# LISOWSKI v. WALMART STORES, INC.

> District Court, W.D. Pennsylvania · August 4, 2021

URL: https://www.frixlaw.com/law-library/cases/10416803

## Case

- **Court:** District Court, W.D. Pennsylvania
- **Decided:** August 4, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10416803

## How later opinions describe it (automated extraction)

- explaining that all fifty states “provide causes of action for unfair or deceptive trade practices, most of which are based on the Federal Trade Commission Act (‘FTCA’

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CHRISTOPHER LISOWSKI, on behalf )
)
of himself and all others similarly
) 2:20-cv-1729-NR
situated, )
)
Plaintiff,
)

v. )
)

)
WALMART STORES, INC., t/d/b/a )
WALMART, )
)
)
Defendant. )
OPINION
J. Nicholas Ranjan, United States District Judge
Twice in the past two years, Plaintiff Christopher Lisowski went to Walmart
to buy a six-pack of “5-Hour Energy” drinks. With each of these purchases, on top of
the base price, Walmart charged Mr. Lisowski 94 cents in sales tax. Mr. Lisowski
paid the tax, but later came to believe those charges were improper, because 5-Hour
Energy is purportedly a “dietary supplement” not subject to sales tax in
Pennsylvania. So he filed this class action, alleging that Walmart’s incorrect
assessment of sales tax violates the Pennsylvania Unfair Trade Practices and
Consumer Protection Law (“UTPCPL”), and also amounts to conversion, unjust
enrichment, and breach of a constructive trust. Walmart now moves to dismiss Mr.
Lisowski’s claims on several grounds.
Applying the familiar standard of Rule 12(b)(6), the Court will grant Walmart’s
motion and will dismiss this case with prejudice. Simply put, Mr. Lisowski’s
complaint suffers from two insurmountable flaws which, in tandem, cause all his
claims to fail as a matter of law.
First, a retailer’s incorrect assessment of sales tax is not conduct covered by
the UTPCPL, which only regulates activity that is part of “the conduct of any trade
or commerce.” 73 P.S. § 201-3(a). When collecting sales tax, a retailer is not
conducting “trade or commerce,” even if such collection occurs in connection with a
commercial transaction. Instead, because the Commonwealth requires retailers to
collect sales tax on the Commonwealth’s behalf, the retailer steps into the shoes of
the Commonwealth and acts as a state agent, motivated by public duty rather than
private gain. Thus, while it is true that the UTPCPL extends broadly, as to regulate
all manner of deceptive activity in the conduct of trade or commerce, it does not
extend to regulate activity disconnected from the retailer’s commercial interests, such
as tax collection. Mr. Lisowski’s statutory claim fails for that reason.
Second, Mr. Lisowski’s common-law claims are barred by the existence of an
administrative procedure for consumers to obtain sales-tax refunds from the
Pennsylvania Department of Revenue. Pennsylvania law requires claimants to
strictly pursue that statutory remedy, to the exclusion of any common-law relief, so
long as it is constitutionally adequate. Under the Erie doctrine, this is a substantive,
rather than procedural, aspect of Pennsylvania law that applies in a federal court
diversity action. What’s more, the Pennsylvania Supreme Court has already held that
the very same statutory refund procedures provide exclusive and adequate relief for
any improper assessment of sales tax. See Lilian v. Commonwealth, 354 A.2d 250,
252 (Pa. 1976). Because such relief is available to Mr. Lisowski, should he choose to
pursue it, his common-law causes of action must also be dismissed.
For these reasons, discussed in full below, the Court will grant Walmart’s
motion, and dismiss Mr. Lisowski’s complaint with prejudice.
BACKGROUND1
Walmart is a multi-billion-dollar corporation that operates around 8,500 retail
stores in 15 countries, including at least 131 Walmart and Sam’s Club stores in
Pennsylvania alone. ECF 1-2, ¶ 2. Among many other things, Walmart sells “5-Hour
Energy” to customers in Pennsylvania and elsewhere. Id. at ¶ 3. 5-Hour Energy is
an energy drink, marketed as a “dietary supplement,” that provides caffeine
comparable to a cup of coffee, delivered in the form of an easily consumed “shot.” Id.
at ¶¶ 3, 15.2 Bottles of 5-Hour Energy are labeled as “DIETARY SUPPLEMENTS,”
and Walmart sells them in the medicine, drug, and medical-supply section of its
stores. Id. at ¶ 15.
Plaintiff Christopher Lisowski lives in Pittsburgh, Pennsylvania. Id. at ¶ 1.
On December 29, 2019, Mr. Lisowski entered a Walmart in Pittsburgh and bought a
six-pack of 5-Hour Energy, among other things. Id. at ¶ 5. For that item, Walmart
charged Mr. Lisowski the purchase price of $13.48, plus sales tax of $0.94. Id. at ¶¶
6-7. The next year, Mr. Lisowski returned to the same Walmart and bought another
six-pack of 5-Hour Energy. Id. at ¶ 8. Once again, Walmart charged him sales tax of
$0.94 on top of the base purchase price. Id. at ¶ 9.
In Pennsylvania, retailers are required to collect sales tax, equal to 6-8% of the
purchase price, on all sales of tangible, personal property. Id. at ¶ 10; see also 72 P.S.
§ 7202. But there are exceptions. Both the statute and the related regulations
promulgated by Pennsylvania’s Department of Revenue exempt certain items from
imposition of the tax. ECF 1-2, ¶ 11. Of relevance here, the Department of Revenue

1 The Court draws the facts from the allegations in Mr. Lisowski’s complaint, which
the Court must accept as true for purposes of this motion to dismiss.

