McIntosh v. Walgreens Boots Alliance, Inc. ( 2018 )

2018 IL App (1st) 170362
FIRST DIVISION
April 23, 2018
No. 1-17-0362
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
DESTIN McINTOSH, Individually and on Behalf of All ) Appeal from the
Others Similarly Situated, ) Circuit Court of
) Cook County
Plaintiff-Appellant, )
)
v. ) No. 16 CH 10738
)
WALGREENS BOOTS ALLIANCE, INC., ) The Honorable
) Diane J. Larsen,
Defendant-Appellee. ) Judge Presiding.
PRESIDING JUSTICE PIERCE delivered the judgment of the court, with opinion.
Justices Simon and Mikva concurred in the judgment and opinion.
OPINION
¶1 Plaintiff Destin McIntosh filed a putative class-action complaint seeking damages from
defendant Walgreens Boots Alliance, Inc., for allegedly imposing and collecting the Chicago
Bottled Water Tax (Chicago Municipal Code § 3-43-010 et seq. (added Nov. 13, 2007)) on retail
sales of beverages that were exempt from the tax. Defendant filed a motion to dismiss plaintiff’s
complaint pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2­
619(a)(9) (West 2016)), arguing that plaintiff’s claim was barred by the voluntary payment
doctrine. The circuit court granted defendant’s motion and dismissed plaintiff’s complaint with
No. 1-17-0362
prejudice. Plaintiff appeals. For the following reasons, we reverse the circuit court’s judgment
and remand for further proceedings.
¶2 BACKGROUND
¶3 Since January 1, 2008, the City of Chicago (City) has imposed a five-cent tax on the
retail sale of each bottle of water sold in the city. Chicago Municipal Code § 3-43-030 (added
Nov. 13, 2007). The retail bottled water dealer is required to include the tax in the sale price of
the bottled water. Id. The purchaser of bottled water is ultimately liable to the City for payment
of the tax. Id. § 3-43-040. The wholesale bottled water dealer is responsible for collecting the tax
from the retail bottled water dealer and is responsible for reporting and remitting the tax to the
City. Chicago Municipal Code § 3-43-050(A) (amended Nov. 16, 2011). Furthermore, “[a]ny
wholesale bottled water dealer who shall pay the tax levied *** shall collect the tax from each
retail bottled water dealer in the city to whom the sale of said bottled water is made, and any
such retail bottled water dealer shall in turn then collect the tax from the retail purchaser of said
bottled water.” Id. § 3-43-050(B). Alternatively, “[i]f any retailer located in the City shall receive
or otherwise obtain bottled water upon which the tax imposed herein has not been collected by
any wholesale bottled water dealer, then the retailer shall collect such tax and remit it directly” to
the City. Id. § 3-43-050(C).
¶4 The City specifically excludes certain bottled beverages from the tax. The exceptions are
set forth in the Chicago Bottled Water Tax Guide, https://www.cityofchicago.org/content/dam
/city/depts/rev/supp_info/TaxSupportingInformation/BottledWaterTaxGuide.pdf (last visited
Apr. 18, 2018). The tax guide states that “taxable products” include, “In general, all brands of
non[-]carbonated bottled water intended for human consumption.” Id. The tax guide then lists 12
“non-taxable examples” of products that are exempt from the tax. Relevant to the matter before
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us, the City exempts Perrier, mineral water, and “other products similar to those listed above due
to carbonation and/or other features such as flavoring.” Id.
¶5 On August 15, 2016, plaintiff filed a verified class-action complaint seeking damages
under the Consumer Fraud and Deceptive Practices Act (Consumer Fraud Act) (815 ILCS 505/1
et seq. (West 2016)). For the purposes of this appeal, we accept as true all the well-pleaded facts
in plaintiff’s complaint and draw all reasonable inferences in his favor. Edelman, Combs &
Latturner v. Hinshaw & Culbertson, 338 Ill. App. 3d 156, 164 (2003). The complaint alleged
that in November 2015, news outlets reported that defendant was charging the tax on sparkling
water sales that were supposed to be exempt. These reports included photos of receipts reflecting
the imposition of the tax on purchases of exempt products. In response to these reports,
defendant announced that it had “corrected the issue.” Plaintiff alleged that in 2015, he
purchased Perrier, LaCroix, and Smeraldina on multiple occasions from four different Walgreens
locations in Chicago. He alleged that he was charged the tax on each of his purchases of
carbonated, flavored, and mineral water, even though the beverages were exempt from the tax. 1
He further alleged that he did not “expect or bargain” to be charged the tax and “did not realize”
he had been charged the tax.
