  (Gov. Code, § 11350, subd. (a); 
see also id., § 11340.6 [generally providing that “any interested 
person may petition a state agency requesting the adoption, 
amendment, or repeal of a regulation”].)  Plaintiffs say they do 
not claim regulation 1591.1(b)(5) is invalid or that it should be 
amended or repealed.  They say they “rely upon [the regulation] 
as the source of the tax exemption for test strips and lancets”; 
their objection is to the interpretation of the exemption 
contained in the Paliani Letter.  But plaintiffs contend that the 
Paliani Letter itself qualifies as a “regulation” subject to the 
Administrative Procedures Act, and they do not explain why 
they cannot seek a judicial declaration of its invalidity under 
Government Code section 11350.  (See Morning Star Co. v. State 
Bd. of Equalization (2006) 38 Cal.4th 324, 334–335; Gov. Code, 
§ 11342.600 [“ ‘Regulation’ means every rule, regulation, order, 
or standard of general application or the amendment, 
supplement, or revision of any rule, regulation, order, or 
standard adopted by any state agency to implement, interpret, 
or make specific the law enforced or administered by it, or to 
govern its procedure.”].) 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
10 
 
We have no occasion to express a definitive view on what 
qualifies as a prior legal determination for purposes of a Javor 
remedy because it is clear that no such determination has been 
made exempting the lancets and strips at issue here.  We 
likewise have no occasion to consider what remedies might be 
available to a claimant who has been unable to obtain a 
determination about the taxability of particular transactions 
using the available avenues.  The Court of Appeal here noted 
that many of the remedial options available to plaintiffs are “the 
practical equivalent of allowing them to tug . . . at the Board’s 
sleeve.”  (McClain, supra, 9 Cal.App.5th at p. 706.)  Even so, 
there is no indication in the record that plaintiffs have pursued 
any avenues other than this lawsuit for obtaining a resolution 
of the taxability question that underlies their claim for relief. 
We see an important difference between circumstances 
like those in Javor, where the taxability issue had already been 
resolved, and the circumstances here, where the taxability issue 
remains disputed.  Where the taxability issue has been resolved, 
the avoidance of unjust enrichment is the primary concern with 
respect to ensuring the integrity of the sales tax.  (See Javor, 
supra, 12 Cal.3d at p. 802.)  Where the taxability issue is 
disputed, the avoidance of unjust enrichment remains a concern, 
but there is a countervailing interest in the orderly 
administration of the sales tax.  In Loeffler, a case concerning 
the taxability of retail sales of hot coffee, we said “[t]he 
taxability question lies at the center of the Board’s function and 
authority. . . .  [T]he sales tax law is exceedingly comprehensive 
and complex; its application to specific types of transactions is 
debatable in innumerable circumstances.  The Legislature has 
subjected such questions to an administrative exhaustion 
requirement precisely to obtain the benefit of the Board’s 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
11 
 
expertise, permit it to correct mistakes, and save judicial 
resources.”  (Loeffler, supra, 58 Cal.4th at p. 1127.)  We 
explained that allowing consumers to sue retailers under 
consumer protection statutes “based on a dispute over the 
taxability of a sale would require resolution of the taxability 
question in a manner inconsistent with this system, forfeiting 
these benefits.”  (Ibid.)  In light of Loeffler, we reject plaintiffs’ 
contention that limiting judicially created refund remedies to 
circumstances where the taxability issue has already been 
resolved would undermine the integrity of the sales tax. 
For similar reasons, we do not agree with plaintiffs that 
the unavailability of a judicially created refund remedy in this 
case violates due process of law.  As noted, plaintiffs may have 
other avenues to obtain a determination of the taxability 
question at the heart of their complaint.  (See ante, at pp. 9–10.)  
Moreover, although sales tax exemptions redound to the benefit 
of consumers, it must be remembered that “[t]he retailer is the 
taxpayer, not the consumer.”  (Loeffler, supra, 58 Cal.4th at 
p. 1104.)  We are not presented here with a taxpayer’s claim that 
no means of challenging an illegal imposed tax is available.  (Cf. 
McKesson Corp. v. Division of Alcoholic Beverages & Tobacco 
(1990) 496 U.S. 18, 39 [due process requires states to “provide 
taxpayers with . . . a fair opportunity to challenge the accuracy 
and legal validity of their tax obligation” and a “ ‘clear and 
certain remedy’ ”].)  Nothing in the sales tax statutes establishes 
that consumers have a vested right to applicable exemptions.  
(See § 6901.5 [requiring retailers to return excess sales tax 
reimbursement to consumers or else remit it to the state].) 
Javor does not suggest otherwise.  There we said that 
when the taxability issue has already been resolved (which is 
not the case here), a judicially created remedy is “clearly 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
12 
 
