Filed 4/10/17 (unmodified opn. attached)
                  CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                               DIVISION TWO


MICHAEL MCCLAIN et al.,                       B265011 & B265029

       Plaintiffs and Appellants,             (Los Angeles County
                                              Super. Ct. Nos. BC327216
       v.                                     & BC325272)

SAV-ON DRUGS et al.,                          ORDER MODIFYING OPINION
                                              AND DENYING REHEARING
       Defendants and Respondents.
                                              NO CHANGE IN JUDGMENT

                  
THE COURT:
It is ordered that the opinion filed herein on March 13, 2017, be
modified as follows:
1.     On page 25, the first paragraph, lines 13 through 22,
following the sentence ending with “(California Building Industry
Assn., at p. 462.)” the remainder of the paragraph is modified to
read as follows:


      CHAVEZ, Acting P. J., HOFFSTADT, J., GOODMAN, J.†

†     Retired judge of the Los Angeles Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
      No matter how it is viewed, consumers‟ payment of the
      sales tax reimbursement does not effect a “taking”: To the
      extent we focus on the retailer‟s initial collection of the tax
      sales reimbursement, it is not a “taking” because the
      retailer is not a government entity (City of Perris v.
      Stamper (2016) 1 Cal.5th 576, 591 [“The takings clause . . .
      prohibits a governmental entity from taking private
      property for public use without just compensation”], italics
      added); to the extent we focus on the Board‟s subsequent
      receipt of that money as part of the retailer‟s sales tax, it is
      not a “taking” because “„[t]axes and user fees . . . are not
      “takings”‟” (Koontz v. St. Johns River Water Mgmt. Dist.
      (2013) 570 U.S. __, __ [133 S.Ct. 2586, 2600-2601, 186
      L.Ed.2d 697]; United States v. Sperry Corp. (1989) 493 U.S.
      52, 62, fn. 9 [110 S.Ct. 387, 107 L.Ed.2d 290]; accord, San
      Remo Hotel v. City and County of San Francisco (2002)
      27 Cal.4th 643, 671-672 [noting that “the taking of money
      is different, under the Fifth Amendment, from the taking of
      real or personal property”]). Thus, the collection of sales
      tax reimbursement from consumers does not implicate the
      takings clause.

2.    On page 28, line 8, footnote 9 should be inserted after the
sentence ending with “[same].)” The text of footnote 9 should
read:
      In their 73-page petition for review, the customers thank
      this Court for “grappling with this difficult area of law”
      and, noting that briefing “may not have sufficiently
      anticipated and focused upon this [C]ourt‟s concerns,”
      proceed to “supply the necessary focus” to their appeal by
      raising several new arguments that appear nowhere in
      their prior briefs—namely, that denying them a remedy
      violates the contract clause of our Constitution, that
      denying them a remedy violates due process because the
      collection of sales tax reimbursement by retailers effects an
      “escheat” to the state, that denying them a remedy




                                  2
      effectively invalidates section 6597, and that they can rebut
      Civil Code section 1656.1‟s presumption of a contractual
      agreement with the retailers to collect sales tax
      reimbursement by showing actual fraud, constructive
      fraud, undue influence, mistake of fact, and mistake of law.
      Because the initial round of briefing on appeal is not a dry
      run for a whole new round of post-opinion briefing on
      rehearing, we respectfully decline to consider these
      arguments for the first time on rehearing. (E.g.,
      Conservatorship of Susan T. (1994) 8 Cal.4th 1005, 1013.)

There is no change in the judgment.
Appellants‟ petition for rehearing is denied.
CERTIFIED FOR PUBLICATION.




                                 3
Filed 3/13/17 (unmodified version)
                  CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                   SECOND APPELLATE DISTRICT

                               DIVISION TWO


MICHAEL MCCLAIN et al.,                       B265011 & B265029

       Plaintiffs and Appellants,             (Los Angeles County
                                              Super. Ct. Nos. BC327216
       v.                                     & BC325272)

SAV-ON DRUGS et al.

       Defendants and Respondents.


     APPEAL from a judgment of the Superior Court of Los
Angeles County. John Shepard Wiley, Jr., Judge. Affirmed.

      The Kick Law Firm, Taras P. Kick, G. James Strenio;
McKool Smith Hennigan, Bruce R. MacLeod and Shawna L.
Ballard for Plaintiffs and Appellants.

      Reed Smith, Douglas C. Rawles, James C. Martin and
Kasey J. Curtis; Morgan Lewis & Bockius, Joseph Duffy and
Joseph Bias for Defendants and Respondents Walgreen Co. and
Rite Aid Corporation.

      Berry & Silberberg, Robert P. Berry and Carol M.
Silberberg for Defendant and Respondent Wal-Mart Stores, Inc.
      Morrison & Foerster, David F. McDowell and Miriam A.
Vogel for Defendant and Respondent Target Corporation.

      Holland & Knight, Richard T. Williams and Shelley
Hurwitz for Defendants and Respondents CVS Caremark
Corporation, Longs Drug Stores Corporation and Longs Drug
Stores California, Inc.

     Safeway, Inc., Theodore Keith Bell for Defendants and
Respondents The Vons Companies, Inc. and Vons Food Services,
Inc.

     Hunton & Williams, Phillip J. Eskenazi and Kirk A.
Hornbeck for Defendants and Respondents Albertson‟s Inc. and
Sav-On Drugs.

      Kamala D. Harris, Attorney General, Stephen Lew,
Supervising Deputy Attorney General, and Nhan T. Vu, Deputy
Attorney General, for Defendant and Respondent California
State Board of Equalization.

