Class Certification Given To Consumers Who Claim LuLaRoe Charged Sales Tax In Exempt Areas

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LuLaRoe Class Action Lawsuit Overview: 

• Who: Katie Von, plaintiff, filed a class action lawsuit against LuLaRoe. 
• Why: Von alleges LuLaRoe has a policy of charging sales tax based on the location of the seller and does not take into account the location of where the item was sold. 
• Where: The class action lawsuit Class was certified in Alaska federal court.

A class action lawsuit alleging LuLaRoe charged sales taxes to customers in areas with tax-free jurisdictions will be allowed to go forward, a federal judge in Alaska ruled.

Plaintiff Katie Van is representing a Class of more than 10,000 consumers who say LuLaRoe violated Alaska’s Unfair Trade Practices and Consumer Protection Act by having a policy of charging sales tax for transactions regardless of where the product was delivered.

Customers in Alaska — where there is no sales tax  — were charged sales tax for remote purchases from retailers in other states, according to the class action. The lawsuit alleges that between April 2016 and June 2017 LuLaRoe charged fraudulent sales taxes for customers in Alaska on 72,000 transactions. 

Van claims LuLaRoe enacted a policy in 2016 that said retailers in all 50 states were to charge sales tax based on their locations, not where the clothing items were shipped, and even issued a memorandum declaring it was within its legal rights to do so.  

The federal court initially dismissed Van’s class action lawsuit back in March 2019, ruling she did not sufficiently establish she had suffered injury by paying the sales tax, since she had the $531 she paid refunded to her, Law360 reported. 

The Ninth Circuit later ruled the court had erred by tossing the class action lawsuit, arguing Van sustained injury by not being able to use the money before LuLaRoe refunded her, according to the motion. 

“Van suffered a cognizable and concrete injury: the loss of a significant amount of money (over $500) for a substantial amount of time (months with respect to some purchases, over a year with respect to others). This injury is not too trifling to support standing,” the Ninth Circuit said, according to the motion. 

Judged Rules LuLaRoe’s Practice of Charging Sales Tax in Tax-Free Jurisdictions is ‘Unfair’

LuLaRoe later attempted to get the claim dropped that it violated Alaska’s unfair trade practices act, reports Law360, but a judge sided with Van and agreed charging sales tax in a tax-free jurisdiction could be considered unfair. 

A separate class action lawsuit was lodged against LuLaRoe back in 2017 which alleged the company sold leggings that were poor quality and developed tears or holes after a single wash or wear

Were you made to pay sales tax after purchasing a product from LuLaRoe despite living in an area that is sales-tax exempt? Let us know in the comments! 

The plaintiff is represented by Steven T. Graham of Snell & Wilmer LLP. 

The LuLaRoe Class Action Lawsuit is Van v. LLR Inc. dba LuLaRoe, et al., Case No. 3:18-cv-0197, in the U.S. District Court for the District of Alaska.

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