mandated by the Board’s duty to protect the integrity of the 
sales tax” (Javor, supra, 12 Cal.3d at p. 802); we did not say the 
remedy was constitutionally compelled.  In enacting a 
“comprehensive” law of exemptions “governing every imaginable 
type of sales transactions” (Loeffler, supra, 58 Cal.4th at 
p. 1105), the Legislature did not run afoul of due process by 
choosing to establish an administrative framework for ensuring 
that retailers claim exemptions and for resolving disputes over 
the applicability of exemptions — even if that framework relies 
on market mechanisms, agency initiative, and consumer 
influence short of lawsuits directly seeking sales tax 
reimbursement refunds.  As the Attorney General explains, “the 
system is designed to ensure that, in general, the benefits of tax 
exemptions flow to consumers as a class (though not necessarily 
in a perfect manner, or in every possible transaction).”  Given 
the competing interests involved in designing the system, due 
process does not require that tax exemptions flow to consumers 
in a more perfect manner. 
Finally, plaintiffs contend that this tax refund system, by 
unjustly enriching the state at the expense of consumers, works 
an unconstitutional taking.  But even if the state’s retention of 
amounts that have been judicially or administratively 
determined to be excess sales tax reimbursement could be 
regarded as a taking, no such determination has been made 
here.  And the absence of a legislatively or judicially created 
refund action to compel such a determination does not itself 
constitute a taking. 
III. 
Plaintiffs’ complaint also alleged that the pharmacy 
defendants breached their contractual duties under Civil Code 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
13 
 
section 1656.1 by misrepresenting the sales tax owed on the 
purchases at issue.  The Court of Appeal granted defendants’ 
demurrer with respect to all claims in the operative complaint, 
and plaintiffs seek to revive this claim as well.  Civil Code 
section 1656.1, subdivisions (a) and (d) establish a “rebuttable 
presumption[]” that retailers and purchasers “agreed to the 
addition of sales tax reimbursement to the sales price of tangible 
personal property sold at retail to a purchaser” if certain notice 
requirements are met.  Plaintiffs argue that if they are not 
permitted to claim breach of contract on the ground that they 
agreed only to pay sales tax reimbursement on purchases 
actually subject to tax, then the rebuttable presumption will 
improperly become an irrebuttable presumption. 
This argument is foreclosed by Loeffler.  In that case, 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.)  Loeffler’s reasoning does not convert the 
rebuttable presumption set forth in Civil Code section 1656.1 
into an irrebuttable presumption.  It simply means that the 
MCCLAIN V. SAV-ON DRUGS 
Opinion of the Court by Liu, J. 
 
14 
 
avenues available to plaintiffs for rebutting the presumption 
must be ones consistent with the tax code. 
CONCLUSION 
We affirm the judgment of the Court of Appeal. 
 
 
 
 
 
 
 
 
 
LIU, J. 
 
 
We Concur: 
CANTIL-SAKAUYE, C.J. 
CHIN, J. 
CORRIGAN, J. 
CUÉLLAR, J. 
KRUGER, J. 
O’LEARY, J.* 
 
                                        
*  
Presiding Justice of the Court of Appeal, Fourth Appellate 
District, Division Three assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution. 
 
