Court Opinion

ID: 4373178
Source: CourtListenerOpinion
Date Created: 2019-03-04 18:02:40.007035+00
Date Added: 2024-06-11T11:59:29.068722
License: Public Domain

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.

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)

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                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

(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
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                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

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

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                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

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

                                 5
                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

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

                                  6
                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

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

                                 7
                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

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
                                  8
                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

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.”].)

                                  9
                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

      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

                                 10
                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

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
                                  11
                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

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

                                 12
                    MCCLAIN V. SAV-ON DRUGS
                    Opinion of the Court by Liu, J.

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

                                  13
                   MCCLAIN V. SAV-ON DRUGS
                   Opinion of the Court by Liu, J.

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.

                                 14
                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

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

                                  2
                   MCCLAIN v. SAV-ON DRUGS
                       Kruger, J., concurring

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.

                                 3
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