2 See also “Regular Strength 5-hour Energy Shots,” 5hourenergy.com, available at
https://5hourenergy.com/faq/regular-strength-5-hour-energy-shot-faqs/ (last accessed
July 27, 2021).
has publicly notified all retailers that “Dietary Supplements and Substitutes” are not
subject to sales tax. Id. at ¶ 12. The Department also issued a “Retailer’s
Information” booklet that identifies “dietary supplements and substitutes, in any
form” as exempt from sales tax in Pennsylvania. Id. at ¶ 13.3
Despite these directives regarding “dietary supplements,” Walmart charged
sales tax to Mr. Lisowski, and other similarly situated individuals, on purchases of
5-Hour Energy. Id. at ¶¶ 14, 17. This conduct forms the basis for all of Mr. Lisowski’s
statutory and common-law claims in the complaint.
LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the
legal sufficiency of the complaint.” Popa v. Harriet Carter Gifts, Inc., 426 F. Supp. 3d
108, 113 (W.D. Pa. 2019) (Stickman, J.) (citation omitted). Such a motion “may be
granted only if, accepting all well-pleaded allegations in the complaint as true and
viewing them in the light most favorable to the plaintiff, a court finds that [the]
plaintiff’s claims lack facial plausibility.” Warren Gen. Hosp. v. Amgen Inc., 643 F.3d
77, 84 (3d Cir. 2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007)).
To evade dismissal, the plaintiff must allege “sufficient factual matter to show
that the claim is facially plausible” and permit a “reasonable inference that the
defendant is liable for the misconduct alleged.” Fowler v. UPMC Shadyside, 578 F.3d
203, 210 (3d Cir. 2009) (cleaned up). Allegations that are “conclusory or bare-bones,”
such as “threadbare recitals of the elements of a cause of action,” will not suffice. Id.
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)) (cleaned up). Even so, “detailed

3 Walmart mentions in its motion that the Department separately advised retailers
that energy drinks or shots of four ounces or greater are taxable under Pennsylvania
law. ECF 16, p. 2. Because the taxability of 5-Hour Energy is ultimately not relevant
to the grounds on which the Court resolves Walmart’s motion, however, the Court
need not, and does not, determine whether 5-Hour Energy is, in fact, taxable under
Pennsylvania law. For now, the Court assumes Mr. Lisowski is correct that it is not.
pleading is not generally required.” Connelly v. Lane Const. Corp., 809 F.3d 780, 786
(3d Cir. 2016). Rather, the complaint need only contain a “short and plain statement”
showing “more than a sheer possibility that a defendant has acted unlawfully.” Id.
(cleaned up).
The defendant bears the burden of establishing that the plaintiff has failed to
plead a plausible claim for relief. See Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d
1406, 1409 (3d Cir. 1991). When evaluating a defendant’s motion to dismiss, the
Court can only consider the allegations of the plaintiff’s complaint, the exhibits
attached to it, and any documents integral to or explicitly relied on by the complaint.
See Popa, 426 F. Supp. 3d at 113 (citations omitted).
DISCUSSION & ANALYSIS
Pennsylvania’s Unfair Trade Practices and Consumer Protection Law arms
consumers with a powerful weapon to wield against many kinds of unfair and
deceptive practices. See generally 73 P.S. § 201-2(4)(i)-(xxi); 73 P.S. § 201-3. But like
all statutory creations, the reach of that weapon is constrained by the statute’s text.
See Niz-Chavez v. Garland, 141 S. Ct. 1474, 1486 (2021) (“[W]ords are how the law
constrains power.”).
Of relevance here, the UTPCPL limits its application to unfair or deceptive
activity “in the conduct of any trade or commerce.” 73 P.S. § 201-3(a). In other words,
the statute aims not at deception and unfairness generally, but at the particular evils
of deception and unfairness in the commercial sphere—where greed, competition, and
information asymmetry between buyers and sellers create unique opportunities for
fraud and exploitation. See Meyer v. Cmty. Coll. of Beaver Cty., 93 A.3d 806, 811 (Pa.
2014) (“Prior to the enactment of the UTPCPL, common law contract and warranty
theories largely presumed that a consumer and merchant stand at arms-length in
reaching their bargain, failing to recognize that the average consumer relies in great
part on a merchant’s advanced knowledge concerning the goods and services at issue,
and thus failed to protect against numerous unfair and deceptive business
practices[.]” (citation omitted)); see also Loduca v. Wellpet LLC, No. 21-0954, 2021
WL 2948848, at *2 (E.D. Pa. July 13, 2021) (“The Pennsylvania Supreme Court has
stated that the underlying foundation and purpose behind Pennsylvania’s Consumer
Protection Law was the prevention of fraud and protection of the public from unfair
or deceptive business practices and to even the bargaining power between consumers
and sellers in commercial transactions.” (citations omitted)).
That limitation poses a problem for Mr. Lisowski. As will be discussed, his
UTPCPL claim fails because the conduct of which he complains here—incorrect
charge of sales tax on the purchase of 5-Hour Energy—is not an act that Walmart
engaged in as part of “the conduct of” its “trade or commerce.” Nor can Mr. Lisowski
prevail on his common-law claims based on the same conduct. Pennsylvania law
precludes such claims when, as here, a statute provides an exclusive and adequate
alternative remedy—in this case, an administrative procedure for Mr. Lisowski to
obtain a full refund from the Department of Revenue. For those reasons, the Court
must dismiss Mr. Lisowski’s entire complaint.
I. Mr. Lisowski’s UTPCPL claim fails because the improper collection of
sales tax is not an “act … in the conduct of any trade or commerce.”
Beginning with the UTPCPL claim, Walmart argues that dismissal is required
because the allegedly improper collection of sales tax is not an “act … in the conduct
of any trade or commerce.” 73 P.S. § 201-3(a). The Court agrees.
Section 201-3(a) of the UTPCPL prohibits “[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade or commerce[.]” 73
P.S. § 201-3(a). The statute defines “[t]rade” and “commerce” to mean, in relevant
part, “the advertising, offering for sale, sale or distribution of any services and any
property, tangible or intangible, real, personal or mixed, and any other article,
commodity, or thing of value wherever situate[.]” 73 P.S. § 201-2(3). It then defines
unfair trade practices to include specific categories of conduct enumerated in Sections
201-2(4)(i)-(xx), as well as “[e]ngaging in any other fraudulent or deceptive conduct
which creates a likelihood of confusion or of misunderstanding.” 73 P.S. § 201-
2(4)(xxi); see also Loduca, 2021 WL 2948848, at *2 (“By its statutory language, the
UTPCPL declares that ‘[u]nfair methods of competition and unfair or deceptive acts
or practices in the conduct of any trade or commerce’ are unlawful. 73 P.S. § 201-3. It
goes on to provide a definition of some twenty-one ‘unfair methods of competition’ and
‘unfair or deceptive acts or practices’ in § 201-2(4)[.]”). Mr. Lisowski alleges that
Walmart’s conduct violates the final, catch-all category of this definition. 73 P.S. §
201-2(4)(xxi).4
There is no question that Walmart engages in “trade or commerce,” as defined
by the UTPCPL, when it sells products to consumers, including 5-Hour Energy. The
dispositive question, then, is whether its collection of sales tax at the time of those
sales is an “act … in the conduct of” that commercial activity. The Court finds that
it is not.
No Pennsylvania appellate court has yet interpreted the UTPCPL’s “trade or
commerce” limitation in the context of a case alleging improper collection of sales tax.