 
MCCLAIN v. SAV-ON DRUGS 
S241471 
 
Concurring Opinion by Justice Kruger 
 
I agree with the majority that plaintiffs in this case do not 
have an equitable cause of action to compel the retailers to seek 
a refund of sales taxes paid to the state.  Although we fashioned 
such a remedy in Javor v. State Board of Equalization (1974) 12 
Cal.3d 790, we did so with the recognition that the Legislature 
that enacted the sales tax laws had not provided a direct refund 
remedy for consumers (who are not, technically speaking, the 
taxpayers under California’s sales tax law).  (Id. at p. 800.)  We 
held, however, in the “unique circumstances” of that case—in 
which the State Board of Equalization had publicly announced 
that refunds were owed to consumers, thanks to intervening 
changes in federal tax law, but retailers had not stepped forward 
to facilitate their disbursement—that a judicially created 
remedy was necessary to ensure consumers actually received 
the refunds.  Without such a remedy, we concluded, the state 
would be unjustly enriched.  (Id. at p. 802.)  Here there are no 
comparable “unique circumstances”; this is, rather, a more 
typical contest over the applicability of the sales tax to a 
particular category of transactions.  To recognize an equitable 
Javor-type cause of action under the facts of this case would not 
comport with the basic structure of the refund procedure 
provided by statute. 
I write separately to address the role that “taxability” 
determinations play in this analysis.  (Maj. opn., ante, at p. 7.)  
As the majority notes, the law does provide avenues for plaintiffs 
MCCLAIN v. SAV-ON DRUGS 
Kruger, J., concurring 
2 
 
to challenge the applicability of the sales tax to the transactions 
at issue here, such as seeking a judicial declaration of the 
validity of governing tax regulations.  (Maj. opn., ante, at pp. 9–
10.)  The majority faults plaintiffs for failing to take that step, 
seeing “an important difference between circumstances like 
those in Javor, where the taxability issue had already been 
resolved, and the circumstances here, where the taxability issue 
remains disputed.”  (Maj. opn., ante, at p. 10; see id. at p. 11.)   
I agree that plaintiffs’ failure to pursue their available 
statutory options is relevant to the determination of whether to 
fashion an equitable remedy here.  But while consumers may 
have alternative mechanisms to obtain an official determination 
that a transaction is exempt from sales tax (see maj. opn., ante, 
p. 9), I would not characterize these mechanisms as the 
functional equivalent of administrative remedies that plaintiffs 
must exhaust before pursuing a Javor action.  The central 
difficulty with plaintiffs’ claim, as I see it, is not that they have 
skipped any particular set of procedural prerequisites to suit.  It 
is, rather, that any cause of action to compel retailer refund suits 
will create a certain amount of tension with a statutory scheme 
that presumes goods are taxable (Rev. & Tax. Code, § 6091), and 
empowers the retailer to waive a potentially applicable tax 
exemption if it so chooses (id., § 6905).  In such a system, the 
question becomes:  under what circumstances can we say the 
state has been unjustly enriched by the retention of funds the 
retailers have turned over, such that consumers should be 
permitted to compel retailers to pursue restitution claims on 
their behalf?  The answer to that question is not easily reduced 
to a simple formula.  Accordingly, as the majority says, even 
when there has been a legal determination of some sort bearing 
on the taxability of a particular transaction, “additional legal 
MCCLAIN v. SAV-ON DRUGS 
Kruger, J., concurring 
3 
 
and equitable hurdles still may lie between a consumer and a 
Javor remedy.”  (Maj. opn., ante, at p. 7.) 
Javor itself did not involve an official determination that 
a particular transaction was not taxable; it involved a 
determination that refunds were owed to consumers.  Other 
claims of unjust enrichment, based on other types of 
determinations, might raise different administrative and other 
considerations.  At present, however, given the policy choices 
embodied in the statutory scheme, plaintiffs have not 
demonstrated circumstances that counsel crafting a common 
law restitutionary remedy. 
With these observations, I concur. 
 
KRUGER, J. 
 
