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Class action: Walgreens wrongly charged Cook 'pop tax'; Retailers had warned such suits were coming

By Jonathan Bilyk | Aug 8, 2017

CHICAGO - Walgreens has become the first retailer hit with a class action lawsuit for allegedly wrongly making customers pay Cook County’s so-called “pop tax” on drink purchases that should have been exempt.

On Aug. 4, just two days after Cook County began requiring retailers to charge and collect its sweetened beverage tax from customers, a plaintiff, identified as Vincent de Leon filed suit in Cook County Circuit Court, asking a judge to order Deerfield-based Walgreens to refund any money they had collected from him and anyone else from whom the retailer collected the tax on beverages which were not supposed to be taxed under the county’s ordinance.

De Leon is represented in the action by attorney Elizabeth Fegan, of the firm of Hagens Berman Sobol Shapiro, of Chicago.

The lawsuit also comes just about a week after a Cook County judge dismissed a challenge to the “pop tax” launched by a group of retailers, who, among other things, alleged the tax was confusing and would inevitably lead to lawsuits from consumers who may be inadvertently overtaxed, or from others, ostensibly on behalf of Cook County, who may sue because businesses aren’t collecting enough of the tax.

In dismissing the retailers’ challenge, Cook County Circuit Judge Daniel Kubasiak downplayed those litigation concerns, saying:

“As to the concerns that improper collection of the tax will open the Merchants up to litigation, any such notion is merely speculation at this point and does not render the Ordinance unconstitutionally vague.”

The county, at the urging of Cook County Board President Toni Preckwinkle, slapped the special 1-cent-per-ounce tax on the sales of sweetened beverages, including those with added sugar, syrups and artificial sweeteners. County officials claimed the tax would raise $200 million for the county, while also reducing the consumption of sweetened beverages, improving public health.

However, in late June, a group of local grocers and the Illinois Retail Merchants Association filed suit in Cook County court challenging the tax, which they argued was unconstitutional. Kubasiak imposed a temporary restraining order, preventing the county from collecting the tax until late July, when he ultimately dismissed the challenge.

In response to the restraining order, Preckwinkle laid off hundreds of county workers, claiming the delay in enforcing the tax was costing the county at least $17 million a month.

Following the dismissal of the legal challenge, the county took what Kubasiak called an “unprecedented” and potentially “chilling” step to then sue the grocers and IRMA, demanding they pay $17 million for challenging the tax and losing. The county is expected to more fully explain and justify its action in briefs the judge has said are due Aug. 15.

However, through the legal challenge, the retailers repeatedly asserted they and others were not ready to begin properly collecting the tax, and would be unfairly exposed to the risk of lawsuits.

In the recently filed lawsuit, De Leon, of Schaumburg, alleges he purchased a case of Dasani Tropical Pineapple Sparkling Water, “which is labeled ‘unsweetened,’” at a Walgreens in Hoffman Estates on Aug. 4, and yet was charged the county’s sweetened beverage tax, which added 96 cents to his $3.79 purchase.

The lawsuit also references other purchases made at other Walgreens stores on Aug. 3 and 4 which similarly appeared to charge the tax on beverage purchases which should have been exempt. The complaint does not specify who made those purchases.

“Walgreens knew it was wrongfully charging the ‘pop tax’ on unsweetened beverages – but did it anyway,” Fegan said in a statement.  “Retailers should not get a pass for using a tax as a guise to pad their own bottom line.”

Attorneys at the Hagens firm are no strangers to such class actions, nor is it the first time Walgreens has been sued for allegedly improperly charging customers tax on beverages.

The Hagens firm has brought a number of high-profile class actions in Chicago courts and elsewhere across the country. The firm has, for instance, represented plaintiffs who have sued the city of Chicago over lead in water pipes; sued Osco Drug for allegedly substituting generic ADHD drugs for a named brand equivalent; sued the makers of the Anatabloc supplement, alleging the “wonder drug” didn’t do what it claimed to reduce inflammation; sued Family Video on behalf of employees who claimed they had been shorted overtime pay; sued spice purveyors McCormick & Company over the amount of black pepper in their containers; and suing Walgreens, Target, Walmart and GNC for allegedly selling herbal supplements even though they contained little to none of the herbs consumers believed they were purchasing; among many other lawsuits.

The firm also represented clients in a mass action against the National Collegiate Athletic Association over athletes’ concussions and brain injuries.

On her webpage, Fegan trumpets her success at securing multi-million-dollar settlements from lawsuits over lead paint on toys, annuities fraud, baby products antitrust violations, aspirin consumer fraud, organic milk consumer fraud, and pre-filled propane tank marketing and sales practices.

De Leon’s lawsuit marks the second time Walgreens has been sued in recent months for allegedly improperly charging consumers beverage taxes. Earlier, Walgreens faced a class action brought by a man who claimed the retailer had wrongly charged him and others a 5-cent tax imposed on the sale of bottled water in the city of Chicgao.

A judge dismissed that lawsuit in February, but plaintiff Destin McIntosh has appealed. That appeal remains pending. The plaintiff is represented in that case by the firm of Siprut P.C., of Chicago.

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Organizations in this Story

Illinois Retail Merchants Association