`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`__________
`
`No. 21-2501
`__________
`
`CHRISTOPHER LISOWSKI, on behalf of himself
`and all others similarly situated,
`Appellant
`
`v.
`
`WALMART STORES, INC.,
`__________
`
`On Appeal from the United States District Court
`for the Western District of Pennsylvania
`(D.C. No. 2:20-cv-01729-NR)
`District Judge: Honorable Nicholas J. Ranjan
`__________
`
`Submitted May 2, 2022
`
`Before: GREENAWAY, JR., PORTER, and PHIPPS, Circuit Judges
`
`(Opinion Filed: July 15, 2022)
`______________
`
`OPINION
`______________
`
`
`
`
`
`
`
`
` This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
`constitute binding precedent.
`
`
`
`
`
`PORTER, Circuit Judge.
`
`
`
`Christopher Lisowski purchased two 6-packs of 5‑Hour Energy on separate
`
`occasions. Walmart charged him a 7% state and local sales tax of $1.88. Aggrieved by
`
`the monetary loss of approximately two dollars, Lisowski filed a putative class action in
`
`state court, alleging that 5‑Hour Energy drinks are “dietary supplements” exempt from
`
`sales tax under Pennsylvania law. His claims for conversion, constructive trust, and
`
`deceptive trade practices all stem from his belief that Walmart knowingly took this
`
`charge to profit from the commission it receives for collecting sales tax. Walmart
`
`removed the suit under the Class Action Fairness Act because the alleged damages
`
`totaled more than $5 million.
`
`
`
`Lisowski filed a motion to remand, arguing that the Tax Injunction Act (“TIA”)
`
`and principles of comity required remand. The District Court determined that the TIA did
`
`not preclude jurisdiction because Lisowski, “if successful, would receive damages from a
`
`private-party defendant.” Lisowski v. Walmart Stores, Inc., No. 2:20-CV-1729-NR, 2021
`
`WL 62627, at *2 (W.D. Pa. Jan. 7, 2021). The District Court then dismissed the
`
`complaint for failure to state a claim under Rule 12(b)(6). Lisowski appeals from the
`
`denial of remand and the dismissal of the complaint. We will affirm.
`
`I
`
`
`
`“Because a motion to remand shares an essentially identical procedural posture
`
`with a challenge to subject matter jurisdiction under Federal Rule of Civil Procedure
`
`12(b)(1), it is properly evaluated using the same analytical approach.” Papp v. Fore-Kast
`
`Sales Co., 842 F.3d 805, 811 (3d Cir. 2016) (citing Leite v. Crane Co., 749 F.3d 1117,
`
`
`
`2
`
`
`
`
`
`
`
`1121 (9th Cir. 2014)). Thus, we review de novo whether the District Court had subject
`
`matter jurisdiction. Id. “A challenge to subject matter jurisdiction under Rule 12(b)(1)
`
`may be either a facial or a factual attack.” Davis v. Wells Fargo, 824 F.3d 333, 346 (3d
`
`Cir. 2016). A facial attack “challenges subject matter jurisdiction without disputing the
`
`facts alleged in the [notice of removal], and it requires the court to consider the
`
`allegations . . . as true.” Papp, 842 F.3d at 811 (alteration in original) (quoting Davis, 824
`
`F.3d at 346).
`
`
`
`The Tax Injunction Act states that “district courts shall not enjoin, suspend or
`
`restrain the assessment, levy or collection of any tax under State law where a plain,
`
`speedy and efficient remedy may be had in the courts of such State.” 28 U.S.C. § 1341.
`
`The prototypical Tax Injunction Act case concerns charges that must be characterized as
`
`either a fee or a tax. See, e.g., Texas Ent. Ass’n v. Hegar, 10 F.4th 495, 505 (5th Cir.
`
`2021). Alternatively, they involve charges that are clearly taxes whose validity is being
`
`challenged. See, e.g., Sipe v. Amerada Hess Corp., 689 F.2d 396, 404 (3d Cir. 1982) (TIA
`
`is implicated when the court must determine “the validity of the state tax system”). But
`
`here, the issue is whether the $1.88 charged by Walmart is a tax at all. Our jurisdiction
`
`turns on that issue. If 5-Hour Energy is taxable, then Walmart’s charge is unambiguously
`
`a tax, and we lack jurisdiction to enjoin its collection. If it is not taxable, then Walmart’s
`
`charge is merely a fraudulent charge that it labeled as a tax, and we do have jurisdiction.
`
`Lisowski argues that reaching the merits of whether an item is taxable or not falls under
`
`the scope of the Tax Injunction Act or, alternatively, is barred by the principles of comity
`
`due to its potential to interfere with the state tax system.
