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McIntosh v. Walgreens Boots Alliance, Inc.

Court of Appeals of Illinois, First District, First Division

April 23, 2018

DESTIN McINTOSH, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant,
v.
WALGREENS BOOTS ALLIANCE, INC., Defendant-Appellee.

          Appeal from the Circuit Court of Cook County No. 16 CH 10738, The Honorable Diane J. Larsen, Judge Presiding.

          PIERCE PRESIDING JUSTICE delivered the judgment of the court, with opinion. Justices Simon and Mikva concurred in the judgment and opinion.

          OPINION

          PIERCE PRESIDING JUSTICE.

         ¶ 1 Plaintiff Destin McIntosh filed a putative class-action complaint seeking damages from defendant Walgreens Boots Alliance, Inc., for allegedly imposing and collecting the Chicago Bottled Water Tax (Chicago Municipal Code § 3-43-010 et seq. (added Nov. 13, 2007)) on retail sales of beverages that were exempt from the tax. Defendant filed a motion to dismiss plaintiff's complaint pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2016)), arguing that plaintiff's claim was barred by the voluntary payment doctrine. The circuit court granted defendant's motion and dismissed plaintiff's complaint with prejudice. Plaintiff appeals. For the following reasons, we reverse the circuit court's judgment and remand for further proceedings.

         ¶ 2 BACKGROUND

         ¶ 3 Since January 1, 2008, the City of Chicago (City) has imposed a five-cent tax on the retail sale of each bottle of water sold in the city. Chicago Municipal Code § 3-43-030 (added Nov. 13, 2007). The retail bottled water dealer is required to include the tax in the sale price of the bottled water. Id. The purchaser of bottled water is ultimately liable to the City for payment of the tax. Id. § 3-43-040. The wholesale bottled water dealer is responsible for collecting the tax from the retail bottled water dealer and is responsible for reporting and remitting the tax to the City. Chicago Municipal Code § 3-43-050(A) (amended Nov. 16, 2011). Furthermore, "[a]ny wholesale bottled water dealer who shall pay the tax levied *** shall collect the tax from each retail bottled water dealer in the city to whom the sale of said bottled water is made, and any such retail bottled water dealer shall in turn then collect the tax from the retail purchaser of said bottled water." Id. § 3-43-050(B). Alternatively, "[i]f any retailer located in the City shall receive or otherwise obtain bottled water upon which the tax imposed herein has not been collected by any wholesale bottled water dealer, then the retailer shall collect such tax and remit it directly" to the City. Id. § 3-43-050(C).

         ¶ 4 The City specifically excludes certain bottled beverages from the tax. The exceptions are set forth in the Chicago Bottled Water Tax Guide, https://www.cityofchicago.org/content/dam /city/depts/rev/supp_info/TaxSupportingInformation/BottledWaterTaxGuide.pdf (last visited Apr. 18, 2018). The tax guide states that "taxable products" include, "In general, all brands of non[-]carbonated bottled water intended for human consumption." Id. The tax guide then lists 12 "non-taxable examples" of products that are exempt from the tax. Relevant to the matter before us, the City exempts Perrier, mineral water, and "other products similar to those listed above due to carbonation and/or other features such as flavoring." Id.

         ¶ 5 On August 15, 2016, plaintiff filed a verified class-action complaint seeking damages under the Consumer Fraud and Deceptive Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2016)). For the purposes of this appeal, we accept as true all the well-pleaded facts in plaintiff's complaint and draw all reasonable inferences in his favor. Edelman, Combs & Latturner v. Hinshaw & Culbertson, 338 Ill.App.3d 156, 164 (2003). The complaint alleged that in November 2015, news outlets reported that defendant was charging the tax on sparkling water sales that were supposed to be exempt. These reports included photos of receipts reflecting the imposition of the tax on purchases of exempt products. In response to these reports, defendant announced that it had "corrected the issue." Plaintiff alleged that in 2015, he purchased Perrier, LaCroix, and Smeraldina on multiple occasions from four different Walgreens locations in Chicago. He alleged that he was charged the tax on each of his purchases of carbonated, flavored, and mineral water, even though the beverages were exempt from the tax.[1]He further alleged that he did not "expect or bargain" to be charged the tax and "did not realize" he had been charged the tax.