                            ******

       A customer buys skin puncture lancets and test strips used
by diabetics to test blood glucose levels from a retail pharmacy
store like CVS or Walgreens. The retail pharmacy is the one
obligated to pay sales tax to the State of California (Rev. & Tax.
Code, § 6051),1 and accordingly charges the customer a “sales tax
reimbursement” to cover the cost of the sales tax and remits that
amount to the state. If the retail pharmacy subsequently
believes no sales tax is owed, it—as the taxpayer—can file an


1    All further statutory references are to the Revenue and
Taxation Code unless otherwise indicated.




                                2
administrative claim for a refund with the state Board of
Equalization (the Board) and challenge any adverse ruling in
court. (§§ 6901 & 6932.) But the retail pharmacy usually has no
financial incentive to pursue such a remedy because any refund it
obtains from the Board must be passed back to the customer.
(§ 6901.5; Decorative Carpets, Inc. v. State Board of Equalization
(1962) 58 Cal.2d 252, 254-255 (Decorative Carpets).) What is
more, and as our Supreme Court recently reaffirmed in Loeffler
v. Target Corp. (2014) 58 Cal.4th 1081, 1123-1124 (Loeffler), the
customer is not the taxpayer and thus cannot herself seek a
refund from the Board.
       May the customer obtain a court order compelling the retail
pharmacy to file an administrative refund claim with the Board?
Our Constitution strictly limits refund actions to those “provided
by [our] Legislature” (Cal. Const., art. XIII, § 32), and no such
statutory remedy exists. However, our Supreme Court in Javor
v. State Board of Equalization (1974) 12 Cal.3d 790, 802 (Javor)
held that the Legislature‟s authority in this regard is not
exclusive and that courts retain a residual power to fill remedial
gaps by fashioning tax refund remedies in “unique
circumstances.” Loeffler had no occasion to define those “unique
circumstances.” (Loeffler, supra, 58 Cal.4th at pp. 1101, 1133-
1134.)
       This case squarely presents this unanswered question. We
conclude that a court may create a new tax refund remedy—and,
accordingly, that the requisite “unique circumstances” exist—
only if (1) the person seeking the new tax refund remedy has no
statutory tax refund remedy available to it, (2) the tax refund
remedy sought is not inconsistent with existing tax refund
remedies, and (3) the Board has already determined that the




                                3
person seeking the new tax refund remedy is entitled to a refund,
such that the refusal to create that remedy will unjustly enrich
either the taxpayer/retailer or the Board. Here, a group of
customers filed a class action predicated on their ability to obtain
an order compelling the retail pharmacies to file an
administrative claim with the Board seeking a refund of the sales
tax paid for skin puncture lancets and glucose test strips.
Because the Revenue and Taxation Code does not provide for this
remedy and because they have not established any of the three
prerequisites to the exercise of the judicial residual power to
fashion new remedies, the trial court correctly sustained
demurrers to all of the claims in the customers‟ operative
complaint without leave to amend. We consequently affirm the
judgment below.
         FACTS AND PROCEDURAL BACKGROUND
I.    Facts
      Plaintiffs and appellants Michael McClain, Avi Feigenblatt,
and Gregory Fisher (collectively, customers) each bought skin
puncture lancets and glucose test strips from retail pharmacy
stores owned and/or operated by defendants and respondents
Sav-On Drugs, Gavin Herbert Company, Longs Drug Stores
Corporation, Longs Drug Stores California, Inc., Rite Aid
Corporation, Walgreen Co., Target Corporation, Albertson‟s Inc.,
The Vons Companies, Inc., Vons Food Services, Inc., and Wal-
Mart Stores, Inc. (collectively, the retail pharmacies). Skin
puncture lancets (or lancets) and glucose test strips are used by
persons living with diabetes to draw their blood and test its
glucose level, which is critical to knowing when to inject insulin
to reduce their glucose levels. When the customers purchased
lancets and test strips from the retail pharmacies, the retail




                                 4
pharmacies charged them “sales tax” on those items. The retail
pharmacies subsequently remitted the money they collected as
sales tax to the Board.
II.    Procedural History
       In the operative fourth amended complaint filed in 2014,2
the customers sued the retail pharmacies and the Board3 for a
refund of the “sales tax” they paid for lancets and test strips,
alleging that these items have been exempt from sales tax since
March 10, 2000, the date on which the Board made effective
California Code of Regulations, title 18, section 1591.1,
subdivision (b)(5) (Regulation 1591.1). This complaint sought to
certify a class comprised of “all persons who were charged by and
paid one or more of the [retail pharmacies] a sales tax on glucose
test strips or skin puncture lancets in California when such
should not have been charged.”



2      This litigation was initiated by different customers in two
separate lawsuits filed in December 2004, and January 2005, the
first seeking a refund for sales tax paid on lancets, and the
second seeking a refund for sales tax paid on test strips. The
current customers were subsequently substituted in as the lead
plaintiffs.

3      Although the Board is not listed in the caption of the
operative complaint, the Board is named in that complaint‟s
claim for declaratory and injunctive relief, and the Board has
appeared and actively litigated the demurrer that is the subject
of this appeal. We consequently conclude that although the
Board was initially brought into this litigation when the retail
pharmacies filed cross-complaints against it for indemnity and
declaratory relief, it is also now a defendant as to the claim for
injunctive and declaratory relief in the main action.




                                 5
       The operative complaint alleges that the retail pharmacies
collected sales tax reimbursement for lancets and test strips
when no sales tax was due on these items and that this conduct
(1) breached an implied term of the contract that is deemed by
statute to exist whenever a retailer collects a sales tax
reimbursement from a customer under Civil Code section 1656.1
and also breached the implied covenant of good faith and fair
dealing; (2) constituted an unlawful, unfair and/or fraudulent
business practice and thereby violates the unfair competition law
(UCL) (Bus. & Prof. Code, § 17200 et seq.); (3) constituted
negligence; and (4) violated the Consumer Legal Remedies Act
(Civ. Code, § 1750 et seq.) by misrepresenting the taxability of
those items. The operative complaint further seeks declaratory
and injunctive relief compelling the retail pharmacies to
prosecute a tax refund claim with the Board and the Board to
award such a refund.
       The retail pharmacies and the Board demurred to the
operative complaint. Following briefing, the trial court issued an
oral ruling sustaining the demurrers to all of the claims in the
operative complaint without leave to amend. The court reasoned
that Loeffler, supra, 58 Cal.4th 1081 held that a customer could
not seek a tax refund of sales tax from a retailer; that Javor,
supra, 12 Cal.3d 790 allowed a customer to seek a refund of sales
tax where the Board had already decided the question of
taxability and concluded that a refund was due; and that “[t]his
case is more like Loeffler than Javor” because the taxability of
lancets and test strips was “very hotly in dispute.”
       Following entry of judgment, the customers filed this
timely appeal.