`
`
`
`3
`
`
`
`
`
`
`
`But Lisowski’s arguments cut against his own complaint. The complaint alleges
`
`
`
`that the $1.88 is merely an improper charge that has been fraudulently labeled as a tax.
`
`See Appellant Br. 4–5 (“Walmart charged (and continues to charge) a higher purchase
`
`price for dietary supplements than authorized, under the guise of collecting a lawful
`
`tax.”); see also Lisowski, 2021 WL 62627, at *2 (noting that the “complaint assumes that
`
`no tax is owed to begin with”). Nonetheless, Lisowski claims that his suit must be
`
`remanded under the Tax Injunction Act because enjoining the collection of this charge
`
`would prevent money from reaching Pennsylvania’s coffers. But assuming Lisowski’s
`
`allegations are true, Pennsylvania has no interest in collecting that money at all. See
`
`Freed v. Thomas, 976 F.3d 729, 735 (6th Cir. 2020) (TIA did not apply when the
`
`government did not “have any property right or interest in the excess sale proceeds”).
`
`And if Pennsylvania has determined that 5-Hour Energy is not taxable, Walmart does not
`
`have the power to impose a tax, even if it labels it so on its receipts.
`
`Undeterred by the limitations of his own complaint, Lisowski argues that if
`
`Walmart denies the allegations against it, then the court will be required to “wade into the
`
`tax regulation waters,” but that if Walmart admits it violated Pennsylvania tax law, then
`
`an injunction would be appropriate. Appellant Br. 18 n.6. Lisowski’s argument requires
`
`that Walmart’s charge is a tax when convenient, and not a tax when inconvenient.
`
`Compare App. 50 (requesting decree enjoining Walmart “from the further improper
`
`collection of sales tax”), with Appellant Br. 4. (“Walmart charged . . . a higher purchase
`
`price . . . under the guise of collecting a lawful tax” (emphasis added)).
`
`
`
`4
`
`
`
`
`
`
`
`We reject Lisowski’s “heads I win-tails you lose” argument. Walmart need not
`
`admit it violated Pennsylvania tax law, nor was the District Court required to determine if
`
`5-Hour Energy was taxable. Instead, the District Court merely held that the facts alleged
`
`in the notice of removal did not implicate the Tax Injunction Act.1 Lisowski’s claims rest
`
`solely on Walmart’s allegedly improper collection of a charge that it was not authorized
`
`to take. And the mere potential for Walmart to eventually raise a tax-based defense did
`
`not strip the District Court of jurisdiction. Cf. Krashna v. Oliver Realty, Inc., 895 F.2d
`
`111, 113 (3d Cir. 1990) (actions not removable based on anticipated federal defenses);
`
`App. 196 (“It’s true that one of our potential defenses down the line, among many, is that
`
`these charges were statutorily authorized . . . .”). Because Lisowski merely seeks to
`
`enjoin Walmart from charging an excess purchase price, we will affirm the District
`
`Court’s denial of remand based on the TIA.2
`
`Alternatively, Lisowski argues that principles of comity require a remand. It is
`
`well established that federal courts have a “virtually unflagging obligation . . . to exercise
`
`the jurisdiction given them.” Colo. River Water Conservation Dist. v. United States, 424
`
`
`1 The District Court also held that the TIA is limited to suits challenging a taxpayer’s own
`underlying tax liability and is thus inapplicable to suits between private parties. While we
`do not reach this issue, we note that other circuits have applied the TIA to private suits.
`See, e.g., Fredrickson v. Starbucks Corp., 840 F.3d 1119, 1122–23 (9th Cir. 2016) (TIA
`barred relief against Starbucks’ withholding of state income tax); Gwozdz v. HealthPort
`Techs., LLC, 846 F.3d 738, 744 (4th Cir. 2017).
`2 In reaching this conclusion, we recognize the Fourth Circuit’s contrary opinion in
`Gwozdz, 846 F.3d at 744 (TIA barred taxpayers’ attempt to “repackage an allegedly
`unlawful sales tax collection into a faux consumer protection suit”). There, plaintiffs sued
`a private party for the collection of $23 on an allegedly untaxable item. Id. at 740. But we
`do not view this case as “artful pleading.” Rather, we accept as true the allegations of the
`complaint to determine whether the Tax Injunction Act applies.
`
`
`
`5
`
`
`
`
`
`
`
`U.S. 800, 817 (1976). Thus, “[a]bstention from the exercise of federal jurisdiction is the
`
`exception, not the rule.” Id. at 813. Comity is a discretionary doctrine, so we review the
`
`District Court’s denial of remand for abuse of discretion. See Remington Rand Corp.-Del.
`
`v. Bus. Sys. Inc., 830 F.2d 1260, 1266 (3d Cir. 1987).
