This week the Appellate Court of Illinois, Fifth District, has served up some very quotable dicta. The court affirmed the dismissal of a putative class action against Papa Murphy’s International, a pizza franchisor, and a local franchisee, located in Edwardsville, Illinois. The plaintiff in Karpowicz v. Papa Murphy’s International had alleged that the imposition of an 8.8% tax on his “take and bake” pizza violated the Illinois Consumer Fraud Act because applicable taxing law and regulations impose a sales tax of only 1% on “food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, candy and food that has been prepared for immediate consumption).” Applicable state regulations further provide that if the retailer provides premises for food consumption, then “a rebuttable presumption is created that all sales of food by that retailer are considered to be prepared for immediate consumption and subject to tax at the high rate.”
The defendant moved to dismiss the complaint on several grounds, including failure to state a valid claim under the Illinois Consumer Fraud Act, a procedural inability to recover under Illinois law, and the “voluntary payment doctrine.” That is the notion that a taxpayer cannot recover taxes paid voluntarily, even if those taxes were illegal, unless specifically authorized by the statute.
In Karpowicz, the plaintiff argued that he had paid the tax on his pizza under duress, and therefore the “voluntary payment doctrine” did not preclude him from challenging the law. The plaintiff in Karpowicz relied heavily on the Illinois Supreme Court’s decision in Geary v. Dominick’s Finer Foods, Inc., 129 Ill. 2d 389 (1989), which held that female consumers had paid a sales tax on feminine hygiene products under “duress” and therefore the voluntary payment doctrine did not prevent those plaintiffs from challenging the law.
Here’s the dicta from Karpowicz: “A Papa Murphy’s take-and-bake pizza is not essential in the same way as feminine hygiene products are to menstruating women. The plaintiff did not pay the tax involuntarily; reasonable alternatives exist that fulfill a consumer’s basic need for sustenance.”
In other words, a pizza is not like a tampon, and we can cite the Appellate Court of Illinois, Fifth District for that!!
H/T Arthur R. Rosen