Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 1 of 15

MAYERLAWGROUP,LLC
CarlJ.Mayer,Esq.
ZacharyJ.Liszka,Esq.
1180AvenueoftheAmericas,Suite800
NewYork,NewYork10036
(212)3824686
(212)3824687

LAWOFFICEOFTEDM.ROSENBERG
TedM.Rosenberg,Esq.(prohacviceapplicationpending)
RobertRosenberg,Esq.(prohacviceapplicationpending.)
321NewAlbanyRd.
Moorestown,NJ08057
(856)6089999

AttorneysforPlaintiffsandthePutativeClass

UNITEDSTATESDISTRICTCOURT
SOUTHERNDISTRICTOFNEWYORK

THOMASESTLER,BLAKERUEHRWEIN, CIVILNO:_____________
andSTEVENPARK,onbehalfofthemselves

andallothersimilarlysituated,

CLASSACTION
Plaintiffs,
COMPLAINT

vs.
JURYTRIALDEMANDED

DUNKINBRANDS,INC.,DUNKIN
DONUTSSTORE#350125,DUNKIN
DONUTSSTORE#350126,
DONUTSSTORE#350127,
DUNKINDONUTSSTORE#345768,and
JOHNDOES1500,

Defendants.

Plaintiffs THOMAS ESTLER, BLAKE RUEHRWEIN, andSTEVENPARK(herein

collectively Plaintiffs), by and through their undersigned counsel, on behalfofthemselves
and on behalf of the Rule 23 Class of all others similarly situated, bring this action against
Defendants DUNKIN BRANDS, INC., DUNKIN DONUTS STORE #350127, DUNKIN

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 2 of 15

DONUTS STORE #345768, DUNKIN DONUTS STORE #350125, DUNKIN DONUTS

STORE #350126, and JOHNDOES1600,(hereincollectivelyDefendants),herebyallege
uponpersonalknowledgeastosome,andinformationandbeliefastotherest,asfollows:
NATUREOFTHEACTION
1. THOMAS ESTLER, BLAKE RUEHRWEIN, and STEVEN PARK, the Plaintiffs in this
action, arecustomers ofDunkinDonutsand resideinNewYorkCity,and,asleadPlaintiffs,
they bring this class action lawsuit against Dunkin Donuts for illegally surcharginginthe
guiseofasalestaxNewYorkcustomerswhopurchaseprepackagedcoffee.
2. In the course of purchasing products from New York Dunkin Donuts stores, the Plaintiffs
learnedthatDefendantsunlawfullysurchargecustomerswhopurchaseprepackagedcoffee.
3. The unlawful surcharge is disguised as a sales tax in the amount of 8.875% on the
customerreceipt.
4. Defendants know that assessing any sales tax on prepackaged coffee is unlawful in New
York because they are aware of the tax regulations on prepackaged coffee promulgated by
theStateofNewYork.
5. Defendants further know that assessing any sales tax on prepackaged coffee is unlawful in
NewYorkbecauseofseveralcustomercomplaints.
6. Defendants continue to dupe Dunkin Donuts customers and flaunt the law
even after
members of the public complained and despitebeinginformedthattheseactionswereand
areunlawful.
7. Despite being aware of the illegality of their actions, DunkinDonutscontinuestoflauntthe
law and dunk their customers, leaving them with a sour taste in their mouth when they buy
theirsweets.

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 3 of 15

8. This action is beingbroughtonbehalf ofPlaintiffs andaclassofallotherssimilarlysituated,

against Defendants for their willful violation of the New York consumer protection statute,
General Business Law 349, which prohibits deceptive and misleading business practices,
andotherNewYorkcommonlaw.
THEPARTIES
9. At all relevant times, Plaintiff THOMAS ESTLER has been a resident of Manhattan, New
York.
10. Plaintiff THOMAS ESTLER purchased prepackaged coffee from Defendants at various
Dunkin Donuts stores in New York and Defendantschargedhimasurchargeintheguiseof
asalestaxonthepurchases.
11. At all relevant times, Plaintiff BLAKE RUEHRWEIN has been a resident of Manhattan,
NewYork.
12. Plaintiff BLAKE RUEHRWEIN purchased prepackaged coffee from Defendants atvarious
Dunkin Donuts stores in New York and Defendantschargedhimasurchargeintheguiseof
asalestaxonthepurchases.
13. Atallrelevanttimes,PlaintiffSTEVENPARKhasbeenaresidentofManhattan,NewYork.
14. Plaintiff STEVEN PARK purchased prepackaged coffee from Defendants at various
Dunkin Donuts stores in New York and Defendantschargedhimasurchargeintheguiseof
asalestaxonthepurchases.
15. Defendant DUNKIN BRANDS, INC. advertises itself as thesourceoffuelforthecountry,
and is otherwise a restaurant chain that sells donuts and coffee. Defendant sets and controls
the price and fees its franchise members charge for their products, including prepackaged
coffee.

