Papa John's removes sales tax class action to federal court

By Ann Maher | Jun 18, 2014

A class action suit claiming Papa John’s pizza improperly charges sales tax on delivery fees has been removed to federal court in East St. Louis.

Lawyers for the company - who moved for more time to respond saying plaintiffs have introduced a novel theory of liability - have until June 27 to answer the lawsuit originally filed in Madison County.

Lead plaintiff Zachary Tucker of Wood River claims he was charged a $2.39 delivery fee, plus an additional 16 cents in sales tax for the non-taxable delivery service.

Tucker is represented by attorneys at Carey, Danis and Lowe in St. Louis and at Wagner, Vaughan and McLaughlin in Tampa, Fla.

Papa John's is represented by attorneys at Greenberg Traurig in Tampa and HeplerBroom in Edwardsville.

The suit claims that sales tax may only be imposed on the total sales price of taxable tangible property. The sales price is the total amount paid for tangible goods including services that are part of the sale; however, when a customer has the option to either pick up goods or have the goods delivered – as is the case for all Papa John’s orders – a seller may not legally charge sales tax on a separate charge for delivery where the cost of delivering the merchandise is equal to or exceeds the delivery fee, the suit claims.

“To the extent the actual cost of delivery is less than the delivery fee itself, under Illinois law, Papa John’s is permitted to charge sales tax only on the excess amount,” the suit claims.

Among other things, the suit claims violations of the Illinois Consumer Fraud Act, the Uniform Deceptive Trade Practices Act.

It seeks class certification, declaratory judgment ordering defendants to cease and desist charging sales tax on delivery fees, restitution, as well as compensatory, consequential and statutory damages, interest, fees and costs, and other relief.

The case was originally filed May 5 and assigned to Circuit Judge Andreas Matoesian.
Papa John's removed the case on May 29.

U.S. Magistrate Judge Philip M. Frazier granted the defense motion for extension of time to answer on June 2.

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