                                6
                            DISCUSSION
I.     Pertinent Legal Principles
       A.    Relevant tax law
             1.    Sales tax generally
       In California, retailers are generally required to pay the
state a sales tax on any “tangible personal property” they sell “at
retail.” (§ 6051; Loeffler, supra, 58 Cal.4th at p. 1103 [“under
California‟s sales tax law, the taxpayer is the retailer, not the
consumer”]; De Aryan v. Akers (1939) 12 Cal.2d 781, 783 [same].)
Retailers pay the sales tax as a percentage of their “gross
receipts” (§ 6051), and it is rebuttably presumed that all “gross
receipts” are subject to the tax (§ 6091). Retailers pay the sales
tax they owe on a quarterly basis. (§§ 6451-6459; State Bd. of
Equalization v. Superior Court (1985) 39 Cal.3d 633, 640.)
             2.    Collection of sales tax reimbursement from the
customer
       Although retailers were in the past required to collect the
money they had to pay as sales tax from their customers (former
§ 6052),4 our Legislature altered that approach after the United
States Supreme Court held that a retailer‟s mandatory collection
of sales tax from customers rendered the customer the de facto
taxpayer. (Diamond National v. State Equalization Bd. (1976)
425 U.S. 268, 268 [96 S.Ct. 1530, 47 L.Ed.2d 780].) Under our


4      Many counties and municipalities still employ such
mechanisms. (E.g., Andal v. City of Stockton (2006) 137
Cal.App.4th 86, 93-95 (Andal) [so noting, and holding that
retailer who collects such fees may seek a refund]; TracFone
Wireless, Inc. v. County of Los Angeles (2008) 163 Cal.App.4th
1359, 1361-1365 (TracFone) [same]; Sipple v. City of Hayward
(2014) 225 Cal.App.4th 349, 358-362 (Sipple) [same].)




                                 7
Legislature‟s current approach, it is up to each retailer to
decide—as a matter of contract with its customers—whether to
charge its customers a “sales tax reimbursement to the sales
price” for items subject to the sales tax, or whether to pay the
sales tax itself. (Civ. Code, § 1656.1, subd. (a).)5 If a retailer
“show[s]” a charge for sales tax on the receipt or “other proof of
sale,” or otherwise notifies a customer that it has or will charge
sales tax, it is rebuttably presumed that the retailer and
customer have contractually agreed that the retailer is collecting
a sales tax reimbursement from the customer. (Civ. Code,
§ 1656.1, subds. (a) & (d).)
              3.    Pertinent exemptions
       The retail sale of many items of tangible personal property
is exempt from the sales tax. (§§ 6351-6380 [exemptions from
sales and use taxes], 6381-6396 [exemptions from sales tax].)
Since 1961, the sale of “medicines” has been exempt from sales
tax if “[p]rescribed for the treatment of a human being by a
person authorized to prescribe the medicines, and dispensed on
prescription filled by a registered pharmacist in accordance with
law.” (§ 6369, subd. (a)(1).) A few years later, in 1963, our
Legislature declared “[i]nsulin and insulin syringes” exempt from
the sales tax if they were “furnished by a registered pharmacist
to a person for treatment of diabetes as directed by a physician.”
(Id., subd. (e).) On March 10, 2000, the Board promulgated


5      The retailer‟s decision affects the amount of the sales tax to
be collected: If the retailer pays the tax itself, it owes sales tax on
the full amount charged for the item; if the retailer charges its
customer a “sales tax reimbursement,” it owes sales tax on the
amount charged for the item less the reimbursement amount
collected. (§ 6012, subd. (c)(12).)




                                  8
Regulation 1591.1, which expanded this statutory exemption
from the sales tax to reach “[g]lucose test strips and skin
puncture lancets” if they were “furnished by a registered
pharmacist [and] used by a diabetic patient to determine his or
her own blood sugar level . . . in accordance with a physician‟s
instructions.” (Cal. Code Regs., tit. 18, § 1591.1, subd. (b)(5); see
generally § 7051 [conferring upon Board the power to “prescribe,
adopt, and enforce rules and regulations relating to the
administration and enforcement” of the sales tax].) The Board
expanded the sales tax exemption to these additional items
because they “are an integral and necessary active part of the use
of insulin and insulin syringes” expressly exempted by statute.
(Cal. Code Regs., tit. 18, § 1591.1, subd. (b)(5).)
       B.     Relevant statutory tax refund procedures
              1.     For retailers
       If a retailer believes it has paid the state sales tax “in
excess of the amount legally due” (§ 6901), the retailer—as the
taxpayer—has two options available to it by statute.
       First, the retailer can file an administrative claim with the
Board for a refund of any amount “not required to be paid.”
(§ 6901.) It has three years from the last day of the quarter in
which it is seeking a refund to file such an administrative claim.
(§ 6902, subd. (a).) If and only if the Board declines to issue a
refund, the retailer may challenge that denial in court if it files
suit “[w]ithin 90 days” of the Board‟s mailing the notice of denial.
(§§ 6932 & 6933; State Bd. of Equalization v. Superior Court
(1980) 111 Cal.App.3d 568, 571 (State Bd. of Equalization)
[“pending completion of . . . administrative proceedings [before
the Board], [the] court lacks jurisdiction”].) Requiring the
retailer to litigate its refund claim before the Board “in the first




                                  9
instance” is designed to “obtain the benefit of the Board‟s
expertise, permit it to correct mistakes, and save judicial
resources.” (Loeffler, supra, 58 Cal.4th at pp. 1103, 1127.) If a
refund is ordered (either by the Board or in subsequent judicial
review), the retailer can either “return[]” the corresponding sales
tax reimbursement it collected to “the customer” or leave the
funds with the state. (§ 6901.5.)
       Second, the retailer can elect to waive its right to a refund
by declining to file a timely claim for administrative review.
(§ 6905.)
              2.    For customers
       If the customer believes it has paid a sales tax
reimbursement for items on which no sales tax is due, the
customer has no statutory tax refund available to her—either
administrative or judicial—against the Board or the retailer.
(See §§ 6901-6909 [no administrative refund procedure for person
who did not “collect” or “pa[y]” the tax], 6931-6937 [no lawsuit
“unless a claim for refund . . . has been duly filed”]; Loeffler,
supra, 58 Cal.4th at pp. 1092, 1133 [customer may not sue the
retailer for excess sales tax reimbursement]; Javor, supra,
12 Cal.3d at p. 800 [customer has no “direct cause of action
against the Board for . . . erroneously collected sales tax
reimbursements”]; see generally Delta Air Lines, Inc. v. State Bd.
of Equalization (1989) 214 Cal.App.3d 518, 526 (Delta)
[“Generally, persons who have not paid the tax in question are
barred from bringing suits for refund of that tax”].)
       C.     Law governing demurrers and their review on
appeal
       In reviewing an order sustaining a demurrer without leave
to amend, we must ask (1) whether the demurrer was properly
sustained, and (2) whether leave to amend was properly denied.




