Emily M. Bass, on Behalf of Herself and All Others Similarly Situated v. J.C. Penney Company, Inc.

IN THE SUPREME COURT OF IOWA
No. 15–0334
Filed June 10, 2016
EMILY M. BASS, on Behalf of Herself and All Others Similarly Situated,
Appellant,
vs.
J.C. PENNEY COMPANY, INC.,
Appellee.
Appeal from the Iowa District Court for Woodbury County, Jeffrey
Poulson, Judge.
Plaintiff appeals from district court summary judgments in a class
action suit against a retailer based on a wrongful collection of sales tax.
AFFIRMED.
Colby M. Lessmann, Timothy S. Bottaro, and Amanda Van Wyhe of
Vriezelaar, Tigges, Edgington, Bottaro, Boden & Ross, LLP, Sioux City,
for appellant.
Michael W. Thrall, Bruce W. Baker, and Keith P. Duffy of
Nyemaster Goode, P.C., Des Moines, for appellee.
Thomas J. Miller, Attorney General, and Donald D. Stanley, Jr.,
Special Assistant Attorney General, for amici curiae State of Iowa and
Iowa Department of Revenue.
2
APPEL, Justice.
In this case, we consider whether a plaintiff may bring a claim
against an internet retailer for unlawfully charging Iowa sales tax on
shipping and handling charges when the retailer forwarded the tax to the
Iowa Department of Revenue (IDOR) pursuant to the Iowa version of the
Streamlined Sales and Use Tax Act (SSUTA). The plaintiff claims the
SSUTA establishes a statutory cause of action against the retailer. In the
alternative, the plaintiff asserts that the retailer forwarding the collected
tax to the IDOR did not extinguish common law claims against the
retailer. The district court granted the retailer’s motion for summary
judgment. Plaintiff appealed.
For the reasons expressed below, we affirm the district court’s
judgment.
I. Background Facts and Proceedings.
The question of proper assessment and collection of state sales tax
on internet sales has been challenging for state governments. To address
internet retailers’ concerns, a number of states banded together and
created an agreement related to these issues, the SSUTA. States joining
the agreement subsequently enacted the SSUTA.
Aware that the tax law had been amended, Carol Danforth, a tax
specialist for J.C. Penney Company, Inc., contacted the IDOR. Danforth
asked IDOR staffer Lola Stegall whether J.C. Penney’s “transportation
and handling” charges on Iowa internet sales transactions were subject
to Iowa sales tax “under the new law.” Stegall replied,
Freight charges are exempt if separately invoiced or
separately stated on the bill. If stated as a single item, and
mandatory to obtain the merchandise, “shipping and
handling” charges (or as you state: “transportation and
handling”) are considered part of the purchase price of the
merchandise and are subject to sales tax.
3
The IDOR published a summary of the changes in law related to
delivery charges in the September 2005 Iowa Tax e-Newsletter. The
newsletter stated:
Delivery charges are exempt from sales tax, so long as they
are separately stated, reasonable in amount and related to
the cost of transportation.
On June 2, 2011, Kathleen Bottaro mailed a letter to J.C. Penney
in which she stated that she had been improperly charged sales tax on
shipping, handling, and delivery charges on an order and demanded
reimbursement. The matter came to Danforth’s attention. She
researched her records and located records related to her June 2005
communication with the IDOR and the September 2005 Iowa Tax e-
Newsletter. Danforth concluded that because J.C. Penney’s delivery
charges were “a flat fee, based on the cost of the merchandise,” it did not
qualify for exemption under the newsletter which seemed to require that
the tax be “related to the cost of transportation.”
Nonetheless, Danforth contacted IDOR once again. She seemed to
get uncertain, if not contradictory advice. One IDOR employee stated
that “interstate separately stated transportation handling was not
taxable,” but another employee indicated that because J.C. Penney’s
charges were related to the cost of the item, they were taxable.
After the internal review and the external communication with
IDOR, Danforth replied to Bottaro. In a letter dated July 15, she stated
that J.C. Penney had been advised that transportation and handling
charges are subject to tax, but that she was reevaluating the issue with
the state. In any event, however, Danforth refunded the tax on Bottaro’s
shipping and additionally gave her a $25 gift card to thank her for
bringing the matter to the company’s attention.
4
Almost two years later on April 24, 2013, Emily Bass placed an
order with J.C. Penney on its website. J.C. Penney charged her sales tax
on the shipping and handling charge. On May 14, Bass wrote to J.C.
Penney requesting a refund and demanding that J.C. Penney cease
collecting taxes on shipping and handling for Iowa transactions. J.C.
Penney refunded the tax.
