Jessica Bower appeals from the judgment entered after the trial court sustained without leave to amend the demurrer of AT&T Mobility, LLC, AT&T Inc. and AT&T Corporation (collectively, AT&T) in this action based on Bower's alleged payment of $15.50 as part of her purchase of a cellular telephone. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. Bower's Original Complaint
On July 17, 2009, Bower filed a class action complaint against AT&T on behalf of herself individually and other AT&T customers alleging causes of action for violation of Civil Code section 1750 et seq., the Consumers Legal Remedies Act (CLRA); unlawful, unfair and fraudulent business practices under Business and Professions Code section 17200 (section 17200); and false or misleading advertising under Business and Professions Code section 17500 (section 17500). Bower based her causes of action on allegations that, on January 27, 2009, she had purchased a cellular telephone from AT&T, retailing at $399, at a discounted rate of $199, on the condition that she enter a wireless service agreement with AT&T for a two-year period. Although Bower purchased the telephone at the discounted rate, she was required to pay the California sales tax of 7.75 percent on the undiscounted price of the telephone. Paying tax on the undiscounted price of the telephone, as compared to the tax that would have corresponded to the discounted price of the telephone, cost Bower an additional $15.50.
According to Bower, based on information obtained from AT&T's Web site and its responses to her postpurchase communications, in purchasing the cellular telephone and entering the wireless service agreement, Bower relied on "misrepresentations" and "misleading statements" by AT&T that she "had no choice but to pay sales tax based on the undiscounted price" of the telephone. Nevertheless, although AT&T is required to remit sales tax to the
2. Bower's First Amended Complaint and the Demurrer Sustained with Leave to Amend
Bower filed a first amended complaint on August 25, 2009, alleging the same three causes of action.
AT&T filed a demurrer to the first amended complaint, making four arguments: (1) Bower's claims are barred by article XIII, section 32 of the
In opposition, Bower argued that her case is not a sales tax dispute and thus that the prohibitions against lawsuits to prevent or enjoin taxation do not apply. She emphasized that her case involves an affirmative misrepresentation that AT&T was required to pass on to her the sales tax on the full, undiscounted price of the cellular telephone, when such decision was purely discretionary. She also argued that she sufficiently had alleged reliance on the misrepresentations and damage therefrom.
The trial court sustained AT&T's demurrer, relying on AT&T's contention that "the claim on behalf of [Bower] and a putative class fails as a matter of law as it is an improper effort to obtain a tax refund on the purchase of a cell phone bundled with a service agreement . . . ." The court afforded Bower 20 days' leave to amend her complaint.
3. Bower's Second Amended Complaint and the Demurrer Sustained Without Leave to Amend
Within the 20 days, on December 1, 2009, Bower filed a second amended complaint, alleging the same three causes of action under the CLRA, section 17200 and section 17500, and adding a cause of action for common law fraud. Bower again brought the action individually and on behalf of all persons who purchased from AT&T "a discounted or free wireless telecommunications device in conjunction with the sale of a wireless service agreement" in California. Bower continued to rely on Regulation 1585, subdivision (b)(3), requiring the retailer of the wireless communication device to report and pay tax based on the unbundled, i.e., full, undiscounted price, of the device, and permitting it to collect tax or tax reimbursement from its customer. She claimed that her lawsuit "does not seek the return of any tax or tax reimbursement," but is to recover based on AT&T's misrepresentations to her that it was required to pass on to her the sales tax on the unbundled price of the cellular telephone that she purchased when such passthrough is merely discretionary. This time, Bower alleged that "[s]he was never informed it was AT&T's discretion whether or not to charge her the cost recovery fee. When [she] inquired why she was paying this unexpected sales tax, she was told by an AT&T representative `there's nothing that can be done about it' and AT&T
AT&T filed a demurrer to the second amended complaint on the same four grounds asserted in its demurrer to the first amended complaint, namely, that Bower's causes of action are barred by the California Constitution as impermissible attempts to prevent or enjoin tax collection; AT&T is entitled to safe harbor immunity because its sales tax collection practices are lawful; Bower did not and cannot allege actual reliance on a genuine misrepresentation; and Bower lacks standing to assert her section 17200 and section 17500 claims. In addition, in response to Bower's newly pleaded fraud cause of action, AT&T asserted that the claim could not survive demurrer because it did not allege the elements of fraud with specificity.