¶6 Plaintiff’s one-count complaint asserted that defendant represented to purchasers of
bottled water that “the total price included the tax required and allowable by law” and that
defendant “knowingly overcharged taxes” to plaintiff and others “by improperly charging the
[tax] on sales of carbonated, flavored and mineral water.” Plaintiff claimed that defendant’s
overcharge “was inconspicuous in that only a close inspection and investigation of the applicable
tax rates and specific rates charged by [defendant] would reveal the overcharge.” Plaintiff
claimed that defendant’s conduct constituted “a deceptive and unfair practice” under the
1
Plaintiff’s complaint acknowledged that he did not have receipts for any of his purchases.
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Consumer Fraud Act because defendant intended plaintiff and others to rely on its
representations in order to purchase products sold by defendant. The complaint alleged that
defendant’s “unfair and deceptive practices took place in the course of trade or commerce” and
that plaintiff and others “suffered injuries in fact and actual damages, including the loss of
money and costs incurred as a result of [defendant’s] violation” of the Consumer Fraud Act.
Finally, plaintiff alleged that his and others’ injuries were proximately caused by defendant’s
unfair and deceptive behavior, “which was conducted with reckless indifference toward the
rights of others, such that punitive damages are appropriate.” The complaint sought an order
certifying a class and awarding actual and statutory damages, reasonable attorney fees and costs,
and other relief.
¶7 Defendant filed a motion to dismiss plaintiff’s complaint pursuant to section 2-619(a)(9)
of the Code (735 ILCS 5/2-619(a)(9) (West 2016)). Defendant argued that plaintiff’s claim was
barred by the voluntary payment doctrine because the tax “was disclosed to [p]laintiff at the time
he paid it, and the tax was remitted to the taxing authority.” The motion was fully briefed. On
January 27, 2017, the circuit court held a hearing on the motion to dismiss. A handwritten order
was entered that same day granting defendant’s motion to dismiss the complaint with prejudice
“for the reasons stated in open court based on Lusinski v. Dominick’s [Finer Foods, Inc.], 136 Ill.
App. 3d 640 [(1985)].” 2 Plaintiff filed a timely notice of appeal.
¶8 ANALYSIS
¶9 Plaintiff raises two related arguments on appeal. First, he argues that the voluntary
payment doctrine per se does not apply to claims under the Consumer Fraud Act. He contends
that the Consumer Fraud Act codified public policy and that the voluntary payment doctrine does
2
The record on appeal does not contain a transcript of the circuit court’s hearing on the motion to
dismiss.
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not apply to causes of action based on statutorily codified public policy. He relies primarily on
our decision in Nava v. Sears, Roebuck & Co., 2013 IL App (1st) 122063, in support of his
argument. Second, he argues that even if the voluntary payment doctrine does apply to Consumer
Fraud Act claims, his Consumer Fraud Act claim satisfies the doctrine’s fraud exception. He
contends that the circuit court’s reliance on Lusinski was misplaced because that case did not
involve any allegation of fraud. We address these arguments in turn.
¶ 10 We review de novo a circuit court’s ruling on a motion to dismiss. Lyons v. Ryan, 201 Ill.
2d 529, 534 (2002). A motion to dismiss under section 2-619 of the Code admits the legal
sufficiency of the complaint and asserts an affirmative matter outside the pleading that avoids the
legal effect of or defeats the claim. Relf v. Shatayeva, 2013 IL 114925, ¶ 20. In ruling on a
section 2-619 motion, we accept as true all well-pleaded facts in plaintiff’s complaint and draw
all reasonable inferences in plaintiff’s favor. Hermitage Corp. v. Contractors Adjustment Co.,
166 Ill. 2d 72, 85 (1995). Conclusions of law or fact, however, will not be accepted as true unless
supported by specific factual allegations. Merrilees v. Merrilees, 2013 IL App (1st) 121897, ¶ 14
(citing Ziemba v. Mierzwa, 142 Ill. 2d 42, 47 (1991)). An affirmative matter in a section 2­
619(a)(9) motion is a defense that negates the cause of action completely or refutes conclusions
of law or conclusions of fact contained in the complaint that are unsupported by allegations of
specific fact upon which the conclusions rest. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469,
486 (1994). The affirmative matter must be apparent on the face of the complaint or supported
by affidavits or other evidentiary materials. Epstein v. Chicago Board of Education, 178 Ill. 2d
370, 383 (1997). The defendant bears the initial burden of establishing that the affirmative matter
defeats the plaintiff’s claim; if the defendant satisfies the burden, the burden shifts to the plaintiff
to demonstrate that the defense is unfounded or requires the resolution of a material fact. Id.