On August 31, Bass placed another order on the J.C. Penney
website and was again charged tax on shipping and handling. On
September 6, Bass filed a class action petition against J.C. Penney. In
Count I, Bass sought an injunction to restrain J.C. Penney from
collecting the tax. In Count II, she asserted a claim against J.C. Penney
under the SSUTA. Finally, in Count III, Bass brought a negligence claim
against the company. Bass served notice of the petition on J.C. Penney
on September 17. After receipt of service, the company remitted all its
taxes collected in the month of August 2013 to the IDOR.
J.C. Penney filed its first motion for summary judgment on
November 1. Bass amended her class action petition on January 2,
2014. In the amended petition, Bass changed her negligence claim into
one of negligent misrepresentation. She also added Counts IV through
VIII bringing claims of fraud and fraudulent misrepresentation, violation
of the Iowa Consumer Fraud Act, unjust enrichment, and conversion.
The district court first granted partial summary judgment
dismissing Counts I and II of the petition. The district court dismissed
the injunction claim on the ground that the collection of the tax was not
illegal or void but merely irregular, and such irregularity could be
adequately compensated by Bass’s administrative remedy with the IDOR.
The district court also held that the SSUTA did not create a private right
because it would be inconsistent with the purpose of the statute and
5
would intrude on the IDOR’s exclusive jurisdiction over the interpretation
of tax law.
On June 12, 2014, J.C. Penney filed its second motion for
summary judgment. The district court granted the motion on all
remaining counts. The district court held that because J.C. Penney
remitted the sales tax to the state Bass’s only remedy for allegedly
improperly collected tax was with the IDOR. In addition, the district
court found no false statement or false representation from J.C. Penney
regarding its method of calculating shipping and handling and, as a
result, no recovery could be had on the plaintiff’s remaining claims.
Bass appealed.
II. Standard of Review.
On review of summary judgment rulings, we review for errors of
law. Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000).
We view the entire record in the light most favorable to the nonmoving
party, making every legitimate inference that the evidence in the record
will support in favor of the nonmoving party. Goodpaster v. Schwan’s
Home Serv., Inc., 849 N.W.2d 1, 6 (Iowa 2014).
III. Overview of Dispute.
A. Introduction. There are two distinct issues in this case. The
first question is whether the SSUTA creates a private right of action
either expressly or by implication. The second question is whether the
SSUTA extinguishes the plaintiff’s remaining causes of action against the
retailer when the internet retailer exercises its option to remit collected
taxes to the IDOR.
B. Relevant Statutory Provisions.
1. Background. In 1999, the Streamlined Sales Tax Project began
to explore ways to assist states in the collection and administration of
6
state sales tax. Streamlined Sales Tax Governing Board, Why Was the
Streamlined Sales Tax Created?, http://www.streamlinedsalestax.org/
index.php?page=gen_2 (last visited June 1, 2016). Three years later, the
SSUTA was developed. John A. Swain & Walter Hellerstein, The Political
Economy of the Streamlined Sales and Use Tax Agreement, 58 Nat’l Tax J.
605, 610 (2005). The Iowa SSUTA is Iowa’s enactment of this multistate
effort to standardize and streamline the administration of sales tax to
reduce the burden of compliance and to provide equal treatment to local
brick-and-mortar businesses and out-of-state, online businesses.
Streamlined Sales Tax Governing Board, What is the Streamlined Sales
and Use Tax Agreement?, http://www.streamlinedsalestax.org/index.php
?page=gen_1 (last visited June 1, 2016). Once states fully enact the
SSUTA, they become “member states” of the Streamlined Sales Tax
Governing Board. As member states, they gain access to a host of
resources to enable the state to tax online purchases effectively. Twenty-
four states have fully enacted the SSUTA. Streamlined Sales Tax
Governing Board, How Many States Have Passed Legislation Conforming
to the Agreement?, http://www.streamlinedsalestax.org/index.php?page=
gen_3 (last visited June 1, 2016).
2. Relevant statutory provisions. Iowa’s SSUTA is codified in Iowa
Code chapter 423 (2013). In our analysis, we begin with Iowa Code
section 423.8, which outlines the intent behind the legislation:
The general assembly finds that Iowa should enter into
an agreement with one or more states to simplify and
modernize sales and use tax administration in order to
substantially reduce the burden of tax compliance for all
sellers and for all types of commerce. It is the intent of the
general assembly that entering into this agreement will lead
to simplification and modernization of the sales and use tax
law and not to the imposition of new taxes or an increase or
decrease in the existing number of exemptions . . . .
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Iowa Code § 423.8 (emphasis added). Notably, the statement of
legislative intent speaks to simplifying and modernizing the collection of
taxes and reducing the burden of tax compliance for all sellers and for all
types of commerce.