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 4 of 15

16. Defendant DUNKIN BRANDS, INC was at all relevant times a business corporation
organized and existing under the laws of the State of Delaware, with its principal executive
officeat130RoyalStreetinCanton,Massachusetts.
17. Defendant DUNKIN BRANDS, INC.s registered service agent in New York is C T
CorporationSystem,111EighthAvenueinNewYork,NY10011.
18. Defendant DUNKIN DONUTS STORE #350125 is located at 2 Penn Plaza, New York,
NewYork.
19. Defendant DUNKIN DONUTS STORE #350126 is located at 2 Penn Plaza, New York,
NewYork.
20. Defendant DUNKIN DONUTS STORE #350127 is located at 2 Penn Plaza, New York,
NewYork.
21. Defendant DUNKIN DONUTS STORE#345768islocated at60610th Avenue,NewYork,
NewYork.
JURISDICTIONANDVENUE
22. This

Court

has

jurisdiction

over

the

subject

matter

presented

by

thisclassactioncomplaintbecause it is aclassactionarisingundertheClassActionFairness
Act of 2005 (CAFA),
Pub. L. No. 1092, 119 Stat. 4 (2005)
, whichexplicitlyprovidesfor
the original jurisdiction of theFederalCourtsoveranyclassactionwhereanymemberofthe
plaintiff class is a citizen of a state different from any defendant, and when the matter in
controversy exceeds in the aggregate the sum of $5,000,000.00, exclusive of interest and
costs.

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 5 of 15

23. Plaintiffs allege that the total claims oftheindividualmembersoftheClassinthisactionare

in excess of $5,000,000.00intheaggregate,exclusiveofinterestandcosts,asrequiredby
28
U.S.C.1332(d)(2)
,(5).
24. Plaintiffs are citizens of New York and at leastoneDefendantcanbe consideredacitizenof
Massachusetts for purposes of diversity. Therefore, diversity of citizenship exists
underCAFAas required by
28 U.S.C. 1332(d)(2)(A) because at least one Plaintiff is
diversefromoneDefendant.
25. Furthermore, Plaintiff alleges that the total number of members of the proposed Class is
greaterthan100,pursuantto
28U.S.C.1332(d)(5)(B)
.
26. Venue is proper in this District pursuant to
28 U.S.C. 1391(b)
because at least one
Defendanthasaprincipalplacesofbusinesslocatedinthisdistrictatalltimesrelevanttothis
action,andmanyoftheactschargedhereinoccurredinthisDistrict.
27. At all relevant times, Defendants committed the acts, caused, or directed others to commit
the acts, or permitted others to commit the acts alleged in this Complaint. Any allegations
about acts of the corporate Defendants means that those acts were committed through their
officers, directors, employees, agents, and/or representatives while those individuals were
actingwithintheactualorimpliedscopeoftheirauthority.
FACTS
DunkinHeadquartersSetsandControlsthePricesandFeesforPrePackagedCoffee

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28. Defendants comprise oneofthe largestbakedgoodsandcoffeestoresintheworld,withover

11,000 stores in 33 countries, and approximately 515 locations in New York, surpassing
1

Starbucksin2013asthelargestchainstoreoperatinginNewYorkCity.
29. Defendant Dunkin Brands, Inc. grants licenses to franchisees to operate Dunkin Donuts
storesinNewYork.
30. As part of the licensing franchisee agreement, Defendant Dunkin Brand, Inc. sets and
controls the prices and taxes to be assessed by each franchise store and programs them into
eachcashregister,includingthecashregistersinNewYork.
31. When Defendants sell prepackaged coffee at their New York stores, a surcharge is
automaticallyaddedontothepurchasepriceintheguiseofasalestax.
PrePackagedCoffeeisExemptFromSalesTaxinNewYork
32. In New York, most food is exempt from sales tax. Food must meet threerequirementstobe
exemptfromsalestax:i)itmustbesoldfor humanconsumption,ii)itmustbesoldunheated,
and iii) it must be sold in the same form and condition, quantities, and packaging as is
commonly used by retail food stores.
See
New York Department of Taxation and Finance
TaxBulletinST525,April13,2011.
33. Further, the New York Department of Taxation and Finance Tax Bulletin ST525 identifies
specific items that are
not tobetaxed
byretailfoodmarketsandsimilarestablishments,such
as Defendants stores. Coffee is specifically listed as exempt fromsalestax inthe Bulletin.
See
NewYorkDepartmentofTaxationandFinanceTaxBulletinST525,April13,2011.
34. If there is any doubt, the New York Department of Taxation and Finance Tax Bulletin
ST806 describes the method by which a business shoulddeterminewhetheranitemsoldby
restaurants,taverns,andsimilarestablishments,includingDefendantsistaxable.

http://nypost.com/2013/12/03/dunkindonutstopsstarbucksascityslargestchain/

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 7 of 15

35. TheTaxBulletinST806statesthefollowing,
When the food and drink is sold by a restaurant togo,itistaxableunless,i)thefood
(other than sandwiches) or drink is beingsoldunheated,and,ii)itisbeingsoldinthe
same way (in the same form, condition, quantities, and packaging) you would
normallyfinditinasupermarketorgrocerystore.