4 Mr. Lisowski’s complaint also alleges that Walmart’s conduct violates Section 201-
2(4)(v), which defines unfair trade practices to include “[r]epresenting that goods or
services have sponsorship, approval, characteristics, ingredients, uses, benefits or
quantities that they do not have or that a person has a sponsorship, approval, status,
affiliation or connection that he does not have[.]” 73 P.S. § 201-2(4)(v). Walmart
moves to dismiss that aspect of his claim on the ground that he has not alleged an
actionable “representation” by Walmart, and that any conceivable representation did
not relate to the “characteristics” of the products being sold. Mr. Lisowski does not
address this claim, respond to Walmart’s arguments, or request leave to amend this
claim, so the Court deems it to be forfeited. See Rapid Models & Prototypes, Inc. v.
Innovated Sols., 71 F. Supp. 3d 492, 506, n.8 (D.N.J. 2014) (“[F]ailure to respond to
an argument advanced in support of a motion to dismiss results in a waiver of the
claim sought to be dismissed.” (citations omitted)). But, in any event, this claim is
subject to the same “trade or commerce” limitation discussed above, and so also fails
on that basis.
Absent such authority, this Court looks to “federal cases interpreting state law” and
“decisions from other jurisdictions that have discussed the issue” for guidance. In re
Energy Future Holdings Corp., 842 F.3d 247, 253-54 (3d Cir. 2016).
Most recently, in McLean v. Big Lots, another judge in this District rejected a
similar claim that improper collection of sales tax violates the UTPCPL. See McLean
v. Big Lots Inc., No. 20-2000, 2021 WL 2317417, at *4 (W.D. Pa. June 7, 2021) (Horan,
J.). There, Judge Horan reasoned that the “collection of sales tax” was not an act “in
the conduct of any trade or commerce” because tax collection is “divorced from private
profit” and “[r]etailers … collect sales tax on behalf of the Commonwealth’s
Department of Revenue” only “because state law requires them to do so.” Id. at *4.
In reaching that conclusion, Judge Horan surveyed several relevant
authorities. Preliminarily, she found persuasive the concurring opinion of the
Pennsylvania Supreme Court’s then-Chief Justice Castille in Meyer v. Cmty. Coll. of
Beaver Cty, 93 A.3d 806, 815 (Pa. 2014) (Castille, C.J. concurring). There, Justice
Castille expressed his view that a “governmental entity … carrying out a public duty,
… is not engaged in the conduct of a trade or commerce, but in the conduct of
government.” Id. at 816 (citation omitted). Thus, he reasoned, conduct motivated by
governmental duties fell outside the bounds of the UTPCPL. See id.
Judge Horan, in McLean, also examined decisions from courts in
Massachusetts and Connecticut that addressed similar claims brought under
statutes “nearly identical to the UTPCPL.” McLean, 2021 WL 2317417, at *4. These
other cases likewise concluded that the retailers’ collection of sales tax did not fall
within the realm of the applicable statutes.
In the first such case, Feeney v. Dell, the Massachusetts Supreme Judicial
Court explained that determining whether sales-tax collection was an act “in the
conduct of any trade or commerce” required a “more textured” analysis than simply
considering whether a transaction “occurred in a business context.” Feeney v. Dell,
Inc., 908 N.E.2d 753, 770 (Mass. 2009). The court in Feeney noted that, as here, the
focus of the claims was “not on the transactions as a whole, but on a particular
component of the transactions, the allegedly improper collection of sales tax[.]” Id.
That tax-collection component was, according to the court, distinct from the sale itself
in a crucial respect. That is, “Dell remitted the proceeds from the tax collected to the
Commonwealth—rather than retaining them for its own enrichment[.]” Id. at 771.
As a result, the court determined that Dell had not collected sales tax for “business
or personal reasons,” as required to support a claim under the Massachusetts unfair-
trade-practices statute, but had done so only “pursuant to legislative mandate.” Id.
Similarly, in Blass v. Rite Aid of Connecticut, a Connecticut trial court—in a
decision later affirmed and adopted on appeal5—explained that the “trade or
commerce” limitation in Connecticut’s equivalent statute reflected an intent to ensure
that claims were “consistent with the regulatory principles established by the
underlying statute.” Blass v. Rite Aid of Connecticut, Inc., 16 A.3d 855, 863 (Conn.
Super. Ct. 2009) (cleaned up), aff’d, 16 A.3d 737 (Conn. App. 2011). The court then
concluded that sales-tax collection fell outside the bounds of the statute, because “[a]
retailer gains no personal benefit from the overcollection of taxes,” and, in fact, “such
activity only increases the retailer’s prices, working against its economic interest.”
Id. The court also held that the defendant’s collection of sales tax “was not
commercial because when it collected the plaintiff’s money for taxes, it did so as an
agent of the State.” Id.
Mr. Lisowski, for his part, does not direct the Court to any reasoned decision—
by any court—interpreting the UTPCPL (or a similar statute) as regulating sales-tax

