Whole Foods to Settle Sales Tax Class Action Lawsuit

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A settlement has been reached in the Whole Foods sales tax class action lawsuit, resolving claims that Whole Foods Market Group Inc. allegedly overcharged consumers who used coupons on their sales tax.

The details of this proposed sales tax class action settlement have not yet been made public, though a hearing has been scheduled and should take place on Sept. 24, unless a motion to dismiss the Whole Foods class action lawsuit is filed before then.

This sales tax class action lawsuit was originally filed in Illinois federal court by plaintiff Chang Wong in January of this year. Wong alleges that when a consumer uses a coupon for which Whole Foods is not reimbursed, the popular grocery store incorrectly calculates the sales tax based on the full price of a purchase before deducting the value of the coupon. According to Wong, this is a violation of the Illinois Administrative Code.

Wong claims that in November 2014 he visited a Chicago Whole Foods store where he used a $15 coupon on a $22.39 transaction. According to the Whole Foods sales tax class action lawsuit, Whole Foods incorrectly applied a 9.25 percent sales tax on the total amount of $22.39 instead of calculating it based off the new amount of $7.39 after the coupon was applied. This miscalculation resulted in Wong overpaying by $1.39. Wong claims the coupon does not require Whole Foods consumers to pay tax liabilities levied by the grocer.

In response to the proposed sales tax class action lawsuit against them, Whole Foods argued that Wong failed to make any allegations that the grocery store company acted in malice when allegedly miscalculating the sales tax. The company further argued that the plaintiff mischaracterized Illinois state law by claiming his sales tax allegations are not barred by the voluntary payment doctrine, a stipulation which prevents consumers from recovering the amount of mistakenly applied taxes that were voluntarily paid at the time of purchase and later paid to the state. Additionally, Whole Foods claimed this proposed sales tax class action lawsuit was flawed in its allegations, as it did not specify the exact coupon mentioned in the overcharged sales tax claims.

In June, U.S. District Judge Matthew F. Kennelly partially agreed with Whole Foods and dismissed plaintiff claims of unjust enrichment, finding that Wong failed to allege a legal claim under Illinois state law because he did not claim the grocery store company retained the value of the allegedly overpaid sales tax.

In addition to representing himself in this Whole Foods sales tax class action lawsuit, Wong also represented a proposed sales tax Class of Whole Foods consumers who may have also been overcharged sales tax in the three to five year period before the class action lawsuit was filed. Wong is seeking both compensatory and punitive damages against Whole Foods equal to at least 1 percent of the annual revenue for each of the grocery store company’s locations in the state of Illinois.

The Whole Foods class action lawsuit estimates that each Whole Foods store makes about $32 million a year and that as of September 2014, at least 19 of the grocer’s locations existed in Illinois.

The plaintiff is represented by Daniel A. Edelman, Cathleen M. Combs, James O. Latturner and Rebecca A. Cohen of Edelman Combs Latturner & Goodwin LLC.

The Whole Foods Sales Tax Class Action Lawsuit is Chang Wong v. Whole Foods Market Group Inc., Case No. 1:15-cv-00848, in the U.S. District Court for the Northern District of Illinois, Eastern Division.