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¶ 11 First, plaintiff argues that the voluntary payment doctrine per se does not apply to claims
under the Consumer Fraud Act because the Act statutorily defines our state’s public policy. We
disagree with plaintiff that all Consumer Fraud Act claims are categorically exempt from the
voluntary payment doctrine. We do, however, agree with Nava that the voluntary payment
doctrine does not apply where the plaintiff has asserted a Consumer Fraud Act claim based on a
deceptive practice or act.
¶ 12 “The Consumer Fraud Act is a regulatory and remedial statute intended to protect
consumers, borrowers and business persons against fraud, unfair methods of competition, and
other unfair and deceptive business practices.” Cripe v. Leiter, 184 Ill. 2d 185, 190-91 (1998).
Section 2 of the Consumer Fraud Act declares as unlawful
“[u]nfair methods of competition and unfair or deceptive acts or practices, including but
not limited to the use or employment of any deception, fraud, false pretense, false
promise, misrepresentation or the concealment, suppression or omission of any material
fact, with intent that others rely upon the concealment, suppression or omission of such
material fact, or the use or employment of any practice described in Section 2 of the
‘Uniform Deceptive Trade Practices Act’, approved August 5, 1965 [815 ILCS 510/2], in
the conduct of any trade or commerce.” 815 ILCS 505/2 (West 2016).
To state a claim under the Consumer Fraud Act, a plaintiff must allege “(1) a deceptive act or
practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the deception; and
(3) the occurrence of the deception during a course of conduct involving trade or commerce.”
Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 417 (2002).
¶ 13 The voluntary payment doctrine states that money voluntarily paid under a claim of right
to the payment, and with knowledge of the facts by the person making the payment, cannot be
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recovered back on the ground that the claim was illegal. Getto v. City of Chicago, 86 Ill. 2d 39,
48-49 (1981) (citing Illinois Glass Co. v. Chicago Telephone Co., 234 Ill. 535, 541 (1908)).
“Absent fraud, misrepresentation, or mistake of fact, money voluntarily paid under a claim of
right to the payment, with full knowledge of the facts by the person making the payment, cannot
be recovered unless the payment was made under circumstances amounting to compulsion.”
Jenkins v. Concorde Acceptance Corp., 345 Ill. App. 3d 669, 675 (2003) (citing Nickum, 159 Ill.
at 497); see also Lusinski, 136 Ill. App. 3d at 643-44 (finding that voluntary payment doctrine
bars claims against a retailer for erroneously imposed taxes absent a showing that customer paid
taxes either (1) without knowledge of facts sufficient to form a basis for protesting the tax or
(2) under duress).
¶ 14 In Nava, the plaintiff asserted a Consumer Fraud Act claim alleging that the defendant
improperly assessed state sales taxes on the entire retail sale price of digital television converter
boxes where part of the sale price was subsidized by a federal consumer voucher program. Nava,
2013 IL App (1st) 122063, ¶ 1. The defendant, in part, raised an affirmative defense that
plaintiff’s claim was barred by the voluntary payment doctrine. Id. ¶ 2. The parties filed cross-
motions for summary judgment, and the circuit court granted summary judgment in favor of the
defendant. Id. ¶ 5. We reversed. We concluded that, because the federal government is exempt
from state sales and use taxes (35 ILCS 120/2-5(11) (West 2010); 35 ILCS 105/3-5(4) (West
2010)), its voucher reimbursement could not be taxed. Nava, 2013 IL App (1st) 122063, ¶ 18.
We then found that the plaintiff had produced sufficient evidence to create a genuine issue of
material fact as to each element of his Consumer Fraud Act claim and that the defendant was not
entitled to summary judgment. Id. ¶¶ 20-23. We then rejected the defendant’s argument that the
plaintiff’s claim was barred by the voluntary payment doctrine, observing that the doctrine “does
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not apply where the payment was procured by deception or fraud.” Id. ¶ 24. We further found
that “because the doctrine cannot apply to impede causes of action based on statutorily defined
public policy, this court has held that it should not apply to claims brought under the [Consumer
Fraud] Act.” Id. (citing Ramirez v. Smart Corp., 371 Ill. App. 3d 797, 805 n.2 (2007)).