5 The trial court’s reasoning was adopted by the appeals court as its own. See Blass
v. Rite Aid of Connecticut, Inc., 16 A.3d 737, 739 (Conn. App. 2011) (“[B]ecause the
court’s thorough and well reasoned memorandum of decision correctly and concisely
addresses the issues raised in the present appeal, we adopt it as a proper statement
of the law and applicable facts on the issues[.]” (citation omitted)).
collection or, for that matter, any other acts motivated by legal duty rather than
commercial interests. At best, he points to a few examples of one Pennsylvania trial
court denying preliminary objections, without an accompanying opinion, in a handful
of copycat state-court cases that his counsel has recently filed. See ECF 50, p. 6.6 He
also points to an unpublished opinion in Farneth v. Walmart Stores, where a
Pennsylvania trial court granted class certification on a similar claim, but did not
address the UTPCPL’s “trade or commerce” limitation or otherwise decide the case
on its merits. See generally ECF 36-1. The Court finds these decisions to be of little
help in answering the question at hand, which is whether sales-tax collection falls
within the scope of the UTPCPL.
It is clear, then, that the weight of what precedent exists favors Walmart’s
interpretation of the statute. Moreover, Pennsylvania law provides that, as a general
principle of statutory interpretation, “[s]tatutes uniform with those of other states
shall be interpreted and construed … to make uniform the laws of those states which
enact them.” 1 Pa. C.S. § 1927. Thus, interpretations of nearly identical statutes in
other states, such as those in Massachusetts and Connecticut discussed above, are
entitled to greater persuasive weight here than usual. Indeed, all of these consumer
protection statutes are patterned after the federal unfair trade practices act. See In
re Pharm. Indus. Average Wholesale Price Litig., 252 F.R.D. 83, 94 (D. Mass. 2008)
(explaining that all fifty states “provide causes of action for unfair or deceptive trade
practices, most of which are based on the Federal Trade Commission Act (‘FTCA’),”
including statutes, like Pennsylvania’s, which “prohibi[t] … ‘unfair methods of