Iowa Code section 423.45 relates to refunds of excess taxes
collected by a retailer. Subsections (2) and (3) are at the center of this
controversy. Subsection (2) generally provides for refund to a consumer
of excess taxes collected by a retailer upon notice by the consumer that
an excess payment exists. Subsection (2) states,
If an amount of tax represented by a retailer to a consumer
or user as constituting tax due is computed upon a sales
price that is not taxable or the amount represented is in
excess of the actual taxable amount and the amount
represented is actually paid by the consumer or user to the
retailer, the excess amount of tax paid shall be returned to
the consumer or user upon proper notification to the retailer
by the consumer or user that an excess payment exists. . . .
No cause of action shall accrue against a retailer for excess
tax paid until sixty days after proper notice has been given
the retailer by the consumer or user.
Id. § 423.45(2).
Subsection (3) provides the retailer an option in the event a
customer notifies the retailer of an excess tax payment. Subsection (3)
provides that a retailer who receives a notice from a consumer of
payment of an excess tax may remit the amount to the IDOR.
Specifically, subsection (3) states,
In the circumstances described in subsection . . . 2, a
retailer has the option to either return any excess amount of
tax paid to a consumer or user, or to remit the amount
which a consumer or user has paid to the retailer to the
department.
Id. § 423.45(3).
While Iowa Code section 423.45(3) allows the retailer to remit
collected taxes to the IDOR after a notice of excess tax by a consumer or
8
user, Iowa Code section 423.47 relates to potential taxpayer refunds.
Specifically, Iowa Code section 423.47 provides,
If it shall appear that, as a result of mistake, an
amount of tax, penalty, or interest has been paid which was
not due under the provisions of this chapter, such amount
shall be credited against any tax due, or to become due, on
the books of the department from the person who made the
erroneous payment, or such amount shall be refunded to
such person by the department.
Id. § 423.47.
IV. Statutory Cause of Action.
A. The Parties’ Positions. Bass argues that Iowa Code chapter
423 creates a private statutory right of action that may be enforced by
the plaintiff. Bass points to language in Iowa Code section 423.45(2),
which provides, “No cause of action shall accrue against a retailer for
excess tax paid” until “proper notice has been given the retailer by the
consumer or user.” According to Bass, the fact that the legislature
expressly referenced “cause of action” in the statute is an explicit
provision creating a private statutory cause of action under the statute.
Bass asks: Why would the legislature provide a notice requirement before
a cause of action accrues if there was no cause of action?
In the alternative, Bass argues that even if the reference to “cause
of action” does not expressly create a cause of action, a private cause of
action should be implied from the statute under the familiar four-part
test presented in Cort v. Ash, 422 U.S. 66, 78, 95 S. Ct. 2080, 2088, 45
L. Ed. 2d 26, 36–37 (1975), as modified in Seeman v. Liberty Mutual
Insurance Co., 322 N.W.2d 35, 40 (Iowa 1982), and Shumate v. Drake
University, 846 N.W.2d 503, 508 (Iowa 2014). Bass argues that a private
cause of action is consistent with the purposes of the legislation. While
Bass recognizes there might be a remedy for refund of taxes remitted to
9
the IDOR by a retailer, nothing in the statute suggests the administrative
remedy should be exclusive.
J.C. Penney counters that the statute does not expressly or
impliedly create a private cause of action against a retailer who remits
taxes collected to the IDOR. J.C. Penney argues that the “cause of
action” language in Iowa Code section 423.45(2) is simply uniform
language in the Iowa SSUTA which was not designed to create a new
statutory cause of action, but to ensure that if state law otherwise
recognizes a cause of action, such claims do not accrue until sixty days
after the consumer or user notifies the retailer of the payment of the
excess tax.
Further, J.C. Penney argues that Iowa Code section 423.45(3)
provides a safe harbor to the retailer. Under J.C. Penney’s
interpretation, subsection (3) allows the retailer to remit taxes to the
IDOR and thereby require the consumer or user to seek any potential
refund directly from the IDOR rather than the retailer. J.C. Penney
argues that its interpretation is consistent with the purpose of the Iowa
SSUTA, which is intended to “simplify and modernize sales and use tax
administration in order to substantially reduce the burden of tax
compliance for all sellers and for all types of commerce.” Iowa Code
§ 423.8.
In support of its position, J.C. Penney points to appellate decisions
in two states under those states’ respective versions of SSUTA. In Kawa
v. Wakefern Food Corp. Shoprite Supermarkets, the New Jersey court held
that its SSUTA statute—which is nearly identical to Iowa’s statute—did
not create a private statutory cause of action when the retailer remitted
the taxes collected to tax authorities. 24 N.J. Tax 444, 452 (Super. Ct.
App. Div. 2009). Similarly, in Georgia Power Co. v. Cazier, the Georgia
10
court found that its SSUTA with its “seller-protection provisions” did not
create a private cause of action. 740 S.E.2d 458, 462–63 (Ga. Ct. App.
