TAMPA (CN) - A lawsuit alleging sales tax on Papa John's delivery fees is illegal will move forward, a federal judge ruled.
A Florida district court denied Papa John's motion to dismiss or stay a class action alleging that the pizza chain added sales tax to delivery fees in violation of state law.
Papa John's claimed that, even if it wrongfully collected sales tax on deliveries, the allegations have no merit under Florida law because it paid taxes to the state's Department of Revenue.
One Florida statute says the only damages that could be paid in a case like this is "the difference between what the retailer, dealer, or vendor collected as a tax, fee, or surcharge and what the retailer, dealer or vendor paid to the taxing authority," according to the ruling.
Papa John's also said that the three plaintiffs who filed the class action - Bruce Schojan, Sean Timmons and Christopher Tollerton - knew about the fees and therefore have no claim under Florida's voluntary pay doctrine.
But Judge Virginia Hernandez Covington said neither of the pizza-maker's arguments warrant dismissal of the case at the preliminary juncture.
"Whether or not the plaintiffs paid the sales tax with full knowledge of the situation is a question of fact that the court cannot reconcile on a motion to dismiss," she wrote in the 16-page opinion.
Judge Hernandez Covington agreed with the plaintiffs that Florida revenue rules go against taxing something like pizza delivery fees.
"The Florida Administrative Code provides that the charge for transportation services is not subject to tax when the charge is separately stated on an invoice or bill of sale and the charge can be avoided by a decision or action on the part of the purchaser," she wrote. "Therefore, the court declines to stay this action and the motion to dismiss is denied."
Papa John's has until July 30 to respond to the complaint, according to the ruling.