Giant Eagle Charged Illegal Sales Tax on 5-Hour Energy Products in Pennsylvania, Class Action Alleges

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Giant Eagle, Inc. has been hit with a proposed class action in which a Pennsylvania consumer claims the grocery store operator has unlawfully charged sales tax on the price of 5-hour Energy supplements.

As the case tells it, the 5-hour Energy products are advertised and marketed as dietary supplements, which are exempt from Pennsylvania’s sales tax requirements. The plaintiff says he was nevertheless charged on September 14, 2020 a $0.35 tax on his purchase of a $4.99 5-hour Energy 2-Pack at a Pittsburgh Giant Eagle store.

The lawsuit wagers the defendant—which operates 474 Giant Eagle grocery stores, most of which are located in Pennsylvania—rakes in millions in sales of 5-hour Energy supplements for which the company has charged an unlawful tax.

“It is believed and therefore averred that Defendant Giant Eagle overcharges, continues to overcharge, and has in the past overcharged Pennsylvania residents in its Pennsylvania stores and internet sales, in violation of Pennsylvania tax law and regulation,” the complaint, filed in the Allegheny County Court of Common Pleas, says.

According to the suit, while Pennsylvania law provides that a six-percent sales tax (or seven percent in Allegheny County and eight percent in Philadelphia) shall be imposed on the purchase price of tangible personal property, the statute exempts from the sales tax certain items, including “Dietary Supplements and Substitutes.”

Moreover, the Pennsylvania Department of Revenue issued a “Retailer’s Information” booklet to retailers, grocery stores, supermarkets, convenience stores and other establishments similar to Giant Eagle in which the agency noted that “dietary supplements and substitutes, in any form” are exempt from sales tax, the case reads.

The 5-hour Energy products sold at Giant Eagle are “clearly labeled and identified” as dietary supplements, according to the lawsuit, and are stocked and sold in the grocery stores’ medicine, drug and medical supply sections in addition to check-out displays.

The lawsuit looks to represent anyone who, on or after October 5, 2014, purchased any dietary supplement in Pennsylvania either from a Giant Eagle store or online from GiantEagle.com or samsclub.com, and was charged or paid sales tax on the purchase price of the product.

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