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McIntosh v. Walgreens Boots Alliance, Inc.

Supreme Court of Illinois

June 20, 2019


          JUSTICE NEVILLE delivered the judgment of the court, with opinion. Chief Justice Karmeier and Justices Thomas, Garman, Burke, Theis, and Neville concurred in the judgment and opinion.



         ¶ 1 Plaintiff Destin McIntosh filed a class action complaint against defendant Walgreens Boots Alliance, Inc. (Walgreens). The complaint alleged that Walgreens violated the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2014)) by unlawfully collecting a municipal tax imposed by the City of Chicago (City) on purchases of bottled water that were exempt from taxation under the City ordinance.

         ¶ 2 The circuit court of Cook County dismissed the action under section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2014)), on the ground that McIntosh's claim was precluded under the voluntary payment doctrine, which provides that money voluntarily paid with full knowledge of the facts cannot be recovered on the ground that the claim for payment was illegal. The appellate court reversed, holding that the voluntary payment doctrine did not bar McIntosh's claim because he had pleaded that the unlawful collection of the bottled water tax was a deceptive act under the Consumer Fraud Act. 2018 IL App (1st) 170362. We allowed Walgreens' petition for leave to appeal (Ill. S.Ct. R. 315(a) (eff. Apr. 1, 2018)). For the reasons that follow, we reverse the judgment of the appellate court and affirm the judgment of the circuit court.

         ¶ 3 I. BACKGROUND

         ¶ 4 Since 2008, the City has levied a five-cent tax on the purchase of bottled water. Chicago Municipal Code § 3-43-030 (added Nov. 13, 2007). Under the ordinance, the buyer is ultimately liable to the City for payment of the bottled water tax. Id. § 3-43-040 (added Nov. 13, 2007). The retail seller is required to include the bottled water tax in the sale price. Id. § 3-43-050 (added Nov. 13, 2007). The bottled water wholesaler collects the tax from the retailer and remits the tax to the City. Id.

         ¶ 5 The ordinance defines the term "bottled water" as "all water which is sealed in bottles offered for sale for human consumption" but excludes any beverage that is defined as a "soft drink" under a separate City ordinance imposing a tax on soft drinks. Id. § 3-43-020 (added Nov. 13, 2007). Under that ordinance, the term "soft drink" has the meaning set forth in section 2-10 of the Illinois Retailers' Occupation Tax Act (id. § 3-45-020 (amended Nov. 16, 2011)), which in turn states that "soft drinks" are defined as "non-alcoholic beverages that contain natural or artificial sweeteners" (35 ILCS 120/2-10 (West 2014)).

         ¶ 6 A guide to the bottled water tax, published by the City's department of revenue, provides examples of the types of bottled water that are excluded from the tax, including (1) any beverage that qualifies as a "soft drink" under the Chicago Soft Drink Tax Ordinance; (2) Pedialyte; (3) Gatorade; (4) Vitamin Water; (5) Sobe Life Water; (6) Propel Fitness Water; (7) Water Joe; (8) Perrier, seltzer water, club soda, or tonic water; (9) mineral water as defined by the Food and Drug Administration; (10) distilled water; (11) other similar products that have carbonation, flavoring, vitamins, caffeine, or nutritional additives; and (12) water provided by delivery services that is in a reusable container not sold with the water. See Chicago Department of Revenue, Chicago Bottled Water Tax Guide, https://www. BottledWaterTaxGuide.pdf (last visited Apr. 25, 2019) [].

         ¶ 7 In 2016, McIntosh filed a class action complaint, asserting that Walgreens had violated the Consumer Fraud Act by collecting the bottled water tax on exempt purchases. The complaint alleged that McIntosh had purchased bottled sparkling water on multiple occasions from several specific Walgreens locations in the city during 2015, and he believed that he was charged the bottled water tax on those occasions. According to the complaint, McIntosh did not know that he had been improperly charged for the bottled water tax until November 2015, when several Chicago news outlets reported that Walgreens was charging the bottled water tax on sparkling water sales that should have been exempt. The complaint further alleged that those reports quoted a Walgreens spokesperson as saying that the company had corrected the issue and that their stores were charging the correct tax on these items.

