First District reverses lower court in suit over sales tax on TV converter box

A man who was charged the full sales tax when he used a federal voucher to purchase a digital television converter box at a Sears store has been cleared to resume his legal action alleging fraud against the retailer.

In late July, a panel of the First District Appellate Court reversed a ruling by Cook County Circuit Judge Mary Anne Mason that granted summary judgment in favor of defendant Sears, Roebuck and Co. in a consumer fraud suit brought by Adrian Nava.

The opinion was written by Justice Thomas E. Hoffman. Justice Mary K. Rochford concurred and Justice Mathias Delort specially concurred.

Sears was represented in the case by attorneys Francis A. Citera, Bevin M. Brennan and Paul A. Del Aguila, all of Greenberg Traurig LLP in Chicago.

Nava was represented by attorneys William M. Sweetman of Sweetnam LLC in Northbrook and Robert A. Holstein of Holstein Law Offices in Chicago.

The appellate court opinion stems from a dispute that arose in 2009 between Nava and Sears.

At that time, Nava had purchased a digital TV converter box, using a $40 voucher provided by the federal government to ease the burden on consumers who may have been inconvenienced by the federal mandate requiring TV stations to replace analog TV broadcasts with digital signal.

Under federal guidelines, states were not allowed to collect sales tax on the full amount of the price for the converter boxes. Because the voucher was backed  by federal government money, the sales tax could only be charged on the net purchase price, minus the $40 voucher.

But when Nava purchased his converter box at Sears, the store charged him sales tax on the full amount.

Nava returned home and noticed the error on his receipt by comparing it to a receipt for a different converter box he had purchased at another retailer that same day. Nine days later, Nava filed suit against Sears.

The suit began as a class action, but Nava later withdrew his request for class certification, pursuing the case on his own.

In June 2012, the court granted Sears’ motion for summary judgment, finding that the fault in the matter lay with Nava, as he did not seek a refund under Sears’ policy of “refunding any taxes mistakenly assessed.”

Nava appealed. Sears cross-appealed, asking the appellate justices for a summary judgment on alternative grounds, which included a request for the court to find that Sears did not err in charging sales tax on the item’s full price.

The justices refused to grant that request by Sears, saying they agreed with Nava that it was not “statutorily authorized” to  collect the tax “on the full gross price of the converter boxes.”

The appellate justices also ruled that Sears’ decision to not alter its registers or properly instruct its cashiers to adjust the sales tax collections on the converter boxes created a situation in which, despite the retailer’s refund policy, its' actions may have resulted in real damage against Nava.

“The circuit court may have been correct that (Nava’s) failure to seek a refund caused his injury, but that revelation does not mean that the defendant’s (Sears’) actions were not also a cause of the injury,” the justices held.

The justices said in the opinion that those legal questions should be answered during further proceedings on the matter, which they remanded.

In a separate concurring opinion, however, Delort warned that Nava may ultimately still face trouble ahead in the matter. Delort wrote he agreed that Sears should not win in the case on summary judgment, as Nava presented enough evidence to proceed.

“However, the evidence is rather thin, particularly on the element of whether the plaintiff’s damages were actually caused by deception,” Delort wrote.

He added, “The circumstantial evidence in the record points strongly to the conclusion that the plaintiff was not actually deceived, because he knew or should have known that his milk run purchases of converter boxes at various retailers were merely shams to establish his standing to bring a lucrative class action lawsuit.”