`
`“The comity principle is commonly applied where a plaintiff seeks a remedy that
`
`is not literally included in the text of the TIA, which by its terms is limited to
`
`injunctions.” Am. Trucking Ass’ns v. Alviti, 944 F.3d 45, 57 (1st Cir. 2019). In other
`
`words, the TIA “prevents federal courts from giving injunctive relief, [whereas] . . . it is
`
`the principle of comity that prevents a taxpayer from seeking damages.” Dorce v. City of
`
`New York, 2 F.4th 82, 97 (2d Cir. 2021) (alterations in original) (quoting Long Island
`
`Lighting Co. v. Town of Brookhaven, 889 F.2d 428, 431 (2d Cir. 1989)). Here, we have
`
`already established that the TIA does not apply to Lisowski’s claims for injunctive relief,
`
`so it makes little sense to apply comity to his claims for damages.3
`
`Lisowski is correct, however, that the District Court could someday be faced with
`
`the issue of deciding whether 5-Hour Energy is taxable, thus risking the possibility of
`
`enjoining a tax. And courts should be hesitant when “entertaining claims for relief that
`
`risk disrupting state tax administration.” Levin, 560 U.S. at 417. But the District Court
`
`has ample tools to manage this case without abstaining from the outset. See Jefferson
`
`
`3 The Supreme Court has given several factors to consider when deciding whether to
`refrain from deciding a case based upon comity. See Levin v. Com. Energy, Inc., 560 U.S.
`413, 421 (2010). As the District Court noted, the comity factors are ill-fitting here.
`Lisowski does not raise an “alleged constitutional defect” or otherwise challenge the
`validity of Pennsylvania’s tax system. Lisowski v. Walmart Stores, Inc., 2021 WL 62627,
`at *3 & n.1 (W.D. Pa. Jan. 7., 2021).
`
`
`
`6
`
`
`
`
`
`
`
`Cnty. v. Acker, 527 U.S. 423, 435 n.5 (1999) (citing Burford v. Sun Oil Co., 319 U.S.
`
`315, 332–34 (1943) (federal abstention where state agency action is involved);
`
`Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 719–21 (1996) (in a case seeking
`
`damages, a federal court may not abstain, but can stay the action pending resolution of
`
`the state-law issue)). And given the ultimate dismissal of this case without reference to
`
`the taxable status of 5-Hour Energy, “there is nothing unique, complex, or particularly
`
`tax-centric about this case.” Lisowski, 2021 WL 62627, at *3. The District Court did not
`
`abuse its discretion in determining that the mere potential for a tax-based defense to arise
`
`in the future did not warrant setting aside its “virtually unflagging obligation” to hear
`
`cases before it. Colo. River Water Conservation Dist., 424 U.S. at 817. So we will affirm
`
`the District Court’s denial of remand.
`
`II
`
`Lisowski raised common law claims and a statutory claim under the Pennsylvania
`
`Unfair Trade Practice and Consumer Protection Law (“UTPCPL”). After denying
`
`Lisowski’s motion to remand, the District Court dismissed all other claims under Rule
`
`12(b)(6). We will affirm.
`
`The District Court dismissed Lisowski’s UTPCPL claim because Walmart was not
`
`conducting “trade or commerce” when collecting sales tax on behalf of Pennsylvania. 73
`
`Pa. Stat. § 201‑3. According to the District Court, the statute aims at the “particular evils
`
`of deception and unfairness in the commercial sphere.” Lisowski v. Walmart Stores, Inc.,
`
`552 F. Supp. 3d 519, 524 (W.D. Pa. 2021). Thus, the statute does not apply when
`
`Walmart collects sales tax where “state law requires [it] to do so.” Id. at 526 (citing
`
`
`
`7
`
`
`
`
`
`
`
`McLean v. Big Lots, 542 F. Supp. 3d 343, 349–51 (W.D. Pa. 2021)). But the District
`
`Court’s reasoning assumes that Walmart is a bona fide collector of sales tax. And as
`
`discussed above, the complaint alleges that the $1.88 charge is not a sales tax.
`
`We nonetheless affirm, albeit on different grounds. See Hassen v. Gov’t of Virgin
`
`Islands, 861 F.3d 108, 114 (3d Cir. 2017) (“[W]e may affirm on any grounds supported
`
`by the record.”). Because Lisowski failed to establish justifiable reliance to support his
`
`statutory claim, the District Court properly dismissed his UTPCPL claim. The UTPCPL
`
`prohibits “deceptive conduct which creates a likelihood of confusion or of
`
`misunderstanding.” 73 Pa. Stat. § 201‑2(4)(xxi). To state a claim, Lisowski must allege
`
`that he justifiably relied on an unlawful practice. See Gregg v. Ameriprise Fin., Inc., 245
`
`A.3d 637, 650 (Pa. 2021). Our precedent unambiguously recognizes that this is the rule
`
`under Pennsylvania law. Hunt v. United States Tobacco Co., 538 F.3d 217, 224 (3d Cir.
