Cert. Sought in Papa John’s Delivery Tax Class Action Lawsuit

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Last week, the plaintiffs in the class action lawsuit alleging that the pizza chain, Papa John’s International Inc., illegally charged sales tax on delivery fees filed a motion to certify a proposed Class of Florida consumers.

Three pizza purchasers filed their initial class action lawsuit in Florida federal court alleging that Papa John’s collected more than $5 million in sales taxes on delivery fees in violation of Florida law. The plaintiffs allege that because the delivery fee for Papa John’s pizza is listed separately on the receipt and a customer could avoid the fee by picking up their pizza at the store, the charge is considered “incidental” under Florida law.

“Florida law is beyond clear that it is unlawful to charge and collect sales tax on a delivery fee when the customer, at his or her option, can avoid the fee by picking up the pizza at the Papa John’s restaurant itself,” The Papa John’s class action lawsuit says. “Over twenty years ago, the Fifth District Court of Appeal considered whether delivery fees were taxable and held that: ‘if such service charges or fees are separately itemized and applied at the sole option or election of the vendee or lessee, or can be avoided by decision or action on the part of the vendee or lessee alone, then those charges and fees are only incidental to the sale, are not part of the “sales price” and are not subject to sales tax.’”

The Papa John’s class action lawsuit also alleges that under Florida tax law, incidental charges are not taxable. The plaintiffs allege in court documents that Papa John’s began erroneously charging sales tax on delivery charges in 1998 and the practice spread throughout the state with the introduction of ordering and billing software called PROFIT. The plaintiffs contend that Papa John’s will not stop charging sales tax on delivery fees for its pizzas without a court order and call for an injunction on the practice as well as repayment of sales taxes charged to customers since March of 2010.

In their motion, plaintiffs asked U.S. District Court Judge Virginia M. Hernandez Covington to certify Class Members including “Any person or entity that ordered Papa John’s food for delivery on or after March 28, 2010, and who was charged and thereafter paid sales tax on a delivery fee that was separately stated on an invoice when the customer had the option to instead pick up the ordered food at a Papa John’s location in Florida.”

The plaintiffs continue in their motion arguing certification of the Papa John’s class action lawsuit is appropriate because “[o]ver $74,500,000 has been collected as separately stated delivery fees and every penny of that has been taxed at a rate of between 6 percent and 7.55 percent — translating to over $5,000,000 from Floridians in sales taxes that were never owed and should never have been charged or collected.”

The Papa John’s class action lawsuit was initially filed in Florida state court in March. Papa John’s argued successfully removed the case to federal court in May. The case survived a motion to dismiss in July, when Judge Hernandez Covington said plaintiffs had provided enough to keep the litigation going.

The plaintiffs are represented by Alan F. Wagner and Jason Whittemore of Wagner Vaughan & McLaughlin PA.

The Papa John’s Delivery Tax Class Action Lawsuit is Schojan, et al. v. Papa John’s International Inc., et al., Case No. 8:14-cv-01218, in the U.S. District Court for the Middle District of Florida.