In opposition, Bower continued to assert that her lawsuit is not a sales tax case and thus the California Constitution's provisions regarding actions for sales tax reimbursement are inapplicable and AT&T is not entitled to rely on safe harbor immunity to defeat her case. She also maintained the second amended complaint sufficiently pleaded reliance, injury in fact and fraud.
The trial court sustained AT&T's demurrer to Bower's second amended complaint without leave to amend. According to the court, Bower "is adamant that she is not seeking a tax refund and points to her own allegations acknowledging that the tax is actually owed by the retailer (here AT&T) and that, under California law, the sales `tax' charged to a customer like [Bower] is really discretionary with the retailers as to what and how much of the sales tax that the State charges them is passed on and sought from the customer as reimbursement. If there is a customer claim for an improper tax assessment, normally there is an administrative requirement to submit a claim for refund to allow the improper assessment to be remedied and this requirement was found to apply even to cases where the consumer was seeking the purported `refund' however disguised from the retailer and not directly against the Board of Equalization. [Citations.] Although there would appear to be little direct case law on point finding that an administrative requirement here is properly imposed or that [Bower] cannot properly couch her claim for `damages' against the retailers and not be deemed to be making a disguised `tax refund' request[,] [AT&T is] correct that [Bower] is not alleging facts as to essential elements such as damages." Bower's "allegations of actual loss here are the fact that she lost the opportunity to go out and `shop around' to [AT&T's] competitors and buy a phone and service agreement that did not
1. Standard of Review
In reviewing a judgment following the sustaining of a demurrer without leave to amend, we decide de novo whether the complaint states facts sufficient to state a cause of action. (Hoffman v. State Farm Fire & Casualty Co. (1993) 16 Cal.App.4th 184, 189 [19 Cal.Rptr.2d 809].) We treat the demurrer as admitting all facts properly pleaded, but we do not assume the truth of contentions, deductions or conclusions of law. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865 [62 Cal.Rptr.3d 614, 161 P.3d 1168].) "The judgment must be affirmed `if any one of the several grounds of demurrer is well taken. [Citations.]' [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.]" (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 [9 Cal.Rptr.2d 92, 831 P.2d 317].) A reviewing court will affirm a judgment based on the sustaining of a demurrer on any properly supported ground, regardless of the trial court's reason for its ruling. (Fremont Indemnity Co. v. Fremont General Group (2007) 148 Cal.App.4th 97, 111 [55 Cal.Rptr.3d 621].)
2. The Trial Court Properly Sustained AT&T's Demurrer to Bower's Second Amended Complaint Without Leave to Amend
Regulation 1585, subdivision (b)(3), applicable to the bundled transaction at issue here, in which Bower purchased a cellular telephone at a discounted price on the condition that she enter a wireless service agreement for a specified time period, reflects California's general policy imposing sales tax on the retailer and permitting the retailer to collect sales tax reimbursement from the consumer. Under Regulation 1585, subdivision (b)(3), "[t]ax applies to the gross receipts from the retail sale of a wireless telecommunication device sold in a bundled transaction, measured by the unbundled sales price of that device. Tax applies to the unbundled sales price whether the wireless telecommunication device and utility service are sold for a single price or are separately itemized in the context of a sale or on a sales invoice. The retailer of the wireless telecommunication device is required to report and pay tax measured by the unbundled sales price of the device and may collect tax or tax reimbursement from its customer measured by the unbundled sales price. Tax does not apply to the charges in excess of the unbundled sales price made for telecommunication services." (Italics added.)