2013).
B. Analysis. We begin by looking at the underlying purpose of the
statute. Here, we are not required to speculate because Iowa Code
section 423.8 is explicit. The purpose of the Iowa SSUTA is to simplify
and modernize sales tax to ease the burdens on retailers seeking to
comply with sales tax requirements. Iowa Code § 423.8. Nowhere in
Iowa Code section 423.8 is there any suggestion that the legislation was
designed to provide taxpayers with a new statutory remedy.
We must view the “no cause of action” language of Iowa Code
section 423.45(2) through the prism of the statute’s stated legislative
purpose. In light of the purpose of simplifying, modernizing, and easing
the burdens and administration of collection of sales tax, we do not
believe the “no cause of action” language was designed to create a private
cause of action under the statute. Further, we note that the “no cause of
action” language is part of a uniform statute that participating member
states are required to enact. The uniform provision is best understood as
being designed to ensure that in all participating member states retailers
are entitled to a sixty-day notice period before a cause of action, if any
otherwise exists under local law, may be brought against the retailer.
See Georgia Power Co., 740 S.E.2d at 462; Kawa, 24 N.J. Tax at 452.
Finally, our interpretation that the “no cause of action” language
does not create a statutory cause of action is reinforced by the negative
phrasing. The legislature did not affirmatively state a new cause of
action exists, but instead crafted what amounts to a negative or limiting
provision. We thus do not find that the “no cause of action” language,
11
which is plainly designed to limit potential claims under a uniform act,
can be used topsy-turvy to expand claims.
For some of the same reasons, we also find that no cause of action
is implied by the “no cause of action” language. In determining whether
a statute creates an implied cause of action, we apply the four-part test
of Seeman, 322 N.W.2d at 40. Under the Seeman test, we consider (1)
whether “the plaintiff [is] a member of the class for whose special benefit
the statute was enacted,” (2) “[l]egislative intent, either explicit or
implicit, to either create or deny such a remedy,” (3) whether a “private
cause of action [is] consistent with the underlying purpose” of the
statute, and (4) whether the “implication of a private cause of action [will]
intrude into an area over which the . . . government has exclusive
jurisdiction or which has been delegated exclusively to a state
administrative agency.” Id. at 41–43; see also Mueller v. Wellmark, Inc.,
818 N.W.2d 244, 254 (Iowa 2012).
Applying the Seeman test, we think it clear that we should not
imply a private cause of action under the SSUTA. The SSUTA was not
enacted to benefit taxpayers, but instead to streamline the tax collection
process for retailers. The legislative intent behind the statute is not
furthered by requiring retailers to answer to consumers or users for
collection of sales taxes which are not collected to the benefit of the
retailer but are collected on behalf of the state and remitted to taxing
authorities. Further, we think the structure of the statute is clear—a
retailer faced with a claim of excess collection of sales tax by a consumer
or user faces a choice; it can refund the amount to the consumer or user
or it can remit the funds to the IDOR and allow the taxpayer to pursue
administrative remedies with the IDOR. Implying a private right of action
12
would complicate, rather than simplify, the tax collection process under
the SSUTA.
For the above reasons, we conclude the district court correctly
granted J.C. Penney’s motion for summary judgment on the plaintiff’s
statutory claims grounded in SSUTA.
V. Overview of Non-SSUTA Causes of Action.
A. Bass’s Position. Bass asserts that even if the SSUTA does not
create a statutory cause of action, Bass still has other common law and
statutory claims against the retailer for collection of excess taxes. She
brings a statutory claim under the Iowa Consumer Frauds Act, Iowa
Code chapter 714H, and common law claims of negligent
misrepresentation, fraud and fraudulent misrepresentation, unjust
enrichment, and conversion.
Bass groups her non-SSUTA claims into two categories. The first
group of non-SSUTA claims is based upon J.C. Penney’s representations
that charging sales tax on shipping and handling is required by Iowa law
(tax representation claims). The second group of non-SSUTA claims is
based upon representations regarding shipping and handling on the
company’s website (shipping and handling misrepresentation claims).
With respect to the tax misrepresentation claims, Bass asserts that
J.C. Penney wrongfully represented that Iowa sales tax is required on its
shipping and handling charges. Bass asserts that shipping and handling
charges of J.C. Penney are not subject to tax and the company is
answerable for its wrongful conduct in making the false
misrepresentation that shipping and handling charges were subject to
sales tax. To the extent the IDOR suggested to J.C. Penney that the
charges were subject to sales tax, Bass simply contends such advice was
13
wrong under the applicable statute. Iowa Code § 423.1(51)(a)(4)
(exempting “delivery charges” from the value subject to tax).