6 The cases cited by Mr. Lisowski are: Lisowski, et al. v. Giant Eagle, Inc., GD-20-
010525 (Allegheny Cty. Ct. Com. Pl. Jan. 12, 2021) (Ignelzi, J.); Barger, et al. v. Target
Corp., Inc., GD-20-10606 (Allegheny Cty. Ct. Com. Pl. Jan. 12, 2021) (Ignelzi, J.);
Garcia, et al. v. Am. Eagle Outfitters, Inc., et al., GD-20-11057 (Allegheny Cty. Ct.
Com. Pl. June 9, 2021) (Ignelzi, J.).
competition’ and ‘unfair or deceptive acts or practices’ in or affecting commerce, a
formulation identical to the FTCA’s prohibition …”).
Of course, this Court is not bound to follow either McLean or the decisions of
the Massachusetts and Connecticut state courts. But the Court finds these decisions
to be persuasive and consistent with the statutory text.
In response, Mr. Lisowski makes two arguments—neither of which is
ultimately persuasive. First, he makes an attenuated argument based on a different
Pennsylvania statute, the Fair Credit Extension Uniformity Act, which regulates
debt collection activity. The argument goes something like this: (1) The FCEUA
classifies taxes owed to political subdivisions of the Commonwealth (though not taxes
owed to the Commonwealth itself) as “debt[s]” subject to the FCEUA’s regulations,
73 P.S. § 2270.3; (2) The legislature decreed that violations of the FCEUA shall
amount to violations of the UTPCPL, in effect making the FCEUA enforceable
through the UTPCPL, 73 P.S. § 2270.5; (3) Therefore, the Court should infer that the
legislature understood tax collection by government agents to constitute activity “in
the conduct of trade or commerce” subject to the UTPCPL. See, e.g., ECF 36, pp. 11-
12; ECF 45, p. 7; ECF 50, p. 2.
This argument is unpersuasive. Unlike the UTPCPL, the FCEUA does not
contain any “trade or commerce” limitation, and thus does not imply a legislative
judgment or understanding that municipal tax collection (or anything else regulated
by the FCEUA) is a commercial activity. Rather, the FCEUA simply declares that an
additional category of conduct (e.g., deceptive acts by for-profit municipal debt
collectors) should also be actionable under the UTPCPL, whether such conduct is
“commercial” or not. See 73 P.S. § 2270.5(a) (“If a debt collector or creditor engages
in an unfair or deceptive debt collection act or practice under this act, it shall
constitute a violation of the act … known as the Unfair Trade Practices and Consumer
Protection Law.”). If anything, the legislature’s decision to enact a new law subjecting
a particular type of tax collection activity to the UTPCPL suggests that it did not
believe such conduct was already regulated by that statute. Conversely, the
legislature’s decision to exclude taxes owed to the Commonwealth from the FCEUA’s
ambit is an indication that it did not intend for the collection of such taxes by
retailers, as opposed to for-profit municipal debt collectors, to be subject to the same
treatment. See 73 P.S. § 2270.3; Mohamed v. Com. Dep’t of Transp., Bureau of Motor
Vehicles, 40 A.3d 1186, 1194–95 (Pa. 2012) (“…[A] court may not add matters the
legislature saw fit not to include under the guise of construction.” (citation omitted)).
Second, Mr. Lisowski also argues—or at least alludes to—an alternative theory
to support his UTPCPL claim. He claims that Walmart was engaged in “trade or
commerce” because, until August 1, 2016, it received a tax credit equal to 1% of all
sales tax collected from each consumer, and thus profited from its tax-collection
activity. See, e.g., ECF 36, pp. 2, 8; ECF 50, p. 8. There is no dispute that the law
changed in August 2016 to provide retailers with, in effect, a flat $25-per-month tax
credit, no matter how much tax they collect. See 72 P.S. § 7227. But before the change
in the law, Walmart had a plausible incentive to improperly collect a tax because it
would receive a percentage-based tax credit from the Commonwealth.
This argument has some facial appeal. For example, the court in Feeney,
discussed above, considered the profit motive of the retailer in determining whether
it was conducting “trade or commerce.” See Feeney, 908 N.E.2d at 771 (“[S]uch an
allegation could conceivably state a claim … to the extent that it demonstrated a
profit-seeking motive for the collection of the tax. Where, as here, the plaintiffs made
no such allegation in their complaint, dismissal is warranted.”). Ultimately, however,
this Court finds this “kickback” theory to be irrelevant. Even if Walmart could
“profit”—i.e., essentially commit some type of tax fraud by obtaining a credit to which
it wasn’t entitled—that doesn’t change the fact that at all times Walmart was acting
in its capacity as an agent of the Commonwealth. Walmart was the Commonwealth’s
tax collector, not a merchant engaged in commerce.7
Simply put, a retailer cannot be fairly said to collect sales tax as part of (or “in
the conduct of”) its “trade or commerce,” because retailers wear a different hat when
collecting taxes from the one they wear when they market and sell their products.
Instead, “[v]endors who collect sales tax … act as agents of the Commonwealth.” Gray
v. Commonwealth, 714 A.2d 1124, 1125 (Pa. Commw. Ct. 1998). Like any agent, they
“stand in the place of their principal[]” and are indistinguishable from the
Department of Revenue itself when performing that function. Hooker v. Wanigas
Credit Union, 835 F. App’x 110, 112 (6th Cir. 2021) (cleaned up); see also Great Am.
Ins. Co. of New York v. Lowry Dev., LLC, 576 F.3d 251, 257 (5th Cir. 2009) (“Once an
agency relationship is created, the agent steps into the shoes of his or her principal
and has the authority to transact business on the principal’s behalf.” (cleaned up));
cf. Johnson v. Johnson, 332 F. Supp. 510, 513 (E.D. Pa. 1971) (“Iowa Medical Service
thus stands, for purposes of paying claims, in the shoes of the governmental agency,
enjoying no greater discretion than that of the agency.” (emphasis in original)).
As a result, when engaged in collecting sales tax, retailers are no different from
a “government entity” that is “carrying out a public duty” directly. Meyer, 93 A.3d at
816 (Castille, C.J. concurring). That is, they are “not engaged in the conduct of a
trade or commerce, but in the conduct of government.” Id. (citation omitted). And
they do not reap any profits or other tangible benefits for carrying out their legal duty
to collect tax. Instead, they are required to “hold the tax in trust before remitting to
the Commonwealth,” and they “realiz[e] no increase in revenue or profit in a

