By Matthew Santoni

Law360 (May 28, 2021, 9:47 PM EDT ) A proposed class of Walgreen's customers suing over the retailer allegedly collecting Pennsylvania sales taxes on tax-exempt face masks asked to move the case back to state court so federal courts wouldn't interfere in the collection of state taxes.

Counsel for proposed lead plaintiff Daniel Garcia said the federal Tax Injunction Act prohibits district courts from enjoining or restraining the collection of taxes when state courts can handle the issue, which should apply to Garcia's suit seeking to make Walgreens pay customers back for taxes it had collected on face masks sold during the COVID-19 pandemic.

"Plaintiff's claim directly implicates this rule. Plaintiff asks the court to declare defendants' collection of tax on face masks invalid and requests a statutory award for such overcharges," said the brief accompanying Garcia's motion for remand Friday. "This will stop collection of tax on face masks, as the court will have ruled such tax collection is invalid. ... The plain language of the TIA prohibits the court from exercising jurisdiction; nothing in the plain meaning of the statute compels a different result."

Garcia asked U.S. District Judge Marilyn J. Horan to send the suit back to the Allegheny County Court of Common Pleas, where it had been filed in March. Garcia was among several plaintiffs claiming that various online and in-person retailers should not have charged state sales tax on face masks, which were supposed to be exempt under Gov. Tom Wolf's COVID-19 disaster declaration.

One such suit, Duranko v. Big Lots Inc. et al., had already been denied a similar motion to remand, and pointed to U.S. District Judge J. Nicholas Ranjan's Jan. 7 ruling that the Tax Injunction Act didn't apply to Lisowski v. Walmart Stores Inc. , a case over sales tax that was allegedly improperly collected on energy drinks.

Judge Ranjan ruled in the Lisowski case that the act did not apply because the state was not a party and the suit was intended to stop the collection of taxes the state was not entitled to in the first place.    

Garcia's brief noted that it recognized Judge Horan's ruling denying remand in the Duranko case based on Judge Ranjan's reasoning but said it would reiterate its arguments for remand in Garcia's case if only to preserve the issue for potential appeal.

"The court should reject any attempt to manufacture exceptions to the TIA that Congress did not create," the brief said. "Specifically, defendants may contend the TIA does not apply where the plaintiff isn't suing the state or one of its units for a tax refund. But this exception is found nowhere in the statute."

Even if the suit didn't name the state as a party, Garcia contended that state tax collectors could become liable for continuing to collect taxes on masks if the suit were successful, so the Tax Injunction Act should apply.

"Plaintiff is asking the court to impose statutory damages for each attempt by defendants to collect tax on face masks. If resolved in plaintiff's favor, the court will effectively hold that the Commonwealth cannot collect sales tax through its retailer agents and that those agents are liable for statutory damages each time they attempt to collect tax for the Commonwealth," the brief said. "Accordingly, the policies that mandate noninterference with state tax administration require the court to decline jurisdiction."

Counsel for Garcia and Walgreens did not immediately respond to requests for comment.

Garcia and the proposed class are represented by Kevin W. Tucker and Kevin J. Abramowicz of East End Trial Group LLC, and Jason M. Leviton and Lauren Godles Milgroom of Block & Leviton LLP.

Walgreens is represented by James L. Rockney of Reed Smith LLP.

The case is Garcia v. Walgreen Co. et al., case number 2:21-cv-00457, in the U.S. District Court for the Western District of Pennsylvania.

--Editing by Rich Mills.

For a reprint of this article, please contact reprints@law360.com.