                                10
The first question requires us to “„“determine whether [that]
complaint states facts sufficient to constitute a cause of action.”‟”
(Centinela Freeman Emergency Medical Associates v. Health Net
of California, Inc. (2016) 1 Cal.5th 994, 1010 (Centinela
Freeman), quoting Zelig v. County of Los Angeles (2002)
27 Cal.4th 1112, 1126.) In undertaking this task, we accept as
true all “„“„material facts properly pleaded‟”‟” and consider any
materials properly subject to judicial notice; we disregard any
“„“„contentions, deductions or conclusions of fact or law‟”‟” set forth
in the operative complaint. (Ibid.; Mitchell v. State Dept. of
Public Health (2016) 1 Cal.App.5th 1000, 1007.) We
independently review the operative complaint and independently
decide whether it states viable causes of action. (Lee v. Hanley
(2015) 61 Cal.4th 1225, 1230.) The second question requires us to
decide whether “„“there is a reasonable possibility that the defect
[in the operative complaint] can be cured by amendment . . . .”‟”
(Centinela Freeman, at p. 1010.)
II.    The Demurrer Was Properly Sustained
       The premise of every claim in the customers‟ operative
complaint is that the retail pharmacies erred in collecting sales
tax reimbursement on lancets and test strips at a time when they
were exempt from sales tax. Accordingly, the customers cannot
state a cause of action unless they can establish their entitlement
to a refund. This raises the preliminary procedural question that
lies at the heart of this case: Can the customers seek a refund of
the amount they paid as sales tax reimbursement through the
lawsuit they have filed?
       Relying on Javor, supra, 12 Cal.3d 790, the customers
argue that this lawsuit is a viable means for seeking a refund of
the sales tax reimbursement they paid for lancets and test strips.




                                  11
Javor, they argue, held that customers who wrongly paid the
sales tax reimbursement could obtain injunctive relief compelling
retailers to file administrative claims with the Board to obtain a
sales tax refund that could be passed back to the customers. (Id.
at pp. 802-803.) This result, the customers urge, preserves the
Board‟s ability to decide the taxability question in the first
instance and prevents the state from being unjustly enriched by
retaining sales tax to which it is not entitled. The retail
pharmacies and the Board respond that the remedy sanctioned in
Javor is limited to situations in which the Board has already
determined that a refund is due and in which the newly created
tax refund remedy would not create inconsistencies with existing
tax refund statutes; both prerequisites, the retail pharmacies and
Board urge, are absent. The availability of a judicially created
remedy to supplement existing statutory remedies is a question
of law that turns in part on questions of statutory interpretation;
accordingly, our review is de novo. (City of San Diego v. Board of
Trustees of California State University (2015) 61 Cal.4th 945, 956
[questions of law reviewed de novo]; Department of Health Care
Services v. Office of Administrative Hearings (2016) 6 Cal.App.5th
120, 140-141 [statutory interpretation is a question of law].)
       A.     Governing law
       Our state Constitution expressly entrusts to our
Legislature the power to regulate post-payment actions for
refunds. Specifically, article XIII, section 32 provides: “After
payment of a tax claimed to be illegal, an action may be
maintained to recover the tax paid, with interest, in such manner
as may be provided by the Legislature.” (Italics added; see also
Masi v. Nagle (1992) 5 Cal.App.4th 608, 611 [“The
Constitution . . . grants the power to the Legislature to prescribe




                                12
the manner of proceeding in tax cases”].)6 “This constitutional
limitation rests on the premise that strict legislative control over
the manner in which tax refunds may be sought is necessary so
that governmental entities may engage in fiscal planning based
on expected tax revenues.” (Woosley v. State of California (1992)
3 Cal.4th 758, 789 (Woosley); Sprint Telephony PCS, L.P.
v. Board of Equalization (2015) 238 Cal.App.4th 871, 883 (Sprint
Telephony).)
      This constitutional mandate has two necessarily implied
corollaries. First, the “[a]dministrative tax refund procedures
[enacted by the Legislature] are to be strictly enforced”;
“substantial compliance” with those procedures will not do.
(McCabe v. Snyder (1999) 75 Cal.App.4th 337, 344; Sprint
Telephony, supra, 238 Cal.App.4th at p. 883; IBM Personal
Pension Plan v. City and County of San Francisco (2005)
131 Cal.App.4th 1291, 1299 (IBM).) Second, and most pertinent
here, courts may not “expand[] the methods for seeking tax
refunds expressly provided by the Legislature.” (Woosley, supra,
3 Cal.4th at p. 792; Kuykendall v. State Bd. of Equalization
(1994) 22 Cal.App.4th 1194, 1203 (Kuykendall).)
      However, this second corollary is not an absolute one and
courts have on occasion recognized “equitable exceptions” in




6     The Constitution also prohibits any pre-payment challenges
to tax collection, establishing a “pay first, sue later” rule that
guarantees the steady collection of taxes and thus the
uninterrupted conduct of the government‟s business that relies on
that steady stream of tax revenue. (E.g., City of Anaheim
v. Superior Court (2009) 179 Cal.App.4th 825, 827 (City of
Anaheim).)