7 Even if Mr. Lisowski’s “kickback” theory were otherwise well taken, his claim would
still face fatal obstacles. Most evident, it would limit the timeframe of the conduct in
this case to pre-August 1, 2016, sales—but Mr. Lisowski hasn’t alleged that he
purchased any 5-Hour Energy drinks before 2016, let alone that he was improperly
charged sales tax on such.
transaction that charges a sales tax.” McLean, 2021 WL 2317417, at *4. In fact,
collecting sales tax “increases the retailer’s prices, working against its economic
interest.” Blass, 16 A.3d at 863. Retailers persist in collecting it only because refusal
to do so could subject them to suspension or revocation of their business license. See
72 P.S. § 7208(b.1).
Given these considerations, “common sense dictates that the collection and
remittanc[e] of sales tax has little to do with profit and revenue,” and is instead
compelled by “basic compliance with the law.” McLean, 2021 WL 2317417, at *4 n.2.
The Court thus concurs with the reasoning of McLean, Feeney, and Blass, and holds
that the collection of sales tax by retailers, acting as agents of state government, is
an activity “divorced from private profit” that does not occur “in the conduct of any
trade or commerce.” Id. at *4. For that reason, Mr. Lisowski’s UTPCPL claim fails
as a matter of law.
II. Mr. Lisowski’s common-law claims are barred by 1 Pa. C.S. § 1504,
because an exclusive and adequate remedy is provided by statute.
In addition to his statutory claim, Mr. Lisowski asserts common-law claims for
conversion, unjust enrichment, and breach of constructive trust. The Court need not
address the sufficiency of these claims individually, because all fail for the same
reason—Pennsylvania law provides that Mr. Lisowski’s exclusive remedy is to
request a refund of improperly collected sales tax from the Department of Revenue.
Section 1504 of the Pennsylvania Statutory Construction Act provides that
“[i]n all cases where a remedy is provided or a duty is enjoined or anything is directed
to be done by any statute, the directions of the statute shall be strictly pursued, and
no penalty shall be inflicted, or anything done agreeably to the common law, in such
cases, further than shall be necessary for carrying such statute into effect.” 1 Pa. C.S.
§ 1504. In practice, this means that “if the legislature provides a specific, [e]xclusive,
constitutionally adequate method for the disposition of a particular kind of dispute,
no action may be brought … to adjudicate the dispute by any kind of ‘common law’
form of action other than the exclusive statutory method.” Lilian v. Commonwealth,
354 A.2d 250, 253 (Pa. 1976) (quoting Sch. Dist. of Borough of W. Homestead v.
Allegheny Cty. Bd. of Sch. Directors, 269 A. 2d 904, 907 (Pa. 1970)); see also White v.
Conestoga Title Ins. Co., 53 A.3d 720, 729 (Pa. 2012) (“[W]hen a statute articulates a
remedy for the breach of a statutory obligation, that remedy is exclusive and must be
strictly pursued to the exclusion of all ‘civil action remedies’ seeking relief for the
harm that results from an alleged breach of that obligation.”).
Walmart contends that such a remedy exists for Mr. Lisowski. But before
considering whether a statutory remedy bars Mr. Lisowski’s claim, the Court must
first pause to consider whether this rule applies in federal court at all.
A. Pennsylvania’s statutory-remedy rule is substantive law that
applies in federal court.
Federal jurisdiction under the Class Action Fairness Act, or CAFA, “is, at base,
an extension of diversity jurisdiction.” In re Burlington N. Santa Fe Ry. Co., 606 F.3d
379, 381 (7th Cir. 2010). “Therefore the normal rules for analyzing diversity
jurisdiction apply to CAFA cases.” Rivers v. Chalmette Med. Ctr., Inc., 805 F. Supp.
2d 291, 295 (E.D. La. 2011). This includes the ordinary rule that “federal courts
sitting in diversity apply state substantive law and federal procedural law.” Neopart
Transit, LLC v. Mgmt. Consulting, Inc., No. 16-3103, 2017 WL 714043, at *11 (E.D.
Pa. Feb. 23, 2017); see, e.g., Audler v. CBC Innovis Inc., 519 F.3d 239, 248 (5th Cir.
