On June 12, 2020, a federal court partially denied Kroger Co.’s motion to dismiss a putative class action complaint regarding Oregon’s bottle deposit on beverages. The complaint alleged that Kroger had misrepresented the cost of certain beverages by charging a ten-cent bottle deposit for beverages that were exempt from the bottle deposit and failing to disclose that the exempt containers could not be returned for a ten-cent refund. Kroger argued that the federal court did not have jurisdiction based on the Tax Injunction Act (TIA), that the plaintiffs failed to allege causation and damages, and that the plaintiffs failed to allege unlawful trade practices or willful conduct necessary for a claim under Oregon’s Unfair Trade Practices Act (UTPA).
The court found that the bottle deposits did not constitute a tax for purposes of the TIA and therefore the TIA did not bar federal court jurisdiction because the bottle deposit does not raise revenue and has only an indirect public benefit. The court further held that principles of comity did not require dismissal of the case because the complaint did not involve a challenge to the bottle deposit statute but was instead a challenge of Kroger’s practice of charging its customers for the deposit on exempt containers. Therefore, the court held that Kroger had not shown why a state court would be in a better position to address the issues presented. The court granted Kroger’s motion to dismiss based on Kroger’s other arguments, but provided the plaintiffs the opportunity to amend their complaint to cure the deficiencies.
Solano v. Kroger Co, Case No. 3:18-cv-01488-AC (D. Or. June 12, 2020).