                                 13
“certain unique circumstances.” (IBM, supra, 131 Cal.App.4th at
p. 1305, fn. 16.)
       The first case to do so was Decorative Carpets, supra,
58 Cal.2d 252. There, a retailer selling carpet sought a tax
refund of the sales tax from the Board. It was determined in a
tax refund suit between the retailer/taxpayer and the Board that
the retailer was entitled to that refund. The retailer nevertheless
declared its intention to keep the refund for itself and not to
return it to its customers, even though the retailer had charged
them a sales tax reimbursement. (Id. at pp. 253-254.) The Board
balked at issuing the refund, arguing that it would “unjustly
enrich[]” the retailer at its customers‟ expense. (Id. at p. 254.)
Our Supreme Court in Decorative Carpets agreed, holding that
the Board‟s “vital interest in the integrity of the sales tax” gave it
the authority to “insist as a condition of refunding overpayments
to [the retailer] that [the retailer] discharge its trust obligations
to its customers” by refunding to them the corresponding sales
tax reimbursement they had paid. (Id. at p. 255.)
       The next case was Javor, supra, 12 Cal.3d at page 790.
There, the Board “admitted” that a recent retroactive repeal of
the federal excise tax on motor vehicles entitled car dealers, as
retailers, to a partial refund of the sales tax because the federal
excise tax had been included in the price of the cars on which
sales tax had been assessed. (Id. at pp. 794, 801-802.) The Board
went so far as to promulgate rules to effectuate these refunds.
(Ibid.) When car dealers did not apply for the tax refund money
the Board had set aside, the customers themselves sued to
compel the retailers to do so. (Id. at pp. 795-796, 802.) Javor
held that this judicially created remedy—a lawsuit by customers
to compel retailers to file administrative claims for refunds and




                                 14
pass those refunds back to the customers—was appropriate
“under the unique circumstances of this case.” (Id. at pp. 797-
803.) In reaching this conclusion, our Supreme Court placed
weight on the facts that the Legislature had “provide[d] no
procedure by which [the customers] [could] claim the refund
themselves” (id. at p. 797); that its newly fashioned remedy was
“consonant with existing statutory procedures” (id. at pp. 800,
802); and, drawing on Decorative Carpets, supra, 58 Cal.2d 252,
that the newly fashioned remedy was necessary—given that the
retailers themselves had “no particular incentive to request the
refund” (because they would act solely as a pass-through for the
refund money)—to ensure that the state would not be “unjustly
enriched” by getting to keep the admittedly erroneous sales tax
revenue (Javor, at pp. 800-802).
        Although Decorative Carpets dealt with a “greedy” retailer
and Javor dealt with unmotivated retailers, both cases share
three commonalities that, in our view, define the “unique
circumstances” to which Javor alludes and that are prerequisites
to the judicial recognition of any new tax refund remedy. First,
in both Decorative Carpets and Javor, the customers had no
available statutory tax refund remedy. (Decorative Carpets,
supra, 58 Cal.2d at pp. 255-256; Javor, supra, 12 Cal.3d at p. 797;
see also Loeffler, supra, 58 Cal.4th at p. 1114 [noting that
customers in Javor had “no direct statutory provision
for . . . refunds”]; cf. State Bd. of Equalization, supra, 111
Cal.App.3d at p. 571 [declining to recognize new remedy because
the “real party . . . does not lack a [statutory tax refund]
remedy”].) Second, in both Decorative Carpets and Javor, the
judicially crafted remedies were “consonant” with the statutory
tax refund procedures that our Legislature did provide.




                                15
(Decorative Carpets, at p. 255; Javor, at pp. 800, 802; accord,
Kuykendall, supra, 22 Cal.App.4th at pp. 1204-1205 [noting that
the “equity” of judicially created remedies “will defer to statute”].)
Lastly, in both Decorative Carpets and Javor, there had been a
precursor determination—either by the Board on its own volition
or through its acquiescence to a court ruling in a tax refund
action between the retailer/taxpayer and the Board—that a tax
refund was due and owing. (Decorative Carpets, at p. 254; Javor,
at pp. 794, 802.) Such a determination left no question that the
court‟s refusal to fashion a new remedy would result in either the
retailer (in Decorative Carpets) or the state (in Javor) keeping
money that the customers had paid as sales tax reimbursement
and to which the customers were unequivocally entitled. And it
was the certainty of this unjust enrichment that offended the
Board‟s “vital interest in the integrity of the sales tax” and
warranted judicial intervention. (Decorative Carpets, at pp. 254-
255; Javor, at pp. 800-803.) Limiting a court‟s authority to
fashion new tax remedies to situations involving all three of these
requirements specifically reinforces the constitutional mandate,
described above, that the Legislature have primacy in fixing the
procedures by which tax refunds are obtained. (Cal. Const., art.
XIII, § 32.)
       The customers in this case do not dispute the necessity of
the first two prerequisites, but dispute the third and offer several
reasons why courts should have the power to fashion new tax
refund remedies even when the entitlement to that refund is yet
to be decided.
       To begin, they assert that Javor itself disclaims any
requirement of a prior determination that the tax refund is due
and owing because, at one point, Javor explains that the




                                 16
customers there sought an order “to compel defendant retailers to
make refund applications to the Board and in turn to require the
Board to respond to these applications by paying into court all
sums, if any, due defendant retailers.” (Javor, supra, 12 Cal.3d
at p. 802, italics added.) The customers argue that the phrase “if
any” means that the retailers‟ entitlement to a refund was still an
open question in Javor. They are wrong. Javor makes clear that
“[t]he Board ha[d] admitted that it must pay these refunds to
retailers” (ibid.); the Court‟s use of the phrase “if any” simply
acknowledged that some retailers might not have sold cars for
which a refund is due—not that there were lingering questions
about whether, as a legal matter, a refund was due.
       Next, the customers argue that Javor’s “unique
circumstances” exist whenever a court is confronted with a
situation involving a “legal taxpayer” who has the right but no
incentive to seek a refund (here, the retail pharmacies) and an
“economic taxpayer” who has the incentive but not the right to
seek a refund (here, the customers). As the customers frankly
acknowledge, however, this division of “taxpayer” status is an
inherent feature of “the peculiar structure of California‟s retail
sales tax” law, making that circumstance ubiquitous—not
unique. More to the point, if courts could fashion new tax refund
remedies simply because the Revenue and Taxation Code does
not label the customer as the taxpayer, our Constitution‟s
directive that the Legislature be the branch primarily charged
with “provid[ing]” tax refund remedies would be rendered all but
meaningless. (Cal. Const., art. XIII, § 32.) The customers urge
that the risk to the state‟s coffers by virtue of new tax refund
remedies is minimal given the statutory presumptions that
customers agree to pay sales tax reimbursement (§ 1656.1, subd.