2008) (“Because CAFA is based on diversity jurisdiction, state substantive law
governs the determination of whether Audler’s petition states a claim for relief.”).
“Whether a state rule is substantive or procedural involves a two step
analysis.” King v. E.I. DuPont De Nemours & Co., 741 F. Supp. 2d 699, 702 (E.D. Pa.
2010) (citations omitted). “First, the Court must determine whether the state rule is
in direct conflict with a Federal Rule of Civil Procedure.” Id. If it is, that ends the
analysis, and the federal rule applies. Id. Here, Section 1504 does not directly conflict
with any Federal Rule of Civil Procedure, so the Court turns to the second part of this
analysis.
In the absence of a direct conflict between the state and federal rules, “the court
considers the twin aims” of the so-called “Erie doctrine,” which are “discouragement
of forum shopping and avoidance of inequitable administration of the laws.” Id.
Courts also consider whether the state rule at issue is “outcome determinative”—that
is, a rule is more likely to be substantive, rather than procedural, if applying or
refusing to apply it “significantly affects the result of a litigation[.]” Edelson v.
Soricelli, 610 F.2d 131, 134 (3d Cir. 1979) (citation omitted).
Before delving into the Erie doctrine’s “twin aims,” the Court notes that as to
Section 1504’s statutory-remedy rule, the Pennsylvania Supreme Court’s precedent
is somewhat murky about its exact nature and, specifically, whether it creates a
“jurisdictional” or “non-jurisdictional” requirement. See White, 53 A.3d at 726 n. 11
(“In School Dist. of Borough of West Homestead v. Allegheny … we suggested that
Section 1504 is jurisdictional[.] … However, in other cases, we have characterized the
doctrine of administrative exhaustion as jurisprudential, i.e., a rule that does not
divest a court of subject matter jurisdiction, but, rather, serves as a prerequisite to
the court’s exercise of its subject-matter jurisdiction.”).
One thing is clear, however—whether jurisdictional or not, Section 1504 is, at
bottom, a “rule of exhaustion” that relates to, and “works in concert” with, the
broader, judicially created doctrine of “exhaustion of administrative remedies.” Id.
at 726 n.10. Understanding Section 1504 as an exhaustion requirement is helpful
here, as many courts have considered whether exhaustion requirements are
“substantive,” and they have overwhelmingly concluded that they are.
Of course, “the line between substance and procedure can be a murky one, and
exhaustion requirements are among those matters which, though falling within the
uncertain area between substance and procedure, are rationally capable of
classification as either.” Lamar Co., L.L.C. v. Mississippi Transp. Comm’n, 786 F.
App’x 457, 460 (5th Cir. 2019) (cleaned up). That said, when analyzed in the context
of the Erie doctrine’s “twin aims,” courts have broadly concluded that the best course
is to “treat administrative exhaustion as substantive for Erie purposes and therefore
apply [state] law.” Id.; see Sani-Dairy v. Yeutter, 782 F. Supp. 1060, 1069 (W.D. Pa.
1991) (Brooks Smith, J.) (“In other words, the requirement of exhaustion of remedies
is substantive.”); Lauwrier v. Garcia, No. 12-7381, 2013 WL 11238497, at *6 (C.D.
Cal. Mar. 8, 2013) (“A state statute relegating particular state law claims to an
administrative forum is substantive law.”); see, e.g., Lockhart v. Coastal Int’l Sec.,
Inc., 905 F. Supp. 2d 105, 115, n.9 (D.D.C. 2012) (“The Court notes that under the
broad command of Erie ... federal courts are to apply state substantive law and federal
procedural law when sitting pursuant to their diversity jurisdiction. … The WCA and
the D.C. Court of Appeals’ construction of this law [to include an exhaustion
requirement] are therefore binding on this Court.”) (cleaned up)).8
More precisely, as these courts have reasoned, Erie’s “twin aims” of
discouraging forum-shopping and avoiding inequitable administration of law heavily
favor treating exhaustion requirements as substantive, because: (1) “[l]itigants would

