Settlement Near in Papa John’s Delivery Tax Class Action Lawsuit

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A tentative settlement has reportedly been reached in the Papa John’s illegal sales tax class action lawsuit, which would resolve claims that the popular pizza company illegally foisted sales tax for pizza delivery charges on the consumers. Additionally, the presiding Florida federal judge agreed to remand the Papa John’s class action lawsuit to state court while the parties finalize the proposed sales tax class action settlement.

On Feb. 17, U.S. District Judge Virginia M. Hernadez Covington granted the parties’ joint motion to remand the illegal tax class action lawsuit back to the state court for final approval. According to the motion, the federal court did not have jurisdiction over the Tax Injunction Act.

This Papa John’s class action lawsuit was originally filed in March of last year by plaintiffs Bruce Schojan, Sean Timmons, and Christopher Tollerton, claiming the illegal sales tax on delivery fees is rooted in a misinterpretation of Florida law that allegedly occurred in 1998 by Papa John’s former legal counsel. This delivery sales tax was allegedly incorporated into Papa John’s computerized ordering billing system, which was then a required system in all the Papa John’s company owned franchise stores. The plaintiffs further allege the pizza chain not only charged illegal sales taxes on delivery fees, but also deceived consumers to believe that the tax is required by Florida tax laws.

In September 2014, the plaintiffs filed a motion to certify the Papa John’s illegal sales tax class action lawsuit, alleging the pizza chain collected over $74.5 million in delivery fees alone since April 2010. The Papa John’s class action lawsuit claims that these millions of dollars of delivery fees were taxed anywhere from 6 to 7.55 percent, resulting in $5 million in sales taxes not owed to state or federal government and that the plaintiffs argue should not have been paid by the Papa John’s consumers.

This tentative Papa John’s illegal sales tax class action settlement has come about thanks to some early legal rulings won by the plaintiffs. For example, Judge Covington denied Papa John’s motion to dismiss the illegal sales tax class action lawsuit in December, ruling that the pizza chain’s claim that one particular plaintiff lacked standing in the case would not be considered until summary judgment on the case had been passed. The company’s arguments regarding the interpretation of the state’s Deceptive and Unfair Trade Practices Act was also stayed until the summary judgment state of the class action lawsuit.

In that same month, Judge Covington certified a Class of nearly tens of thousands Papa John’s consumers residing in Florida. The plaintiffs of the illegal sales tax class action lawsuit subsequently filed a motion for summary judgment, claiming Florida law clearly states that taxes on a separately stated delivery fee is illegal and prohibited.

While a settlement has been reached in this illegal sales tax class action lawsuit, Papa John’s still faces similar illegal sales tax on delivery fees allegations in the state of Illinois.

More information about the Papa John’s class action settlement is not readily available at this time. Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

The plaintiffs are represented by Alan Frederick Wagner and Jason Kyle 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.