¶ 15 In Ramirez, the plaintiff asserted, in part, a Consumer Fraud Act claim against the
defendant medical record retrieval and copying service, alleging that the defendant overcharged
patients for its service. Ramirez, 371 Ill. App. 3d at 799. The circuit court determined that the
voluntary payment doctrine barred the plaintiff’s claim and granted summary judgment in favor
of the defendant. Id. at 801. On appeal, the plaintiff argued that she adequately pleaded that her
payment was made under duress and that she lacked a reasonable alternative method for
obtaining her medical records, which precluded the application of the voluntary payment
doctrine. Id. We reversed the circuit court’s judgment, finding that there were genuine issues of
material fact as to the availability of reasonable alternative services. Id. at 803. We further
considered whether the section 8-2001 of the Code (“Hospital Records Act”) (735 ILCS 5/8­
2001 (West 1998)), which obligates hospitals to enable patients to obtain copies of their medical
records, precluded the application of the voluntary payment doctrine. Relying on a case from
Tennessee, we concluded that the Hospital Records Act contained an implied element of
reasonableness in the billing of patients for services. Ramirez, 371 Ill. App. 3d at 804 (citing
Pratt v. Smart Corp., 968 S.W.2d 868 (Tenn. Ct. App. 1997)). We found that the voluntary
payment doctrine would not impede the plaintiff’s claim of excessive charges because her claim
“might well violate the intent of the Hospital Records Act, i.e., that a party must act reasonably
when fulfilling its mandate.” Id. In a footnote, we observed that the plaintiff’s complaint alleged
a Consumer Fraud Act claim and noted that
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“[t]he Consumer Fraud Act is a regulatory and remedial statute intended to give broad
protection to consumers, borrowers, and business people against fraud, unfair methods of
competition, and other unfair and deceptive business practices. [Citations.] The object of
the statute is the protection of the public interest. [Citation]. Thus, [the defendant’s]
allegedly excessive charges would violate the fairness requirements of the Consumer
Fraud Act as well.” Id. at 805 n.2.
¶ 16 Aside from the fact that the footnote in Ramirez is obiter dictum (see Schweihs v. Chase
Home Finance, LLC, 2016 IL 120041, ¶ 41 (noting that “obiter dictum *** means a remark or
opinion uttered by the way”)), the Ramirez court reached its conclusion without considering our
decision in Flournoy v. Ameritech, 351 Ill. App. 3d 583 (2004). In Flournoy, the plaintiff
asserted claims of fraud and negligence against the defendant prison telephone service provider.
The plaintiff alleged that the defendant deliberately terminated collect calls he made from a
prison phone, resulting in additional charges to the recipient of the calls in the form of initial
calling fees and surcharges, and that the plaintiff sent money every month to his mother to cover
the cost of his collect calls. Id. at 584. The circuit court dismissed the plaintiff’s complaint under
sections 2-615 and 2-619 of the Code. We reversed, concluding that the plaintiff adequately
stated a cause of action under the Consumer Fraud Act. Id. at 587. We further held that the
voluntary payment doctrine did not bar the plaintiff’s claim because we concluded that the
plaintiff sufficiently alleged a deceptive practice and that his claim was “in the nature of fraud.”
Id. We distinguished between Consumer Fraud Act claims based on unfair practices, which are
barred by the voluntary payment doctrine, and Consumer Fraud Act claims based on deceptive
practices or fraud, which are not barred by the voluntary payment doctrine. Id. (observing that in
Jenkins, “the plaintiffs did not allege fraud sufficient to defeat the voluntary payment doctrine
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because their claim under the Consumer Fraud Act was based on an unfair practice rather than
deception or fraud”).
¶ 17 Regardless of whether the footnote in Ramirez is a fully accurate statement of the law,
both Nava and Flournoy make clear that when a plaintiff sufficiently pleads a Consumer Fraud
Act claim based on a deceptive act or that is in the nature of fraud, the voluntary payment
doctrine does not apply and is not a bar to the plaintiff’s claim. Here, plaintiff’s underlying
allegation is that defendant imposed a tax on transactions that were exempt from that tax.
