By Melissa Angell

Law360 (July 9, 2021, 9:18 PM EDT ) A Pennsylvania federal judge on Friday axed a proposed class action accusing Dollar General and Aldi of violating state law by incorrectly charging sales tax on tax-exempt protective face coverings, finding that charging sales tax on the masks are not deceptive under Quaker State law.

In a 10-page opinion granting the retailers' motion to dismiss, U.S. District Judge Marilyn J. Horan also ruled that she was unconvinced by Joshua James' argument that Aldi and Dollar General benefited from maximizing fees and profits by taxing the face masks.

"The collected sales tax from the two defendants totaled $0.45 and $0.36," the judge wrote in her opinion. "To suggest that defendants sought to retain those amounts of money or benefited from those amounts defies logic."

Friday's decision marks an end to James' putative class action that was first raised in Pennsylvania state court in November and later removed to a federal venue in February.

James brought the lawsuit under the Unfair Trade Practices and Consumer Protection Law and the Pennsylvania Fair Credit Extension Uniformity Act, alleging that retailers in Pennsylvania cannot collect sales tax on face masks since they are nontaxable "medical supplies" and "clothing and accessories."

James further argued that the retailers' conduct counted as trade and commerce under the Unfair Trade Practices law.

But the retailers hit back, arguing that collecting sales tax is required by state law "and not motivated by private profit or greed." Collecting sales tax is not considered trade or commerce under the Unfair Trade Practices law, the retailers added.

The retailers also emphasized that their conduct "cannot be considered deceptive" since they disclosed pretax prices along with the actual sales tax amount.

Judge Horan ruled in favor of the retailers on Friday, concluding that sales tax collection falls beyond the scope of what defines trade or commerce under the Unfair Trade Practices law.

And even if James' argument could sustain a claim under the law, the judge took note that the retailers "did not engage in fraudulent, unfair, or deceptive conduct."

Judge Horan also observed that since James did not suffer an "ascertainable loss," he cannot bring a claim under the Unfair Trade Practices law.

The judge further underscored that James failed to allege that the retailers pocketed the sales tax for their own benefit.

"The Pennsylvania tax collection scheme designates defendants to collect the tax as an agent of the Department of Revenue, and it remains highly implausible that defendants would have kept $0.45 and $0.36 per face mask for their own use when they were required to remit that money to the state," the judge wrote in her opinion.

This would not be the first lawsuit raised in the state over the taxation of face masks amid the pandemic.

Dollar General, along with Big Lots and Jo-Ann Stores, faced similar accusations of wrongly taxing exempt face coverings in another proposed class action launched last year.

But Judge Horan axed that suit in June, finding that the Unfair Trade Practices law did not apply because charging sales tax — a tax required by state law — does not fit the definition of "trade or commerce" under the law.

Counsel and representatives for the parties did not immediately respond to Law360's requests for comment on Friday.

James is represented by Joshua P. Ward of J.P. Ward & Associates LLC.

Dollar General is represented by Courtney S. Schorr and Gerald J. Stubenhofer Jr. of McGuireWoods LLP.

Aldi is represented by Craig D. Mills and Samantha L. Southall of Buchanan Ingersoll & Rooney.

The case is Joshua James v. Aldi Inc. et al., case number 2:21-cv-00209, in the U.S. District Court for the Western District of Pennsylvania.

--Additional reporting by Lauren Berg. Editing by Jay Jackson Jr.

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