8 See also, e.g., U.S. Fid. & Guar. Co. v. Lee Invs. LLC, 641 F.3d 1126, 1133 (9th Cir.
2011) (“[T]he California Workers’ Compensation Act’s exclusivity provisions are
‘substantive’ provisions which, under Erie, a district court sitting in diversity is bound
to follow.” (cleaned up)); Zapata v. Colorado Christian Univ., No. 18-2529, 2019 WL
1544179, at *4 (D. Colo. Mar. 15, 2019) (“[T]his court must apply CADA’s exhaustion
requirements even though Plaintiff filed suit in federal court rather than state
court.”); Jones v. Deaconess Billings Clinic, No. 06-15, 2008 WL 5435956, at *4 (D.
Mont. July 14, 2008) (“The required exhaustion of the Montana Medical Legal Panel
is a substantive provision which under Erie this Court is bound to follow.”); White v.
Lavigne, 741 F.2d 229, 230 (8th Cir. 1984) (“To waive the exhaustion requirement in
the case at bar for plaintiffs suing in diversity would contravene the policies
underlying the Erie doctrine. Other courts have required exhaustion of
administrative remedies in similar circumstances for the reasons discussed above.”).
engage in forum shopping if federal courts and state courts applied different
administrative exhaustion regimes, because some claims could proceed in one court
system but not the other”; and (2) “it would be unfair for non-diverse litigants to be
able to proceed in state court when diverse but otherwise identically situated litigants
could not proceed because their case was in federal court.” Lamar Co., 786 F. App’x
at 460. The same goes here. Additionally, Section 1504 is likely to be outcome
determinative in any case in which its rule applies, i.e., when a plaintiff fails to
pursue an available statutory remedy that is specific, exclusive, and constitutionally
adequate to redress the plaintiff’s alleged harm. See Edelson, 610 F.2d at 134.
Thus, when analyzed in the context of Erie’s “twin aims,” Section 1504’s “rule
of exhaustion” is a substantive, rather than procedural, requirement that applies in
a federal court diversity action. As such, applying Section 1504, noncompliance with
any specific, exclusive, and adequate remedy provided by another Pennsylvania
statute compels dismissal of any common-law cause of action for failure to state a
claim—even if Section 1504 is non-jurisdictional. Cf. Wesolowski v. United States,
No. 117-749, 2017 WL 3720197, at *7 (S.D. Ind. Aug. 28, 2017) (“Indiana thus
subscribes to the Seventh Circuit’s position that failure to exhaust administrative
remedies does not deprive a court of jurisdiction. … The Court therefore clarifies that
dismissal of Count II of Mr. Wesolowski’s Complaint is required for failure to state a
claim and not for lack of subject matter jurisdiction.”); Lockhart, 905 F. Supp. 2d at
115, n.9 (“Instead, for Federal courts sitting in diversity jurisdiction, the exhaustion
requirement is prudential rather than jurisdictional, and the plaintiff has in fact
‘failed to state a claim on which relief may be granted’ with respect to the
unexhausted claim or claims by failing to demonstrate that a necessary precondition
to judicial review of those claims has been satisfied.” (cleaned up)).
The Court will therefore go on to consider whether Pennsylvania does, in fact,
provide an exclusive and adequate statutory remedy for the harm Mr. Lisowski
alleges in this case. If it does, Mr. Lisowski must strictly pursue that remedy, to the
exclusion of any common-law relief.
B. Pennsylvania provides an exclusive and adequate statutory
remedy for the harm of which Mr. Lisowski complains.
Walmart argues that Mr. Lisowski’s exclusive remedy is to petition the
Pennsylvania Department of Revenue for a refund of any improperly collected sales
tax. Such refunds are mandated by the Pennsylvania Tax Reform Code, which states
that the Department of Revenue “shall … refund all taxes, interest and penalties paid
to the Commonwealth under the provisions of this article and to which the
Commonwealth is not rightfully entitled.” 72 P.S. § 7252. To obtain such a refund,
“a taxpayer who has actually paid tax ... to an agent or licensee of the
Commonwealth authorized to collect taxes[,] may petition the Department of
Revenue for refund or credit of the tax, interest or penalty.” 72 P.S. § 10003.1(a).
Together, these provisions establish a clear procedure for individual taxpayers
to obtain refunds of sales tax improperly collected by the Commonwealth or its
agents—the taxpayer need only file a petition with the Department of Revenue.
Indeed, Mr. Lisowski alleges in his complaint that the Department of Revenue has
already refunded sales tax charged to certain individuals on purchases of 5-Hour
Energy, ECF 1-2, ¶¶ 16(a)-(d), and that the Department did not appeal a previous
decision by its review board that such refunds were appropriate. Id. at ¶ 16(c). Thus,
in both theory and practice, Pennsylvania has provided by statute a remedy for those
who are incorrectly charged sales tax on a purchase.
The only remaining question, then, is whether this remedy is “exclusive” and
“constitutionally adequate.” Lilian v. Commonwealth, 354 A.2d 250, 253 (Pa. 1976).
As it turns out, the Pennsylvania Supreme Court has already considered this precise
issue, and determined that these tax-refund procedures provide an exclusive and
adequate remedy for improper assessments of sales tax. See id. at 252 (“Tax Reform
Code of 1971, … 72 P.S. §§ 7252-7255 … provide for the refunding of improperly
assessed or paid sales taxes, and set forth the procedure whereby such refunds may
be obtained. … Where such an administrative remedy is statutorily prescribed the
general rule is that a court … is without jurisdiction to entertain the action. Strict
compliance with the statutory procedure … is the norm.” (citing 1 Pa. C.S. § 1504)).
Moreover, Section 10003.1, cited above, makes clear that these refund procedures
apply to taxes collected by the Commonwealth’s “agents,” such as Walmart, and not
just by the Commonwealth itself. 72 P.S. § 10003.1(a).
That ends the inquiry. See State Farm Mut. Auto. Ins. Co. v. Coviello, 233 F.3d
710, 713 (3d Cir. 2000) (“When ascertaining Pennsylvania law, the decisions of the
Pennsylvania Supreme Court are … the authoritative source.”). In sum, because
Pennsylvania provides an adequate statutory remedy for improperly collected sales
tax, Section 1504 requires Mr. Lisowski to resort to that remedy, to the exclusion of
any common-law relief.
The Court will thus dismiss all of Mr. Lisowski’s common-law claims.
CONCLUSION
For all the reasons discussed above, Walmart’s motion to dismiss will be
granted.9
Additionally, since the bases for the Court’s decision relate to purely legal
defects in the complaint, rather than factual ones, the Court finds that any
amendment of the complaint here would be futile; the Court will therefore dismiss

9 Because all of Mr. Lisowski’s claims fail on the grounds discussed above, the Court
need not, and does not, consider the other arguments Walmart makes in its motion
to dismiss, e.g., (1) that Mr. Lisowski’s claims are barred by the voluntary-payment
doctrine; or (2) that Mr. Lisowski has failed to allege deceptive conduct or justifiable
reliance to support his UTPCPL claim. The Court notes that Walmart withdrew its
argument that Mr. Lisowski’s claims are barred by the “economic loss” doctrine
following the Third Circuit’s recent decision in Earl v. NVR, Inc., 990 F.3d 310 (3d
Cir. 2021). ECF 39.
the complaint with prejudice. See, e.g., Est. of Tyler ex rel. Floyd v. Grossman, 108 F.
Supp. 3d 279, 297, n.7 (E.D. Pa. 2015) (“The Court has determined that amendment
would be futile on all claims dismissed thus far as the Estate cannot state these
claims as a matter of law—amendment would be of no assistance.”).
An appropriate order follows.

DATE: August 4, 2021 BY THE COURT:
/s/ J. Nicholas Ranjan
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10416803. Public record. Not legal advice.