Therefore, to avoid the application of the voluntary payment doctrine, plaintiff’s complaint must
sufficiently allege a deceptive act or fraudulent conduct by defendant.
¶ 18 Plaintiff contends that his Consumer Fraud Act claim alleges a deceptive practice or
otherwise satisfies the fraud exception to the voluntary payment doctrine. He asserts that,
“Here, *** [p]laintiff alleges that [defendant] knew it was not supposed to charge or collect the
bottled water tax on [p]laintiff’s purchases, yet [d]efendant deceptively represented that it could,
and then in fact collected the monies from [p]laintiff.” Defendant responds that plaintiff’s
complaint failed to allege sufficient facts to satisfy the fraud exception to the voluntary payment
doctrine and failed to state a claim under the Consumer Fraud Act because he failed to allege
sufficient facts to show that defendant intended to induce plaintiff’s reliance on any
misrepresentation. In his reply brief, plaintiff argues that defendant “forfeited” any argument
regarding the sufficiency of his complaint by failing to raise that argument in the circuit court.
Plaintiff’s forfeiture argument, however, is misplaced. “[A]n appellee may raise any argument in
support of the circuit court’s judgment, even if the argument was not raised in the circuit court,
as long as the argument has a sufficient factual basis in the record.” BMO Harris Bank National
Ass’n v. LaRosa, 2017 IL App (1st) 161159, ¶ 16. Therefore, we will evaluate plaintiff’s
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complaint to determine whether it contains sufficient factual allegations to state a deceptive act
or fraud claim under the Consumer Fraud Act.
¶ 19 Disregarding all of the numerous legal conclusions in plaintiff’s complaint, he alleged
that at the time he purchased Perrier, LaCroix, and Smeraldina from defendant, he did not know
that his purchases were exempt from the bottled water tax. He further alleged that defendant
(1) represented to purchasers of bottled beverages that the total purchase price included taxes
required and allowable by law, (2) charged customers the bottled water tax on purchases of
beverages that were exempt from the tax, (3) intended for its customers to rely on its
representation that the total purchase price included required and allowable taxes, and (4) made
its representations in the course of trade or commerce. Plaintiff further alleged that he and other
customers suffered injuries and actual damages that were proximately caused by defendant’s
conduct.
¶ 20 We find that plaintiff’s complaint sufficiently alleges a deceptive act and stated a claim
under the Consumer Fraud Act and, therefore, the voluntary payment doctrine does not bar
plaintiff’s claim. As set forth above, the Consumer Fraud Act prohibits “the use or employment
of any deception, fraud, false pretense, false promise, misrepresentation or the concealment,
suppression or omission of any [such] material fact *** in the conduct of trade or commerce.”
815 ILCS 505/2 (West 2016). We held in Nava that, “[i]f, as the plaintiff alleges, the defendant
charged a tax neither it nor the plaintiff was bound to pay, it can be found to have engaged in a
deceptive act” for the purposes of the Consumer Fraud Act. Nava, 2013 IL App (1st) 122063,
¶ 20. Furthermore, we held that the defendant’s intent that the plaintiff rely on a deceptive act
might be established by the fact that the customer’s payment of the tax was a natural and
predictable consequence of the defendant asking the plaintiff to do so. Id. (noting that the
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defendant’s intent that a plaintiff rely on a deceptive act does not require proof that the defendant
intended to deceive the plaintiff). Here, plaintiff alleged that defendant represented to customers
that the bottled beverages they purchased were subject to the bottled water tax, when the
purchased products were in fact exempt from the tax, and represented to customers that the
purchase price of the beverages included the required tax. Plaintiff further alleged that defendant
intended that its customers rely on its representation that the products were subject to the tax
when the customers were in fact buying tax-exempt products. Taking those allegations as true,
the defendant could be found to have engaged in a deceptive act, which precludes the application
of the voluntary payment doctrine as a defense. We find that plaintiff has sufficiently alleged a
Consumer Fraud Act claim in the nature of fraud and, therefore, the voluntary payment doctrine
does not bar his claim. We therefore reverse the circuit court’s order dismissing plaintiff’s
complaint and remand for further proceedings.
¶ 21 CONCLUSION
¶ 22 For the foregoing reasons, the judgment of the circuit court is reversed, and we remand
for further proceedings.
¶ 23 Reversed and remanded.
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