         ¶ 8 McIntosh's complaint asserted a claim under the Consumer Fraud Act on behalf of himself and all other similarly situated individuals who were charged the bottled water tax on exempt purchases from a Walgreens store in the city. In particular, the complaint alleged that Walgreens represented to buyers of bottled water that the total price "included the tax that was required and allowable by law." According to the complaint, Walgreens knowingly overcharged taxes to McIntosh and other class members by improperly charging the bottled water tax on retail sales of carbonated, flavored, and mineral water. The complaint further asserted that the overcharge was inconspicuous because only a close inspection and investigation of the applicable tax rates and the specific tax charged by Walgreens would reveal the overcharge. In addition, the complaint alleged that Walgreens' conduct constituted a deceptive and unfair practice under the Consumer Fraud Act, which took place in the course of trade or commerce, and that Walgreens intended that the purchasers of bottled water rely on its deceptive and unfair practice, which proximately caused them to suffer actual damages.

         ¶ 9 Walgreens moved to dismiss the complaint under section 2-619(a)(9) of the Code (735 ILCS 5/2-619(a)(9) (West 2014)), asserting that the claim was barred by the voluntary payment doctrine. The motion was supported by the affidavit of Michelle Vartanian, Walgreens' manager for sales and use tax compliance. Vartanian's affidavit averred that, in 2015, Walgreens customer receipts listed the bottled water tax as a separate line item, along with the amount of the tax, for purchases upon which the bottled water tax was charged. Vartanian further averred that Walgreens remitted the bottled water tax to the City in one of two ways: either by making monthly payments to the City for water shipped from a central Walgreens warehouse or by paying the tax to a vendor for water shipped from the vendor, which was responsible for remitting the tax to the City.

         ¶ 10 McIntosh opposed the motion to dismiss, claiming only that the voluntary payment doctrine did not apply to claims brought under the Consumer Fraud Act. He did not file an affidavit or other evidentiary matter to contradict the averments in Vartanian's affidavit. The circuit court granted Walgreens' motion and dismissed the action with prejudice.

         ¶ 11 McIntosh appealed. The appellate court initially determined that the voluntary payment doctrine does not bar a Consumer Fraud Act claim that is predicated on a deceptive act. 2018 IL App (1st) 170362, ¶ 17. The appellate court further held that McIntosh had sufficiently alleged that Walgreens engaged in deceptive conduct in violation of the Consumer Fraud Act by collecting the bottled water tax on purchases that were exempt from the tax. Id. ¶¶ 19-20. Accordingly, the appellate court reversed the dismissal of McIntosh's complaint. Id. ¶ 20.

         ¶ 12 Walgreens appeals to this court. We also allowed the Taxpayers' Federation of Illinois, the Illinois Retail Merchants Association, and the Chicagoland Chamber of Commerce to file a brief as amici curiae in support of Walgreens' position. Ill. S.Ct. R. 345 (eff. Sept. 20, 2010).

         ¶ 13 II. ANALYSIS

         ¶ 14 Walgreens argues that the appellate court erred in reversing the dismissal of McIntosh's complaint under section 2-619(a)(9) of the Code. Specifically, Walgreens contends that the appellate court's decision effectively nullifies the voluntary payment doctrine. Walgreens further contends that the policy underlying the voluntary payment doctrine applies to this case and that the facts alleged in the complaint are insufficient to invoke the fraud exception to the doctrine.

         ¶ 15 McIntosh urges that the appellate court's judgment be affirmed, asserting that the voluntary payment doctrine does not apply to claims brought under the Consumer Fraud Act. McIntosh alternatively contends that the circuit court's dismissal of his complaint was erroneous because he sufficiently pleaded that his claim falls within the doctrine's exception for fraud.

         ¶ 16 Section 2-619(a)(9) of the Code permits dismissal of an action where "the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/2-619(a)(9) (West 2014). The phrase "affirmative matter" refers to a defense that negates the cause of action completely or refutes crucial conclusions of law or conclusions of material fact contained in or inferred from the complaint. Glisson v. City of Marion, 188 Ill.2d 211, 220 (1999) (citing Illinois Graphics Co. v. Nickum, 159 Ill.2d 469, 486 (1994)). A motion to dismiss under section 2-619 admits well-pleaded facts but does not admit conclusions of law and conclusory factual allegations unsupported by allegations of specific facts alleged in the complaint. Better Government Ass'n v. Illinois High School Ass'n, 2017 IL 121124, ¶ 21. In addition, a defendant does not admit the truth of any allegations in the complaint that may touch on the affirmative matters raised in the section 2-619(a)(9) motion to dismiss. Barber Colman Co. v. A&K Midwest Insulation Co., 236 Ill.App.3d 1065, 1073 (1992). Where a defendant presents affidavits or other evidentiary ...

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