Bass disagrees that the administrative remedies with the IDOR are
exclusive when a retailer remits collected taxes to the IDOR. In support
of her argument, Bass cites George v. D.W. Zinser Co., 762 N.W.2d 865
(Iowa 2009). In George, we noted that if the legislature intended a
statute providing for administrative relief to provide an exclusive remedy
and preclude a private cause of action, it could expressly do so. Id. at
872.
The second category of non-SSUTA claims relates to
representations made on J.C. Penney’s website with respect to shipping
and handling charges. Bass’s claims focus on a website statement by
J.C. Penney that “[s]hipping and handling charges for delivery will be
added to your purchase, based upon the total of your order and the type
of delivery you select or is available.” Bass claims this statement is false
or misleading because the charges are not, in fact, “shipping and
handling” charges.
B. J.C. Penney’s Position. With respect to Bass’s sales tax
representation claims, J.C. Penney responds that when a retailer remits
collected sales taxes to the IDOR pursuant to Iowa Code section
423.45(3), the exclusive remedy rests with administrative proceedings
before the IDOR seeking a refund. In support of its position, J.C. Penney
cites Loeffler v. Target Corp., 324 P.3d 50 (Cal. 2014). In Loeffler, the
California Supreme Court considered whether an administrative remedy
to determine sales tax issues was exclusive in the context of a statute
unrelated to SSUTA. Id. at 54. The Loeffler court concluded that the
administrative remedy was exclusive and that claims under a consumer
14
protection statute were barred. Id. A similar result was reached in Kawa
under the New Jersey version of the SSUTA. Kawa, 24 N.J. Tax at 451.
With respect to the shipping and handling claims, J.C. Penney
offers the additional argument that no misrepresentation was made on
the website. J.C. Penney points out that its website accurately described
the charge for shipping and handling, including a matrix presentation
that showed how the charge was affected by the amount of purchase and
the method of delivery chosen by the customer. J.C. Penney thus
concludes that no reasonable person would be misled by its shipping and
handling charges.
VI. Analysis of Non-SSUTA Claims.
A. Tax Representation Claims. We first consider the merits of
the district court’s granting of summary judgment on the sales tax
representation claims on the ground that the remedies under Iowa Code
sections 423.45(3) and 423.47 are exclusive remedies barring any other
claims for relief for wrongful payment of sales taxes under SSUTA.
We have considered whether a statute provides an exclusive
remedy in a number of cases. For example, in Northrup v. Farmland
Industries, Inc., we held that the Iowa Civil Rights Act provided the
exclusive remedy for a claimant seeking to pursue a remedy for a
discriminatory practice. 372 N.W.2d 193, 197 (Iowa 1985). We noted
that the statute expressly declared that “[a] person claiming to be
aggrieved by an unfair or discriminatory practice must initially seek an
administrative relief by filing a complaint with the [Iowa Civil Rights
C]ommission . . . .” Id. at 196 (quoting Iowa Code § 601A.16(1) (1983)).
We found that the statute clearly provided that the procedure under the
Iowa Civil Rights Act was exclusive. Id. at 197. In light of the express
language of the statute, Northrup was an easy call.
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In many situations, however, the legislature has not provided us
with express direction regarding whether a statutory remedy is exclusive.
We have said, however, that the absence of express exclusivity language
does not give rise to a presumption of nonexclusivity. Goebel v. City of
Cedar Rapids, 267 N.W.2d 388, 392 (Iowa 1978); see also Snyder v.
Davenport, 323 N.W.2d 225, 227 (Iowa 1982). For instance, in Van Baale
v. City of Des Moines, we held that when the legislature has provided a
comprehensive scheme for dealing with a particular kind of dispute, the
statutory remedy provided is generally exclusive. 550 N.W.2d 153, 156
(Iowa 1996). We stated in Van Baale that the label of the claim was not
controlling. Id. (noting that actions in contract and tort can be barred by
a statute providing the exclusive remedy for wrongful discharge is
administrative).
Under Van Baale, it is plausible to assert that to the extent a
taxpayer has a dispute with the IDOR or the director with respect to
taxes paid to the department, Iowa Code section 423.47 (2013) provides
an exclusive remedy to resolve the issues. No one can seriously contest
that the regulatory framework is a dense, comprehensive scheme. See
Iowa Code §§ 422.67–.75; Iowa Admin. Code ch. 701 (2013); cf. Walthart
v. Bd. of Dirs., 667 N.W.2d 873, 878 (Iowa 2003); Van Baale, 550 N.W.2d
at 156 (“Where the legislature has provided a comprehensive scheme for
dealing with a specified kind of dispute, the statutory remedy provided is
generally exclusive.” (quoting 1A C.J.S. Actions § 14 n.55 (1985))); In re
Entergy Corp., 142 S.W.3d 316, 322 (Tex. 2004) (holding a “pervasive
regulatory scheme” shows that the legislature intended the
administrative remedy to be exclusive).
