Ninth Circuit vacates class certification in LuLaRoe sales tax class action
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Takeaway: In Van v. LLR, Inc., 61 F.4th 1053 (9th Cir. 2023), the Ninth Circuit vacated the district court’s grant of class certification and remanded for re-assessment of whether the plaintiff had satisfied the predominance requirement. Although the court rejected challenges to class certification based on standing and the voluntary payment doctrine, it found that individual issues related to defendants’ provision of discounts for the purpose of offsetting the allegedly improper sales tax assessment potentially defeated predominance.
Plaintiff Katie Van filed a putative class action against Defendants LLR, Inc., and LuLaRoe (collectively, “LuLaRoe”) alleging that LuLaRoe over-charged sales tax to Alaskan customers. LuLaRoe, a multi-level marketing company that sold leggings and other women’s clothing through independent fashion retailers, used a point-of-sale system that calculated sales tax based on the retailer’s location, not the customer’s location. This practice caused LuLaRoe to overcharge customers in states – like Alaska – that did not charge any sales tax. The District Court of Alaska granted class certification in September 2021 and LuLaRoe appealed.Finding that LuLaRoe’s provision of retailer discounts created individualized issues, the Ninth Circuit reversed and remanded. Before addressing the discounts, the court addressed – and rejected – LuLaRoe’s other challenges to of class certification. First, the Court of Appeals found that Ms. Van had standing. 61 F.4th at 1063. After the filing of litigation, LuLaRoe had attempted to refund the money improperly collected as sales tax. LuLaRoe did not, however, pay interest for the time between the improper charge and the return. The only injury suffered by many of the putative class members was a small amount – often less than $0.05 of the time value of money. LuLaRoe argued that such de minimis injury was insufficient to establish standing. The court disagreed, concluding that “[a]ny monetary loss, even one as small as a fraction of a cent, is sufficient to support standing.” Id. at 1064.
Content retrieved from: https://www.jdsupra.com/legalnews/ninth-circuit-vacates-class-5063480/.