                                17
(a)) and that all of a retailer‟s gross receipts are subject to the
sales tax (§ 6051). But the affront to the constitutional mandate
stems from the judicial creation of new tax refund remedies,
whether or not the use of those remedies ultimately leads to a
refund.
       The customers further cite a number of cases in which
courts have allowed one party to file a derivative action for
another. These cases fall into three broad categories, each of
increasing irrelevance. The first is Delta, supra, 214 Cal.App.3d
518. There, the Court of Appeal held that an airline that paid
sales tax reimbursement to a retailer for fuel could sue for a sales
tax refund, even though it was not the taxpayer. (Id. at pp. 526-
528.) In so holding, the court cited Javor and ruled that the case
involved a “unique circumstance” authorizing judicial recognition
of a new remedy of a direct lawsuit for a refund—namely, that
California‟s tax statutes “regard[] common carriers such as Delta
as retailers as well as purchasers.” (Delta, at p. 528) Indeed,
Delta expressly distinguished common carriers from “ordinary
purchasers or consumers.” (Id. at p. 526.) The customers here
are ordinary consumers, not common carriers. The second
category involves cases in which a retailer who collected county
or municipal taxes from consumers was held to have standing to
sue for a refund, even though the retailer was not technically the
taxpayer. (See Andal, supra, 137 Cal.App.4th at pp. 93-95;
TracFone, supra, 163 Cal.App.4th at pp. 1364-1365; Sipple,
supra, 225 Cal.App.4th at pp. 358-362.) In so holding, these
cases declined to recognize a “sharp distinction between a
„taxpayer‟ and a „tax collector‟” or to follow a “strict rule denying
standing in all circumstances to „tax collectors.‟” (Sipple, at
p. 359.) These cases are doubly irrelevant because they deal with




                                 18
the standing of a retailer who is a tax collector and not the
standing of a consumer who is neither a tax collector nor a
taxpayer, and because they deal with local taxes and thus are not
constrained by article XIII, section 32‟s mandate which, as noted
above, does require “strict” construction of tax refund statutes.
(Howard Jarvis Taxpayers Assn. v. City of La Habra (2001)
25 Cal.4th 809, 822, fn. 5 [art. XIII, § 32 does not apply to “local
governments”]; City of Anaheim, supra, 179 Cal.App.4th at pp.
830-831 [same].) The last category involves the right of a limited
partner to file a derivative action on behalf of a limited
partnership. (Wallner v. Parry Professional Bldg., Ltd. (1994)
22 Cal.App.4th 1446, 1449-1450.) Because it arises in a different
context and involves a different statutory scheme, it is irrelevant.
       The customers lastly contend that limiting judicially
created remedies to cases in which there has been a prior
determination that a tax refund is due will lead to absurd results.
We agree that courts are loathe to interpret the law in a way that
yields absurd results (John v. Superior Court (2016) 63 Cal.4th
91, 96), but disagree with the customers‟ prognostications. The
customers assert that if consumers can sue for a tax refund only
if there is a prior determination that a refund is due, then the
same must be true for retailers seeking a refund from the Board,
which will make it nearly impossible for retailers to obtain a tax
refund. But the conclusion of this argument does not flow from
its premise. The reason why a prior determination is required for
consumers is because they are asking the court to create a new
tax refund remedy when none exists by statute in order to avoid
certain unjust enrichment; that reason has no application to
retailers, who are authorized by statute to seek administrative
and then judicial relief. The customers also argue the Board is




                                19
not infallible because its rulings are sometimes overturned, such
that placing limits on the power of courts to fashion new tax
refund remedies makes it more possible for the Board‟s incorrect
interpretations to go unreviewed. However, the question before
us is to define the conditions that must be satisfied before the
judiciary may fashion tax refund remedies notwithstanding our
Constitution‟s primary commitment of defining remedies with the
Legislature; it is not to afford maximum opportunities for judicial
review. Moreover, retailers still have the right to directly
challenge the Board‟s rulings and, as we discuss below,
consumers have a more diluted right to do so.
       B.     Application
       As explained above, a court may create a new tax refund
remedy—and, accordingly, Javor’s “unique circumstances”
exist—only if (1) the person seeking the new tax refund remedy
has no statutory tax refund remedy available, (2) the tax refund
remedy sought is not inconsistent with existing tax refund
remedies, and (3) the Board has already determined that the
person seeking the new tax refund remedy is entitled to a refund,
such that the refusal to create that remedy will unjustly enrich
either the taxpayer/retailer or the Board. The trial court in this
case ruled that it could not fashion a new judicial remedy to allow
the customers to attack the Board‟s collection of sales tax on
lancets and test strips. This ruling was correct because none of
the three prerequisites is present in this case.
       First, the customers do not have a statutory right to
directly file for a refund of the sales tax from the Board or for a
refund of sales tax reimbursement from the retailers, but they
are not remedy-less. In fact, they have several other remedies
available to them. They may urge the Board to initiate an audit




                                20
of the retail pharmacies‟ practices in collecting sales tax or to
conduct a deficiency determination of the retail pharmacies‟ sales
tax payments (§§ 6481, 6483 & 7054; Loeffler, supra, 58 Cal.4th
at pp. 1103-1104, 1123 [noting that “consumers who believe they
have been charged excess reimbursement . . . may complain to
the Board, which may in turn initiate an audit” or a “deficiency
determination”].) They can, as “interested person[s],” petition the
Board under the Administrative Procedure Act to compel the
Board to “adopt[], amend[], or repeal” Regulation 1591.1,
subdivision (b)(5) and the collection of sales tax under that
regulation. (Gov. Code, § 11340.6; Loeffler, at p. 1123.) And they
can, as “interested person[s],” sue the Board under the
Administrative Procedure Act, for declaratory relief “as to the
validity of” Regulation 1591.1. (Gov. Code, § 11350; Loeffler, at
p. 1123.)
       Second, judicial recognition of a right of customers to sue
retailers and the Board for a sales tax refund when the Board has
yet to determine whether any refund is due is inconsistent with
at least two provisions of the Revenue and Taxation Code. It is
inconsistent with section 6905. That section allows retailers to
waive their right to seek a tax refund; if consumers can compel a
retailer to seek a refund when it would rather waive it, the
retailer‟s right to waiver would be negated. (Loeffler, supra,
58 Cal.4th at p. 1129 [so noting].) The consumers assert that the
retailers‟ power to waive their right to a refund is irrelevant
because the retailers‟ power to collect sales tax reimbursement
from consumers is a matter of contract under Civil Code section
1656.1. But the contractual nature of the right to collect sales
tax reimbursement in no way affects the fact that a judicial