         ¶ 6 Plaintiff's one-count complaint asserted that defendant represented to purchasers of bottled water that "the total price included the tax required and allowable by law" and that defendant "knowingly overcharged taxes" to plaintiff and others "by improperly charging the [tax] on sales of carbonated, flavored and mineral water." Plaintiff claimed that defendant's overcharge "was inconspicuous in that only a close inspection and investigation of the applicable tax rates and specific rates charged by [defendant] would reveal the overcharge." Plaintiff claimed that defendant's conduct constituted "a deceptive and unfair practice" under the Consumer Fraud Act because defendant intended plaintiff and others to rely on its representations in order to purchase products sold by defendant. The complaint alleged that defendant's "unfair and deceptive practices took place in the course of trade or commerce" and that plaintiff and others "suffered injuries in fact and actual damages, including the loss of money and costs incurred as a result of [defendant's] violation" of the Consumer Fraud Act. Finally, plaintiff alleged that his and others' injuries were proximately caused by defendant's unfair and deceptive behavior, "which was conducted with reckless indifference toward the rights of others, such that punitive damages are appropriate." The complaint sought an order certifying a class and awarding actual and statutory damages, reasonable attorney fees and costs, and other relief.

         ¶ 7 Defendant filed a motion to dismiss plaintiff's complaint pursuant to section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9) (West 2016)). Defendant argued that plaintiff's claim was barred by the voluntary payment doctrine because the tax "was disclosed to [p]laintiff at the time he paid it, and the tax was remitted to the taxing authority." The motion was fully briefed. On January 27, 2017, the circuit court held a hearing on the motion to dismiss. A handwritten order was entered that same day granting defendant's motion to dismiss the complaint with prejudice "for the reasons stated in open court based on Lusinski v. Dominick's [Finer Foods, Inc.], 136 Ill.App.3d 640');">136 Ill.App.3d 640 [(1985)]."[2] Plaintiff filed a timely notice of appeal.

         ¶ 8 ANALYSIS

         ¶ 9 Plaintiff raises two related arguments on appeal. First, he argues that the voluntary payment doctrine per se does not apply to claims under the Consumer Fraud Act. He contends that the Consumer Fraud Act codified public policy and that the voluntary payment doctrine does not apply to causes of action based on statutorily codified public policy. He relies primarily on our decision in Nava v. Sears, Roebuck & Co., 2013 IL App (1st) 122063, in support of his argument. Second, he argues that even if the voluntary payment doctrine does apply to Consumer Fraud Act claims, his Consumer Fraud Act claim satisfies the doctrine's fraud exception. He contends that the circuit court's reliance on Lusinski was misplaced because that case did not involve any allegation of fraud. We address these arguments in turn.

         ¶ 10 We review de novo a circuit court's ruling on a motion to dismiss. Lyons v. Ryan, 201 Ill.2d 529, 534 (2002). A motion to dismiss under section 2-619 of the Code admits the legal sufficiency of the complaint and asserts an affirmative matter outside the pleading that avoids the legal effect of or defeats the claim. Relf v. Shatayeva, 2013 IL 114925, ¶ 20. In ruling on a section 2-619 motion, we accept as true all well-pleaded facts in plaintiff's complaint and draw all reasonable inferences in plaintiff's favor. Hermitage Corp. v. Contractors Adjustment Co., 166 Ill.2d 72, 85 (1995). Conclusions of law or fact, however, will not be accepted as true unless supported by specific factual allegations. Merrilees v. Merrilees, 2013 IL App (1st) 121897, ¶ 14 (citing Ziemba v. Mierzwa, 142 Ill.2d 42, 47 (1991)). An affirmative matter in a section 2-619(a)(9) motion is a defense that negates the cause of action completely or refutes conclusions of law or conclusions of fact contained in the complaint that are unsupported by allegations of specific fact upon which the conclusions rest. Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 486 (1994). The affirmative matter must be apparent on the face of the complaint or supported by affidavits or other evidentiary materials. Epstein v. Chicago Board of Education, 178 Ill.2d 370, 383 (1997). The defendant bears the initial burden of establishing that the affirmative matter defeats the plaintiff's claim; if the defendant satisfies the burden, the burden shifts to the plaintiff to demonstrate that the defense is unfounded or requires the resolution of a material fact. Id.

         ¶ 11 First, plaintiff argues that the voluntary payment doctrine per se does not apply to claims under the Consumer Fraud Act because the Act statutorily defines our state's public policy. We disagree with plaintiff that all Consumer Fraud Act claims are categorically exempt from the voluntary payment doctrine. We do, however, agree with Nava that the voluntary payment doctrine does ...


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