Ordinarily, however, a remedy cannot be considered exclusive if
the party does not have access to the remedy. In all of the exclusivity
16
cases, the plaintiff had the opportunity to seek relief from the exclusive
remedy. Van Baale, 550 N.W.2d at 155 (describing how the plaintiff had
an opportunity to pursue an exclusive remedy “before the civil service
commission”); Northrup, 372 N.W.2d at 195; Snyder, 323 N.W.2d at 227.
Further, an administrative remedy should be adequate in order to be
deemed exclusive. City of Des Moines v. Des Moines Police Bargaining
Unit Ass’n, 360 N.W.2d 729, 731 (Iowa 1985) (stating that the
administrative process will be held to be exclusive only when an
adequate administrative remedy exists, and the statutes expressly or
impliedly require that the remedy be exhausted before a court may hear
the issue); see B & D Inv. Co. v. Schneider, 646 S.W.2d 759, 763 (Mo.
1983) (en banc).
Here, however, it is not clear that the consumer may seek the
remedy which Bass claims is exclusive. Specifically, Iowa Code section
423.47 provides,
If it shall appear that, as a result of mistake, an
amount of tax, penalty, or interest has been paid which was
not due under the provisions of this chapter, such amount
shall be credited against any tax due, or to become due, on
the books of the department from the person who made the
erroneous payment, or such amount shall be refunded to
such person by the department.
Iowa Code § 423.47. By the statute’s express terms, the remedy is
available in the event of “mistake” by “the person who made the
erroneous payment.” Id.
Who is “the person who made the erroneous payment?” Under
Iowa Code section 423.29, every seller who is a retailer and makes sales
of tangible personal property is required to “collect the sales tax.” Id.
§ 423.29. Unlike other states, a seller is not allowed to advertise or hold
out that the retailer is absorbing taxes or that taxes will not be added to
17
the sales price of property sold. Iowa Code § 423.24. The burden of the
Iowa sales tax thus plainly falls on the consumer, from whom the retailer
is required to collect the tax, and not upon the retailer.
The parties originally cited no Iowa authority on the question of
whether a consumer may obtain a remedy under Iowa Code section
423.47. In at least two cases from other jurisdictions, however, for
purposes of recovery of sales taxes paid to the state, the taxpayer has
been held to be the retailer and not the consumer. Loeffler, 324 P.3d at
64; State v. Buggy Bath Unlimited, Inc., 18 P.3d 1182, 1187 (Wyo. 2001).
As explained above, under Iowa law, a claim of exclusiveness of a
statutory remedy would be undermined if the complaining party could
not utilize the exclusive remedy.
To clarify the issue, we sought supplemental briefing from the
parties and an amicus brief from the State of Iowa. As a result of our
request, the IDOR weighed in on the question of who may seek a refund
under Iowa Code section 423.47. The IDOR emphasizes that under the
Iowa statutory framework, the retailer is required to collect the tax. See,
e.g., Iowa Code § 423.1(47) (defining “retailer” as including “seller[s]
obligated to collect sales or use tax” (emphasis added)); id. § 423.2(12)
(“All taxes collected under this chapter by a retailer . . . are deemed to be
held in trust for the state of Iowa.” (Emphasis added.)); id. § 423.14(1)(a)
(“Sales tax . . . shall be collected by sellers who are retailers or by their
agents.” (Emphasis added.)). Under the language of the Iowa statutes,
the IDOR asserts that the retailer merely collects the tax, which is paid
by the consumer.
As a result, IDOR maintains that the consumer as the taxpayer
has the right to seek a refund of taxes paid under Iowa Code section
423.47. The IDOR distinguishes Loeffler and Buggy Bath on the ground
18
that the language of the state statutes involved in these cases actually
imposed the sales tax on the retailer, not the consumer.
Neither party challenges the interpretation of the IDOR on this
point and, after review of the various statutes and cases cited, we
conclude that the IDOR’s interpretation is correct. Unlike the statutory
schemes in California and Wyoming, the Iowa statutory scheme treats
the retailer as one who collects the tax and holds the collections in trust
for the state. The retailer under the Iowa statutory scheme is a mere
conduit for the IDOR. As a result, J.C. Penney’s argument with respect
to the exclusivity of Iowa Code section 423.47 cannot be defeated on the
ground that the remedy is not available to the plaintiffs in this case.
Having concluded that taxpayers have a remedy against IDOR and
that, as a result, the provision of Iowa Code section 423.47 may be
exclusive, we thus confront Loeffler, in which plaintiffs challenged the
Target Corporation’s collection of sales tax on coffee to go. Loeffler, 324
P.3d at 53–54. The trial court dismissed the plaintiffs’ claims. Id. at 57.