                                21
remedy compelling a retailer to seek a refund overrides a
retailer‟s election not to seek one.
       Judicial recognition of a right of customers to sue retailers
when the Board has yet to determine whether a refund is due is
also inconsistent with section 6901.5. That section requires a
retailer that obtains from the Board a sales tax refund collected
from its customers to do one of two things: (1) return that money
to the customers once its entitlement to the refund “has been
ascertained”; or (2) leave that money with the state. (§ 6901.5;
see also Cal. Code Regs., tit. 18, § 1700, subd. (b)(1) [containing
identical language].)7 In Loeffler, our Supreme Court read this
section as providing a “safe harbor” or “safe haven” for any
retailer/taxpayer “vis-à-vis the consumer” if the retailer/taxpayer
“remits reimbursement charges [it collects] to the Board.”
(Loeffler, supra, 58 Cal.4th at pp. 1100, 1103-1104, 1119.) If
consumers can sue retailers to compel them to seek a refund from
the Board, then the “safe harbor” from suit erected by section
6901.5 is no safe harbor at all. (Accord, Loeffler, at p. 1126
[noting conflict].) Indeed, the customers concede as much when


7     In pertinent part, this provision provides: “When an
amount represented by a person to a customer as constituting
reimbursement for taxes due under this part is computed upon
an amount that is not taxable or is in excess of the taxable
amount and is actually paid by the customer to the person, the
amount so paid shall be returned by the person to the customer
upon notification by the Board of Equalization or by the customer
that such excess has been ascertained. In the event of his or her
failure or refusal to do so, the amount so paid, if knowingly or
mistakenly computed by the person upon an amount that is not
taxable or is in excess of the taxable amount, shall be remitted by
that person to this state.” (§ 6901.5)




                                22
they raise the issue before us only to preserve it for challenge
before the Supreme Court. To be sure, the regulation
implementing section 6901.5 provides that it “do[es] not
necessarily limit the rights of customers to pursue refunds from
persons who collected tax reimbursement from them in excess of
the amount due.” (Cal. Code Regs., tit. 18, § 1700, subd. (b)(6).)
But Loeffler held that this language did no more than
“acknowledge[] that if other remedies are available, the
regulation does not interfere with them.” (Loeffler, at p. 1122.)
       Third, the Board has yet to decide whether the retail
pharmacies—and, by extension, the customers—are entitled to a
refund. Regulation 1591.1 exempts the sales of lancets and test
strips, but only when they are (1) “furnished by a registered
pharmacist,” and (2) “used by a diabetic patient . . . in accordance
with a physician‟s instructions.” (Cal. Code Regs., tit. 18,
§ 1591.1, subd. (b)(5).) It has yet to be determined whether those
two conditions are legally valid or were factually satisfied as to
the customers‟ purchases. In their reply brief on appeal, the
customers argue that the Board has conceded that a refund was
due because the Board, in its brief on appeal, did not address the
merits of the taxability issue and admitted that a 2003 opinion
letter sent by a Board staff member arguably setting forth
additional prerequisites to application of Regulation 1591.1‟s
exemption was not a “binding determination of the Board.”
There was no concession. The Board did not address the merits
of the taxability issue because the chief issue in this appeal is not
the merits, but where and by whom they may be litigated. And
the validity or invalidity of the 2003 opinion letter does not alter
the undisputed fact that the Board has yet to determine that all




                                 23
of the sales the customers challenge fall within the ambit of
Regulation 1591.1‟s exemption.
       For these reasons, the customers have not established that
this case involves the “unique circumstances” that empower a
court to fashion a new tax refund remedy.8 Absent such a
remedy, there can be no judicial determination that the retail
pharmacies‟ collection of sales tax reimbursement was improper.
And absent that determination, none of the customers‟ claims—
all of which are premised on the unlawful collection of sales tax
reimbursement—state a viable cause of action. (Centinela
Freeman, supra, 1 Cal.5th at p. 1010.)
       C.     Customers’ further arguments
       The customers level two further categories of arguments at
our conclusion.
       First, the customers note that courts must generally
“construe . . . statute[s] in a manner that avoid[] doubts as to
[their] constitutional validity.” (Steen v. Appellate Division of
Superior Court (2014) 59 Cal.4th 1045, 1048.) From this, they
argue that we must not construe the Revenue and Taxation Code
to deny them a judicially fashioned tax refund remedy because
doing so will risk violations of the takings clause and due process.
No such risks exist.




8     In light of our conclusion that the requisite “unique
circumstances” have not been shown, we have no occasion to
reach the Board‟s and retail pharmacies‟ further arguments that
Javor also requires a showing that the consumers first demanded
that the retail pharmacies file an administrative refund claim or
a showing that the retail pharmacies have maintained records
making it possible to remit any refund to the correct customers.




                                24
        The federal and California Constitutions guarantee that
“private property” shall not “be taken for public use, without just
compensation.” (U.S. Const., 5th Amend.; Cal. Const., art. I, § 19,
subd. (a).) Two types of “takings” are assured just compensation:
(1) categorical or per se takings, which arise when the
government physically occupies property or deprives its owner of
all viable uses of the property (Brown v. Legal Foundation of
Wash. (2003) 538 U.S. 216, 233 [123 S.Ct. 1406, 155 L.Ed.2d 376];
California Building Industry Assn. v. City of San Jose (2015)
61 Cal.4th 435, 462); and (2) regulatory takings, which arise
when government regulation of a property‟s use sufficiently
impairs its value (California Building Industry Assn., at p. 462.)
However, it is well settled that “„[t]axes and user fees . . . are not
“takings.”‟” (Koontz v. St. Johns River Water Mgmt. Dist. (2013)
570 U.S. __, __ [133 S.Ct. 2586, 2600-2601, 186 L.Ed.2d 697];
United States v. Sperry Corp. (1989) 493 U.S. 52, 62, fn. 9 [110
S.Ct. 387, 107 L.Ed.2d 290]; accord, San Remo Hotel v. City and
County of San Francisco (2002) 27 Cal.4th 643, 671-672 [noting
that “the taking of money is different, under the Fifth
Amendment, from the taking of real or personal property”].)
Thus, the collection of sales tax reimbursement from consumers
does not implicate the takings clause.
        The federal and California Constitutions also provide that
the state shall not deprive persons of their property “without due
process of law.” (U.S. Const., 14th Amend., § 1; Cal. Const., art.
I, § 7.) This guarantee applies to the payment of taxes (T. M.
Cobb Co. v. County of Los Angeles (1976) 16 Cal.3d 606, 617,
fn. 6), but authorizes a state to relegate taxpayers to a
“„postpayment refund action‟” as long as they are afforded
“„meaningful backward-looking relief to rectify any




