Cook County Record

Friday, February 21, 2020

Appeals court pops the top on class action vs Walgreens for wrongly charging Chicago bottled water tax

By Scott Holland | Mar 29, 2018

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Saying a Cook County judge was wrong to cap it off, a state appeals panel has popped the lid placed on a class action lawsuit accusing Walgreens of wrongly charging a Chicago city tax on bottled water.

The complaint from plaintiff Destin McIntosh said the Deerfield-based Walgreens Boots Alliance wrongly charged a 5-cent city sales tax on bottled drinks that should have applied only to bottled water.

But the lawsuit was shelved in January 2017 when Cook County Circuit Judge Diane J. Larsen dismissed it with prejudice, prompting McIntosh to appeal.

The Illinois First District Appellate Court ruled on the appeal in an unpublished order issued March 26. Justice Daniel J. Pierce wrote the order; Justices John B. Simon and Mary L. Mikva concurred. The order was issued under Supreme Court Rule 23, which restricts its use as precedent, except under very limited circumstances permitted by the Supreme Court rule.

When McIntosh filed his original complaint in August 2016, he said Walgreens should be made to pay for improperly charging the bottled water tax on an assortment of other bottled beverages, including sparking water, soft drinks, flavored waters and mineral waters, asserting the alleged overcharge violated the Illinois Consumer Fraud Protection Act.

Walgreens said it responded to news reports of the collection error and fixed the problem, but McIntosh — while admitting he didn’t notice the charge listed on his receipts — said the company should have tried to issue refunds. In dismissing the complaint, Larsen sided with Walgreens’ invocation of the so-called “voluntary payments doctrine,” presented in case law in the 1985 Illinois First District Appellate Court opinion in Lusinski vs. Dominick’s Finer Foods, which held plaintiffs in McIntosh’s position, who didn’t pay a tax under protest, can have their claim barred if they cannot demonstrate “facts sufficient to form a basis for protesting the tax under duress.”

On appeal, McIntosh said that doctrine doesn’t apply to ICFA claims, and even if it did, his claim satisfies the doctrine’s fraud exception.

The appellate justices’ decision detailed prior incidents in which the First District Appellate Court reversed circuit court rulings regarding ICFA claims and the voluntary payment doctrine, noting the important distinction between claims based on unfair practices, which the voluntary payment doctrine does bar, and those passed on deceptive practiced or fraud, to which the doctrine does not apply.

In this case, McIntosh alleged charging the tax on bottled beverages that were not still water was a deceptive practice since Walgreens knew it wasn’t supposed to charge the nickel per bottle tax on those other beverages. Walgreens said McIntosh never explained how the company intended to induce customers to rely on any misrepresentation, but McIntosh argued it forfeited the right to say his complaint was insufficient when it failed to do so in circuit court.

Although the panel said McIntosh’s forfeiture argument was misplaced, his appeal succeeded because the justices found that, when McIntosh bought drinks such as Perrier, LaCroix and Smeraldina, he didn’t know they were exempt from the city tax and successfully alleged Walgreens “represented to purchasers of bottled beverages that the total purchase price included taxes required and allowable by law,” and charged the tax improperly anyway.

With the ruling reversed, the complaint was remanded to circuit court. The original lawsuit asked the court to award unspecified “actual and statutory damages,” plus attorney fees.

McIntosh is represented in the case by attorney Joseph Siprut, of Siprut P.C., of Chicago.

Walgreens is defended by attorneys with the firm of Morgan, Lewis & Bockius LLP, of Chicago.

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Organizations in this Story

Walgreens Co.Morgan, Lewis and Bockius LLPIllinois First District Appellate CourtSiprut P.C.