On appeal, the plaintiffs argued that they were entitled to bring an action
for misrepresentation by Target that sales tax was due on coffee to go
under the California unfair competition statute and the Consumers Legal
Remedies Act. Id. at 58. As J.C. Penney does here, Target urged that the
exclusive avenue for challenging the imposition of sales tax on consumer
transaction was the administrative apparatus of the California taxing
authority.1 Id. at 60.
1Unlike in this case, under California law retailers, rather than consumers, were
the taxpayers. Thus, in some respects, the argument for exclusivity of administrative
remedies that were available only to taxpayers had less attractiveness in Loeffler than in
this case, where the consumers are taxpayers and have an available administrative
remedy.
19
The California Supreme Court found that California’s well-
developed administrative remedy before the board was an exclusive
remedy for tax matters even in the absence of an express legislative
direction. Id. at 82. The court concluded that the plaintiffs’ claims—
based upon Target’s alleged misrepresentation regarding the taxability of
the sale of hot coffee—required resolution of what the court called “the
taxability question.” Id. at 77. The court reasoned that the taxability
question under applicable statutes must be resolved by the taxing
authority and that the tax code precluded claims outside the established
process. Id. at 79. As a result, the plaintiff consumers in Loeffler could
not bring an action against Target under California consumer protection
laws for misrepresenting the sales taxes due on the sale of hot coffee at
Target retail locations. Id. at 82; see also Stoloff v. Neiman Marcus Grp.,
Inc., 24 A.3d 366, 373 (Pa. Super. Ct. 2011) (holding that a claim under
Pennsylvania’s consumer protection law, among other claims, could not
be brought against the retailer for alleged overpayment of tax because
the administrative remedy was exclusive).
A dissenting opinion in Loeffler adopted a different view. According
to the dissent, the plaintiffs’ actions involved a dispute between the
consumers and the retailer based on statutory grounds, not a dispute
between the retailer and the state. Loeffler, 324 P.3d at 82 (Liu, J.,
dissenting). The dissent noted that the consumer fraud statute was to be
liberally construed for the benefit of consumers. Id. at 85. While the
dissent recognized that it might be desirable to have the department of
revenue participate in decisions involving a determination of the legality
of sales taxes for policy reasons, such participation could be achieved by
joining the department as a party to the litigation. Id. at 86.
 20
Based on the above considerations, we conclude that Iowa Code
section 423.47 provides an exclusive remedy for disputes between
consumers and retailers over retailers’ representations to consumers
about the tax consequences of transactions. In this tax case, the retailer
simply collects the taxes and holds them in trust for the state. Iowa
Code § 423.2(12); see, e.g., Cash v. State, 628 So. 2d 1100, 1101 (Fla.
1993) (holding that a retail seller was an agent of the state in the
collection of taxes and thus owed a fiduciary duty toward the state);
Stoloff, 24 A.3d at 372–73 (explaining that once a retailer collects the tax,
it holds it in trust for the state); Davis v. State, 904 S.W.2d 946, 951
(Tex. App. 1995) (“[T]he sales tax collector holds tax receipts, the state’s
property, in trust for the state.”). The state has the beneficial interest in
the funds collected by the retailer and temporarily held by the retailer
prior to remission to the IDOR. Under Iowa Code section 423.45(3),
SSUTA allows the retailer, when faced with a consumer complaint
regarding the imposition of sales tax, to either refund the tax or to pass
the funds on to the beneficiary, the state. Once the funds are passed on
to the state, the consumer has a remedy pursuant to Iowa Code section
423.47.
Admittedly, the statute does not expressly declare that the remedy
provided in Iowa Code section 423.47 is the customer’s exclusive remedy
when the funds have been remitted by the retailer. But, as in Loeffler,
the Iowa law surrounding sales tax is often quite complicated, involving
myriad potential fact patterns. See Loeffler, 324 P.3d at 62. Many sales
tax questions are not easily handled by general practitioners but fall in
the province of specialists. See generally Charles Rembar, The Practice of
Taxes, 54 Colum. L. Rev. 338, 340 (1954) (describing how tax law is
unlike other areas of law and shares much in common with
21
accountancy). In this unusual setting, orderly administration of tax law
will be thwarted if consumers are able to bring claims against retailers
claiming that the retailer illegally assessed taxes. Further, one of the
purposes of SSUTA was to “simplify and modernize sales and use tax
administration in order to substantially reduce the burden of tax
compliance for all sellers.” Iowa Code § 423.8. Allowing retailers to be
sued over taxability questions when the retailer has forwarded the funds
to the IDOR is in conflict with the fundamental statutory purpose.