We Concur: 
CHIN, J. 
CORRIGAN, J. 
O’LEARY, J.* 
                                        
* 
Presiding Justice of the Court of Appeal, Fourth Appellate 
District, Division Three, assigned by the Chief Justice pursuant 
to article VI, section 6 of the California Constitution. 
 
 
See last page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion McClain v. Sav-On Drugs 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 9 Cal.App.5th 684 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S241471 
Date Filed: March 4, 2019 
__________________________________________________________________________________ 
 
Court: Superior 
County: Los Angeles 
Judge: John Shepard Wiley, Jr., and Emilie H. Elias 
 
__________________________________________________________________________________ 
 
Counsel: 
 
The Kick Law Firm, Taras P. Kick, G. James Strenio, Robert J. Dart; McKool Smith Hennigan, Bruce R. 
MacLeod and Shawna L. Ballard for Plaintiffs and Appellants. 
 
Chavez & Gertler and Mark A. Chavez for Public Citizen, Inc., as Amicus Curiae on behalf of Plaintiffs 
and Appellants. 
 
Jonathan M. Coupal, Trevor A. Grimm, Timothy A. Bittle and Laura E. Murray for Howard Jarvis 
Taxpayers Foundation as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
Law Office of Daniel Berko and Daniel Berko for Larry Littlejohn as Amicus Curiae on behalf of Plaintiffs 
and Appellants. 
 
Law Office of Tony J. Tanke, Tony Jerome Tanke; Hattis Law and Daniel M. Hattis for A. Bekkerman, B. 
Griffith, J. Lee and C. Lisser as Amici Curiae on behalf of Plaintiffs and Appellants. 
 
Reed Smith, Douglas C. Rawles, James C. Martin, Kasey J. Curtis; Morgan Lewis & Bockius, Joseph 
Duffy and Joseph Bias for Defendants and Respondents Walgreen Co. and Rite Aid Corporation. 
 
Berry & Silberberg, Berry Silberberg Stokes, Robert P. Berry and Carol M. Silberberg for Defendant and 
Respondent Wal-Mart Stores, Inc. 
 
Morrison & Foerster, David F. McDowell and Miriam A. Vogel for Defendant and Respondent Target 
Corporation. 
 
Holland & Knight, Richard T. Williams, Alan Watson and Shelley Hurwitz for Defendants and 
Respondents CVS Caremark Corporation, Longs Drug Stores Corporation and Longs Drug Stores 
California, Inc. 
 
Theodore Keith Bell for Defendants and Respondents The Vons Companies, Inc., and Vons Food Services, 
Inc. 
 
 
 
 
 
 
 
Page 2 – S241471 – counsel continued 
 
Counsel: 
 
Hunton & Williams, Hunton Andrews Kurth, Phillip J. Eskenazi and Kirk A. Hornbeck for Defendants and 
Respondents Albertson’s, Inc., and Sav-On Drugs. 
 
Kamala D. Harris and Xavier Becerra, Attorneys General, Edward C. DuMont, State Solicitor General, 
Janill L. Richards, Principal Deputy State Solicitor General, Diane S. Shaw, Assistant Attorney General, 
Max Carter-Oberstone, Associate Deputy State Solicitor General, Lisa W. Chao, Stephen Lew and Nhan T. 
Vu, Deputy Attorneys General, for Defendant and Respondent State Board of Equalization. 
 
Colantuono, Highsmith & Whatley, Michael G. Colantuono and Andrew C. Rawcliffe for League of 
California Cities and California State Association of Counties as Amici Curiae. 
 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Taras P. Kick 
The Kick Law Firm 
815 Moraga Drive 
Los Angeles, CA  90049 
(310) 395-2988 
 
David F. McDowell 
Morrison & Foerster 
707 Wilshire Boulevard, Suite 6000 
Los Angeles, CA  90017-3543 
(213) 892-5200 
 
Janill L. Richards 
Principal Deputy State Solicitor General 
1515 Clay Street, 20th Floor 
Oakland, CA  94612 
(510) 879-1300