                                 25
unconstitutional deprivation.‟” (River Garden Retirement Home
v. Franchise Tax Bd. (2010) 186 Cal.App.4th 922, 937-938 (River
Garden), quoting McKesson Corp. v. Florida Alcohol & Tobacco
Div. (1990) 496 U.S. 18, 31 [110 S.Ct. 2238, 110 L.Ed.2d 17]
(McKesson); City of Anaheim, supra, 179 Cal.App.4th at p. 831.)
A state provides “meaningful backward-looking relief” if it gives
taxpayers (1) “a „fair opportunity to challenge the accuracy and
legal validity of their tax obligation,‟” and (2) “a „“clear and
certain remedy”‟ for the erroneous or unlawful tax collection.”
(River Garden, at p. 938, quoting McKesson, at p. 39.)
       We conclude that our refusal to craft a judicial tax refund
remedy for consumers does not risk a due process violation. To
begin, it is not precisely clear how due process applies to them.
The payment of sales tax alleged in the operative complaint
entails two sequential transactions: Consumers pay sales tax
reimbursement to retailers, and retailers pay sales tax to the
state. The first transaction is ostensibly outside the reach of due
process because it reflects a contractual arrangement between
two private parties (§ 1656.1; Coleman v. Department of
Personnel Administration (1991) 52 Cal.3d 1102, 1112 [“Only
those actions that may fairly be attributed to the state . . . are
subject to due process protections”]), and the consumers are not
parties to the second transaction. Further, our Supreme Court in
Loeffler—although silent on this point—noted no constitutional
impediment to its ruling that left consumers with no direct
remedy for a refund and instead relegated them to urging Board
inquiry and to filing claims or actions under the Administrative
Procedure Act. (Loeffler, supra, 58 Cal.4th 1081.) Were we to
come to a contrary conclusion, we would effectively overrule
Loeffler, something we are not allowed to do except in narrow




                                26
circumstances not present here. (Auto Equity Sales v. Superior
Court (1962) 57 Cal.2d 450, 456.)
       Second, the customers assert that our ruling that we are
powerless to craft a new judicial tax refund remedy does not
warrant dismissal of their breach of contract claims or their
second UCL claim. Specifically, the customers urge (1) that their
breach of contract claims are grounded in Civil Code section
1656.1, which is effectively part of the Revenue and Taxation
Code and is more specific than section 6901.5, and thus cannot be
inconsistent with either the Code or section 6901.5, (2) their
second breach of contract claim is premised on allegations that
one of the retailers who charged sales tax reimbursement
sometimes did not mean to do so because its corporate policy did
not call for it, and (3) that their second UCL claim is based upon
allegations that the retail pharmacies should have informed them
of the requirements to qualify for Regulation 1591.1‟s exemption.
       We reject the customers‟ first argument because, as
explained above, the premise of their breach of contract claims is
that the retail pharmacies wrongly collected sales tax
reimbursement that was not due, yet they have no means in this
lawsuit of establishing whether it was due. We reject the
customers‟ second argument because the only contract at issue is
the one between the retailer and customer; because the express
terms of that contract, which arise from the presumption in Civil
Code section 1656.1 because the retailer showed a charge for
sales tax on its receipts, are that the retailer is charging sales tax
reimbursement; and because the retailer‟s unexpressed intention
not to charge sales tax in some transactions cannot alter the
express terms of the parties‟ contract or otherwise rebut the
statutory presumption (Patel v. Liebermensch (2008) 45 Cal.4th




                                 27
344, 352 [“„The terms of the contract are determinable by an
external, not by an internal standard‟”]). We reject the
customers‟ third argument because the pharmacies owed no duty
to explain how to qualify for the exemption. (Accord, Buller
v. Sutter Health (2008) 160 Cal.App.4th 981, 987-988 [insurance
company has no duty to explain to clients how to get the best
deal]; Levine v. Blue Shield of California (2010) 189 Cal.App.4th
1117, 1136-1137 [same].)
III. Leave To Amend Was Properly Denied
       The customers argue that the trial court erred in not
allowing them to amend the operative complaint to add a claim
that they were suffering an unconstitutional taking. Because, as
explained above, such a claim lacks merit as a matter of law, the
trial court‟s conclusion that there was no reasonable possibility
the customers could amend their complaint to state a claim was
correct.
                              ******
       The result we reach in this case is not an entirely satisfying
one. The retail pharmacies lack any financial incentive to
challenge the Board‟s implementation of Regulation 1591.1 by
seeking a refund, and the statutory remedies available to the
customers—urging the Board to conduct an audit or filing a claim
or lawsuit under the Administrative Procedure Act—while
effective enough to satisfy due process, are nevertheless the
practical equivalent of allowing them to tug (albeit persistently)
at the Board‟s sleeve. However, this is the result we must reach
because our Constitution chiefly assigns the task of creating tax
refund remedies to our Legislature, and our Legislature has yet
to address the situation that arises when the legal taxpayer has
no incentive to seek a direct refund and the economic taxpayer




                                 28
has no right to do so. It is a topic worthy of legislative
consideration. Because the prerequisites for making it a topic of
judicial consideration are not present, we adhere to the statutes
as they are written and affirm the order dismissing this case.
                           DISPOSITION
      The judgment is affirmed. The Board and the retail
pharmacies are entitled to their costs on appeal.
      CERTIFIED FOR PUBLICATION.


                                      ______________________, J.
                                      HOFFSTADT
We concur:

_________________________, Acting P. J.
CHAVEZ

_________________________, J.*
GOODMAN




*     Retired judge of the Los Angeles Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.




                                 29