`
`2008) (“Given the Pennsylvania Supreme Court’s unequivocal holdings, . . . it is perhaps
`
`unsurprising that our Court has already interpreted the justifiable-reliance standing
`
`requirement to apply to all substantive subsections of the [UTPCPL], fraud-based or
`
`not.”). Thus, a plaintiff “must allege reliance, that he purchased [an item] because he
`
`heard and believed [defendant’s] false advertising.” Weinberg v. Sun Co., 777 A.2d 442,
`
`446 (Pa. 2001); see also Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa.
`
`2004) (“To bring a private cause of action under the UTPCPL, a plaintiff must show that
`
`he justifiably relied on the defendant’s wrongful conduct or representation and that he
`
`suffered harm as a result of that reliance.” (citations omitted)).
`
`
`
`8
`
`
`
`
`
`
`
`But Lisowski has failed to allege reliance, or any facts supporting justifiable
`
`reliance, in his complaint. App. 42–54. There is no indication that Lisowski purchased
`
`the 5‑Hour Energy under the assumption that it was tax free. And there is no indication
`
`that Walmart’s conduct or representations would lead a reasonable consumer to assume
`
`that 5‑Hour Energy was tax free. In fact, Lisowski’s allegations show that he was charged
`
`a sales tax of $.94 for his first purchase of 5-Hour Energy and that he nonetheless
`
`purchased another 5‑Hour Energy, tax notwithstanding. So, we will affirm the dismissal
`
`of Lisowski’s UTPCPL claim for failure to allege justifiable reliance.
`
`Lisowski has three remaining common law claims: (1) conversion; (2) unjust
`
`enrichment; and (3) breach of constructive trust. The District Court properly dismissed
`
`these claims because Lisowski has an exclusive statutory remedy under the Tax Reform
`
`Code. See White v. Conestoga Title Ins. Co., 53 A.3d 720, 731 (Pa. 2012) (noting that one
`
`of “Pennsylvania’s oldest legal principles” is that a statutory remedy bars common law
`
`claims); see also 1 Pa. Stat. and Cons. Stat. § 1504 (codifying the principle that statutory
`
`remedies displace common law). “[I]f 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). As the District Court noted, the Tax Reform Act provides a refund
`
`remedy for the improper collection of a charge under the guise of a sales tax. See 72 Pa.
`
`Stat. § 7252 (requiring Department of Revenue to “refund all taxes, interest and penalties
`
`paid to the Commonwealth under the provisions of this article and to which the
`
`
`
`9
`
`
`
`
`
`
`
`Commonwealth is not rightfully entitled.”). This remedy is available to any “taxpayer
`
`who has actually paid tax . . . to the Commonwealth or to an agent or licensee of the
`
`Commonwealth authorized to collect taxes.” 72 Pa. Stat. § 10003.1 (emphasis added).
`
`Rather than launch a putative class action, Lisowski could have sought a simple
`
`refund from the Pennsylvania Department of Revenue. In fact, Lisowski alleged that
`
`another purchaser of 5-Hour Energy petitioned for a refund and was compensated $4.51.
`
`That refund would fully compensate him for any alleged harm and would thus be
`
`constitutionally adequate. So, Lisowski’s common law claims are barred by the existence
`
`of a statutory refund mechanism that is available to him.
`
`III
`
`Lisowski contends that the District Court erred in dismissing his complaint with
`
`prejudice. But Lisowski “did not ask the District Court for leave to amend [his]
`
`complaint, . . . [so he] can hardly fault the Court for not granting relief [he] never
`
`requested.” Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 253
`
`(3d Cir. 2007). And we have noted that district courts do not have a duty to “sua sponte
`
`grant leave to amend before dismissing a complaint for failure to state a claim.” Id. at
`
`252.4
`
`*
`
`*
`
`*
`
`
`4 Lisowski cites Phillips v. Cnty. of Allegheny for the proposition that “a district court
`must permit a curative amendment” even when a plaintiff does not seek leave to amend.
`515 F.3d 224, 236 (3d Cir. 2008). We have limited this proposition to civil rights cases,
`so it does not apply here. See Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc.,
`482 F.3d 247, 252 (3d Cir. 2007) (“We have rarely applied the sua sponte amendment
`rule outside of the context of a civil rights case, and we will not do so here.”).
`
`
`
`10
`
`
`
`
`
`
`
`For these reasons, we will affirm the District Court’s denial of remand and
`
`dismissal of the complaint with prejudice under Rule 12(b)(6).
`
`
`
`11
`
`