The heart of Bower's case in the operative second amended complaint is that, although Regulation 1585, subdivision (b)(3), permitted AT&T to collect sales tax reimbursement from her on the unbundled sales price of the cellular telephone that she purchased, it falsely misrepresented to her that it was required to do so. According to Bower, AT&T was required under Regulation 1585, subdivision (b)(3), to remit sales tax to the state on the unbundled sales price of the cellular telephone that she purchased. It, however, was not required to charge her reimbursement for the same amount, as it represented to her, but only permitted to do so. Bower contends that the alleged misrepresentation, i.e., that AT&T was required to collect sales tax from her on the full, unbundled price of the cellular telephone, amounts to actionable conduct under section 17200, section 17500, the CLRA and principles of common law fraud and that the second amended complaint is sufficient to withstand demurrer. We disagree that Bower has stated any cause of action.
b. Section 17200
There are two key allegations in Bower's second amended complaint. First, she alleged, for the first time in the second amended complaint, that, "[w]hen [she] inquired why she was paying this unexpected sales tax, she was told by an AT&T representative that `there is nothing that can be done about it' and AT&T is `required by law' to charge her the tax." Second, she alleged that she "relied on the misrepresentations and misleading statements made by [AT&T] that AT&T is legally required to charge consumers for the bundled sales tax. She was denied any opportunity [to] shop around for retailers that do not charge consumers this discretionary fee."
Bower did not allege that she could have obtained a bundled transaction for a new cellular telephone—the telephone that she selected—at a lower price from another source. (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1591 [80 Cal.Rptr.3d 316] [affirming judgment based on demurrer sustained to § 17200 cause of action on grounds of lack of economic injury when plaintiffs did "not allege they could have bought the same insurance for a lower price either directly from the insurer or from a licensed agent"].) This is not a case in which the defendant's alleged misrepresentation caused a consumer to purchase a product that he or she would not have bought but for the misrepresentation and the product was worth less than represented by the defendant or was different from what the consumer wanted and expected to buy. (Cf. Kwikset Corp. v. Superior Court, supra, 51 Cal.4th at p. 330 [cause of action stated under § 17200 because defendant's labeling of product as "Made in America" when all components were not made in America allegedly caused the consumer to "part with more money than he or she otherwise would have been willing to expend" and he or she would not have purchased the product but for the misrepresentation].) Bower thus did not plead injury in fact in connection with her section 17200 cause of action.
c. Section 17500
Bower's cause of action under section 17500 alleged that AT&T "fraudulently inform[s] customers they will be charged only `mandatory' taxes, when in fact [AT&T was] and [is] labeling discretionary cost recovery fees as taxes and charging consumers this fee while making fraudulent misrepresentations that [AT&T is] required by law to do so." Assuming the alleged misrepresentation made to Bower could constitute advertising within the meaning of
In her cause of action under the CLRA, Bower alleged that AT&T violated numerous provisions of the act by misrepresenting that California law requires it to charge customers sales tax on the full, unbundled price of the cellular telephone when it is not legally required to do so, but rather is only permitted to seek sales tax reimbursement from its customers. On appeal, she contends her allegation that she was denied the opportunity to shop around for a retailer that does not charge sales tax reimbursement on the full, undiscounted price of a cellular telephone as part of a bundled transaction is sufficient to satisfy the CLRA's pleading requirements. Similar to her section 17200 cause of action, this allegation is insufficient to support her CLRA cause of action. As noted, Bower did not allege that she could have obtained a bundled transaction for the new cellular telephone that she wanted at a lower price from another source. Bower thus did not allege a "tangible increased cost or burden" as a result of AT&T's purported misrepresentation sufficient to pursue a CLRA cause of action. (Meyer, supra, 45 Cal.4th at p. 643.)
e. Common law fraud
Bower's failure to plead injury in fact (in the context of common law fraud described as damages) with respect to her consumer causes of action defeats her common law fraud cause of action as well.
The judgment is affirmed. Respondents are entitled to recover their costs on appeal.
Chaney, J., and Johnson, J., concurred.