Dunkin’ Donuts Charges Illegal Sales Tax, Class Actions Allege

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Dunkin’ Donuts was hit with two class action lawsuits Monday, both of which accuse the donut company of illegally charging tax on tax-exempt products. The Dunkin’ Donuts class action lawsuits were filed on behalf of New York and New Jersey customers.

Plaintiffs Thomas Estler, Blake Ruehrwein and Steven Park filed their Dunkin’ Donuts class action lawsuit in New York federal court. They allege Dunkin’ Donuts illegally includes a surcharge when New York customers purchase pre-package coffee. This surcharge is allegedly listed on customers’ receipts as a “sales tax” of 8.875 percent.

“Defendants know that assessing any sales tax on pre-packaged coffee is unlawful in New York because they are aware of the tax regulations on pre-packaged coffee promulgated by the State of New York,” the Dunkin’ Donuts class action lawsuit asserts.

Dunkin’ Donuts continues to charge the illegal sales tax even after receiving complaints from customers, the plaintiffs claim in their illegal sales tax class action lawsuit.

“Despite being aware of the illegality of their actions, Dunkin’ Donuts continues to flaunt the law and dunk their customers, leaving them with a sour taste in their mouth when they buy their sweets,” the Dunkin’ Donuts class action lawsuit says.

The New York plaintiffs accuse Dunkin’ Donuts of willfully violating the New York consumer protection statute which prohibits deceptive and misleading business practices. They also bring breach of contract, unjust enrichment, fraud and negligence claims.

Plaintiffs Ron Frate and Carol Frate filed a similar Dunkin’ Donuts class action lawsuit in New Jersey, accusing the donut company of illegally adding a surcharge disguised as a 7 percent “sales tax” to New Jersey customers who purchase bottled water and pre-packaged coffee. Under New Jersey law, packaged coffee and bottled water are exempt from sales tax.

According to the Dunkin’ Donuts class action lawsuit, the donut chain is aware that the surcharge disguised as a “sales tax” is illegal, but continues to charge customers anyway. The company continues this illegal practice even though it was featured in a 2013 article published on www.NJ.com, titled “Bamboozled: Coffee Tax Creates Quite a Stir.”

The illegal sales tax class action lawsuit asserts that the headquarters for all Dunkin’ Donuts franchises were notified that the New Jersey locations were charging an illegal sales tax, and that the headquarters responded by stating that the issue had been addressed with the New Jersey locations. However, Dunkin’ Donuts franchises continue to charge the illegal sales tax, the plaintiffs assert.

The New Jersey plaintiffs charge Dunkin’ Donuts with violations of the New Jersey Consumer Fraud Act, breach of contract, unjust enrichment, negligence, fraud and other violations of New Jersey law.

The plaintiffs are represented by Carl J. Mayer and Zachary J. Liszka of the Mayer Law Group LLC and Ted M. Rosenberg and Robert Rosenberg of The Law Office of Ted M. Rosenberg.

The Dunkin’ Donuts Illegal Sales Tax Class Action Lawsuits are Estler, et al. v. Dunkin Brands Inc., et al., Case No. 1:16-cv-00932, in the U.S. District Court for the Southern District of New York, and Frate, et al. v. Dunkin’ Donuts Franchised Restaurants LLC, et al., in the Superior Court of the State of New Jersey, Bergen County.