Thus, our decision here is not based simply on the denseness and
comprehensiveness of the regulatory scheme, but primarily on the
inconsistency of the remedy sought by the plaintiffs with the structure of
provisions of the tax code designed to provide a retailer with a way to
step out of tax controversies and pass the problems, if any, onto the
IDOR. This case thus differs markedly from Freeman v. Grain Processing
Corp., in which the federal statutory and regulatory environment was
also detailed but the plaintiff’s additional statutory and common law
remedies were cumulative and not inconsistent with the federal law.2
848 N.W.2d 58, 88–89 (Iowa 2014).
In sum, our decision today is a narrow one. Given the structure of
SSUTA and the unique regime for tax collection generally, we conclude
the best reading of Iowa Code section 423.47 is that it provides the
exclusive remedy for a party seeking a refund of sales tax claims where
the retailer has forwarded the funds to the IDOR pursuant to Iowa Code
section 423.45(3). Therefore, the district court properly dismissed the
claims of the plaintiff’s related to the alleged unlawful payment of taxes.
2Nothing in this opinion addresses the scenario in which a retailer collects a tax,
receives a consumer complaint, but refuses to refund the collected tax and does not
forward the taxes collected on to the IDOR.
22
B. Shipping and Handling Misrepresentations. We now turn to
the shipping and handling misrepresentation claims. The gist of all of
these claims is the assertion that J.C. Penney has made a material
misrepresentation related to its shipping and handling charges and that
plaintiffs are entitled to recover under various theories including
negligent misrepresentation, fraud, fraudulent misrepresentation, unjust
enrichment, violation of the Iowa Consumer Fraud Act, and conversion.
Upon our review of the undisputed facts, we conclude that J.C.
Penney did not make a material misrepresentation concerning shipping
and handling charges that provides a claim for relief under any of Bass’s
theories. The J.C. Penney website stated that it charged for delivery
based upon the total cost of the items ordered and the type of delivery
the customer selected. The specific charges were identified based on the
two variables. As is apparent from J.C. Penney’s disclosures, the cost of
the delivery charge as a percentage of the amount of the order declined
as the amount of the order increased, thereby serving as an incentive for
consumers to purchase additional items to save on delivery charges.
Nowhere in the website did J.C. Penney claim that its shipping and
handling charges were based upon “actual cost.” Indeed, the matrix
chart provided by J.C. Penney plainly demonstrated that the key
variables were not weight or size but cost of the item and the chosen
method of delivery. See Zuckerman v. BMG Direct Mktg., Inc., 737
N.Y.S.2d 14, 15 (App. Div. 2002) (holding that billing consumers for
shipping and handling an amount exceeding the seller’s actual costs
cannot be deceptive as a matter of law when the amounts are fully
disclosed); see also Ciser v. Nestle Waters N. Am. Inc., 596 F. App’x 157,
163 (3d Cir. 2015) (finding a fully disclosed late fee charge had no
capacity to mislead); Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d
23
609, 623–24 (7th Cir. 2012) (concluding that charging a flat “handling,
postage, and insurance” fee in excess of actual costs on investment
transactions, when the amount was fully disclosed to customers, was not
a misrepresentation); Bergmoser v. Smart Document Sols., LLC, 268
F. App’x 392, 395 (6th Cir. 2008) (finding no statement of a claim of
fraud when the retailer charged a flat postage fee more than its actual
cost because the retailer did not represent that the postage rate was its
actual cost).
Under these circumstances, we do not see that Bass has a viable
cause of action under any of the alleged theories. The undisputed facts
reveal that no materially false or deceptive misrepresentation to support
negligent misrepresentation or fraud and fraudulent misrepresentation
claims occurred. Any person examining the disclosures of J.C. Penney
knew exactly what was being charged and how that charge was
calculated. J.C. Penney’s disclosures were not complicated or confusing,
and did not involve tricky or clever stratagems or fine print designed to
mislead less attentive customers. J.C. Penney’s clear disclosures do not,
as a matter of law, give rise to “substantial, unavoidable injury to
consumers.” Iowa Code §§ 714.2(9), .16(1)(n). Because there is a
contract between the consumer and J.C. Penney for the sale of goods, the
claim for unjust enrichment fails as a matter of law. Johnson v. Dodgen,
451 N.W.2d 168, 175 (Iowa 1990). Conversion will not lie because in
light of the clear disclosure, there is no wrongful control of another
person’s property contrary to that person’s possessory interests. See
Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 593 (Iowa
1999).
As a result, we agree with the district court that J.C. Penney was
entitled to summary judgment on the shipping and handling
misrepresentation claims.
24
VII. Conclusion.
For the above reasons, the judgment of the district court granting
summary judgment on the claims in this case is affirmed.
AFFIRMED.