Flippo v. L.L. Bean, Inc.

Summary

The Maine Supreme Judicial Court held that L.L. Bean properly included the value of credit and inducement coupons in the taxable sale price of merchandise. Because L.L. Bean and MBNA intended the royalty payments to reimburse L.L. Bean for accepting the coupons, the coupons were not discounts under Maine’s sales tax statute. The court affirmed partial summary judgment for L.L. Bean, vacated the remaining judgment, and remanded for entry of judgment in L.L. Bean’s favor on all claims.

Holdings

1. The value of the credit and inducement coupons was part of the taxable sale price, not an excluded discount, because L.L. Bean and MBNA intended that MBNA's royalty payments would reimburse L.L. Bean for the value of the coupons.
2. The tax liability is determined at the time of sale based on the retailer's expectation of third-party reimbursement; actual failure to receive expected reimbursement does not retroactively reduce the taxable sale price or create a purchaser refund.
3. L.L. Bean was entitled to summary judgment for all years on all of the class's claims because it properly charged sales tax on the value of the coupons.

Questions Presented

1. Whether the value of credit coupons and inducement coupons accepted by L.L. Bean constituted a discount excluded from the taxable sale price under Maine's sales tax statute.
2. Whether determining the taxable sale price required examining whether L.L. Bean was actually fully reimbursed by MBNA in each tax year.
3. Whether L.L. Bean was entitled to summary judgment on the class's sales-tax, implied-contract, and Unfair Trade Practices Act claims.

Disposition

other