Walmart Returns Class Action Settlement Gets Judge’s Approval

UPDATE: December 2020, the Walmart, Sam’s Club sales tax refund class action settlement is now open. Click here to file a claim.

A federal judge gave his support Wednesday to a proposed $5 million settlement that would end a class action lawsuit over a Walmart return policy that doesn’t always refund sales tax.

Scott Pearlstone of Missouri filed the class action lawsuit against Walmart in December 2017, saying that on two occasions when he returned items purchased from the discount retailer he was denied a full refund. Instead, the store kept the sales tax he had originally paid.

Now Pearlstone is the lead plaintiff in the case, representing what could be hundreds of thousands of other Walmart shoppers who were similarly shortchanged on store returns, and he is ready to settle.

Pearlstone’s lawyers submitted the proposed settlement to U.S. District Judge Henry Edward Autrey on Nov. 24, outlining the deal they negotiated with lawyers for Walmart.

“By any measure, the settlement and the relief it provides are a terrific outcome for the settlement [C]lass [M]embers given the significant risks involved in continued litigation,” Pearlstone’s lawyers wrote.

Under the terms of the proposed settlement, Walmart will pay out $5 million. That total will cover payments to eligible Class Members, an incentive award for lead plaintiff Pearlstone, litigation and settlement administration costs and the plaintiffs’ lawyers fees.

Eligible Class Members will be paid on a pro rata basis, meaning individual payment amounts will depend on the total number of claims made.

The settlement will be available to eligible Class Members who purchased items from Walmart and Sam’s Club, both in-store and online, and were shortchanged their sales tax on returning the products.

Walmart has also agreed, under the terms of the settlement, to update its electronic point-of-sales systems to ensure that customers who return items with their original receipt or proof of purchase will automatically be refunded the entire purchase price, including sales tax.

According to the class action lawsuit’s complaint, Pearlstone said he bought some items from a Walmart store in Manchester, Missouri, on two occasions, just a few weeks apart, in September 2017 and early October 2017.

He went back to the store Oct. 3 to return the items for a refund, he says.

When the Walmart returns were processed, the store register automatically gave Pearlstone a refund for the purchase price of the items, but not the sales tax he paid for them.

When Pearlstone asked a store employee why he didn’t get the sales tax back, the worker told him it was the Walmart return policy not to do so, the class action lawsuit claims.

Pearlstone’s class action lawsuit accused Walmart of breach of contract, unjust enrichment, and violations of the Missouri Merchandising Practices Act.

Walmart refuted those allegations and admits no legal wrongdoing, as part of the proposed settlement.

With the judge’s preliminary approval secured, the two sides will now work out the final details of the settlement and submit those to the court when they have been worked out.

“After nearly three years of contentious litigation, and following three full-day mediation sessions with former U.S. District Court Chief Judge James F. Holderman — an experienced mediator with more than 30 years of experience on the bench — the parties are pleased to report that they have reached a class wide settlement that favorably resolves this case,” Pearlstone’s class action settlement proposal says.

It goes on to note that, if approved, the deal will, “bring meaningful relief to consumers nationwide as well as certainty and closure to what has been — and likely would continue to be — highly contentious, costly and lengthy litigation.”

Have you returned items to Walmart or Sam’s Club and had the store keep the sales tax you paid? Tell us about it in the comment section below.

Lead plaintiff Pearlstone and the proposed Class Members are represented by Myles McGuire, Paul T. Geske and Brendan Duffner of McGuire Law PC.

The Walmart Returns Class Action Lawsuit is Pearlstone v. Wal-Mart Stores Inc., Case No. 4:17-cv-02856, in the U.S. District Court for the Eastern District of Missouri.

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