Wal-Mart Sales Tax Class Action Lawsuit Will Move Forward

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A sales tax class action lawsuit against Wal-Mart Stores Inc. will be allowed to move forward in Cleveland federal court, a case which alleges that Wal-Mart employs exploitative return policies.

Plaintiffs Shaun Brandewie and John Newbrough, both residents of Ohio, originally filed this Wal-Mart sales tax class action lawsuit in May of last year, claiming the popular retailer did not give customers full refunds for store products bought in one state county and then returned in another.

Brandewie and Newborough both claim that when they returned items in Cuyahoga County they did not receive a full refund, losing $0.84 and $0.99 respectively on their returned items. The plaintiffs jointly claim that Wal-Mart owes consumers over $5 million in sales tax class action claims.

In response to these sales tax class action allegations, Wal-Mart denied the charges and submitted a motion to dismiss the case on Jan. 16. In their motion to dismiss the sales tax class action lawsuit, Wal-Mart argued the plaintiffs’ claims for sales tax refund must be exclusively filed and handled by the Ohio Tax Commissioner, which would then necessitate the dismissal of the Wal-Mart class action lawsuit.

The retailer further argued, “Even if that scheme did not provide a remedy (as was true before 2002), any refund claim must be brought in the Court of Claims against the State, not Walmart. Either way, this case must be dismissed on the pleadings.”

However, U.S. District Judge James Gwin disagreed with Wal-Mart’s arguments and denied its motion to dismiss the sales tax class action lawsuit, ruling that the Ohio Tax Commissioner would not hear the case unless taxes were sent to the state. In his denial of Wal-Mart’s motion to dismiss, Judge Gwin stated:

“At this stage, it is not clear whether Wal-Mart paid Ohio the sales tax that it did not refund to Plaintiffs when they returned the merchandise. If Ohio has the not-refunded tax, Wal-Mart likely has a winning argument that Plaintiff must make a claim to the Ohio Tax Commissioner. In contrast, if Wal-Mart did not remit to Ohio the sales tax that was not returned to the Plaintiff, then ORC § 5739.07 [Ohio Revised Code] does not allow a claim to the Tax Commissioner, and [the U.S. Supreme Court decision in] Volbers-Klarich allows a direct breach of contract action.”

Despite this denial by Ohio court, Wal-Mart recently submitted a motion to stay the sales tax class action lawsuit pending the resolution of the jurisdictional issue raised by Judge Gwin during the Jan. 16 order, that issue being, “Did Wal-Mart properly remit to Ohio the sales tax that it allegedly did not refund to Plaintiffs and the putative class?” Wal-Mart claims the retailer did in fact provide plaintiffs with a declaration demonstrating state sales taxes were paid by Wal-Mart and, furthermore, the retailer has offered this declaration for deposition in future litigation.

The plaintiffs are represented by Dennis R. Lansdowne, William B. Eadie, Stuart Scott, Nicholas DiCello and Daniel Frech of Spangenberg Shibley & Liber LLP and Daniel Myers of Myers Law LLC.

The Wal-Mart Sales Tax Class Action Lawsuit is Shaun Brandewie et al. v. Wal-Mart Stores Inc. et al., case number 1:14-cv-965, in the U.S. District Court for the Northern District of Ohio.

UPDATE: On July 8, 2015, the plaintiffs urged an Ohio federal judge to approve a settlement that would resolve this Wal-Mart sales tax class action lawsuit.

UPDATE 2: Instructions on how to file a claim for the Wal-Mart sales tax settlement are now available! Click here or visit www.WalmartSalesTaxSettlement.com for details.

UPDATE 3: On April 12, 2018, Top Class Actions readers reported that they have received $15 electronic Walmart gift cards from a class action settlement over allegations that the retailer failed to provide consumers a full refund that included sales tax when they returned merchandise.