NewYorkDepartmentofTaxationandFinanceTaxBulletinST806,April13,2011.

36. Despite knowledge of Tax Bulletins ST525 and ST806, Defendants include a surchargein
the guise of a sales tax on their prepackaged coffee sold in the same form, condition,
quantities, and packaging as commonly sold in grocery stores. Indeed, the prepackaged
coffeeissoldunheatedandforoffpremiseconsumption.
37. To be sure, when Plaintiffs called the New York Department of Taxation customer service
hotline they were told by a representative that prepackaged coffee is not supposed to be
taxed under New York tax regulations because it is sold unheated, for offpremise
consumption, and in the same form, condition, quantities, and packaging as commonly sold
ingrocerystores.
38. The NewYorkDepartment ofTaxationcustomerservicehotlineisavailable foranybusiness
touse,includingDefendants.
DefendantsUnlawfullyAssessaSurchargeintheGuiseofaSalesTax

39. On December 26, 2015, Plaintiff ESTLER purchased prepackaged coffee from Defendant
DUNKINDONUTSSTORE#350125andwasassessedasurchargeof.89centsintheguise
ofsalestax,asindicatedonthePlaintiffsreceipt.
40. On December 26, 2015, Plaintiff ESTLER purchased prepackaged coffee from Defendant
DUNKINDONUTSSTORE#350126andwasassessedasurchargeof.89centsintheguise
ofsalestax,asindicatedonthePlaintiffsreceipt.

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 8 of 15

41. On December 26, 2015, Plaintiff ESTLER purchased prepackaged coffee from Defendant
DUNKIN DONUTS STORE #350127 and was assessed a surcharge of $.89 cents in the
guiseofsalestax,asindicatedonthePlaintiffsreceipt.
42. On December 29, 2015, Plaintiff ESTLER purchased prepackaged coffee from Defendant
DUNKIN DONUTS STORE #345768 and was assessed a surcharge of $.89 cents in the
guiseofsalestax,asindicatedonthePlaintiffsreceipt.
43. On January 13, 2016, Plaintiff RUEHRWEIN purchased prepackaged coffee from
Defendant DUNKIN DONUTS STORE #350125 and was assessed a surcharge of $.89
centsintheguiseofsalestax,asindicatedonthePlaintiffsreceipt.
44. On January 13, 2016, Plaintiff RUEHRWEIN purchased prepackaged coffee from
Defendant DUNKIN DONUTS STORE #350126 and was assessed a surcharge of $.89
centsintheguiseofsalestax,asindicatedonthePlaintiffsreceipt.
45. On January 13, 2016, Plaintiff RUEHRWEIN purchased prepackaged coffee from
Defendant DUNKIN DONUTS STORE #350127 and was assessed a surcharge of $.89
centsintheguiseofsalestax,asindicatedonthePlaintiffsreceipt.
46. On January 14, 2016, Plaintiff PARK purchased prepackaged coffee from Defendant
DUNKIN DONUTS STORE #350125 and was assessed a surcharge of $.89 cents in the
guiseofsalestax,asindicatedonthePlaintiffsreceipt.
47. On January 14, 2016, Plaintiff PARK purchased prepackaged coffee from Defendant
DUNKIN DONUTS STORE #350126 and was assessed a surcharge of $.89 cents in the
guiseofsalestax,asindicatedonthePlaintiffsreceipt.

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 9 of 15

48. On January 14, 2016, Plaintiff PARK purchased prepackaged coffee from Defendant
DUNKIN DONUTS STORE #350127 and was assessed a surcharge of $.89 cents in the
guiseofsalestax,asindicatedonthePlaintiffsreceipt.
DunkinDonutsisAwareofitsIllegalActionsandContinuestoFlaunttheLaw
49. Defendants are aware ofthetaxregulationspromulgatedbythe State ofNewYorkregarding
thesaleofprepackagedcoffee.
50. Despite knowledge of the tax regulations, Defendants have ignored the regulations for at
leastthepastthree(3)years.
51. Instead, Defendants have a policy and practice of adding on a surcharge to their productsin
theguiseofasalestax.
52. Defendants maintain this policy despite customer complaints and press coverage, including
thefollowing:
a.

In March 2013 an article published in www.NJ.com, Bamboozled: Coffee Tax

2

Creates Quite a Stir

, reported the story of two Dunkin Donuts customers who were
assessed 7 percent fee in the guise of a sales tax on prepackaged coffee beans
purchasedatseveralNewJerseyDunkinDonuts.
b.

According to the article, Dunkin Donuts headquarters was alerted that New

Jerseyfranchiseswereunlawfullyassessinga7percentchargeonprepackagedcoffee.
c.

According to the article, Dunkin Donuts headquarters responded, in sum and

substancethatithadaddressedtheissuewithitsfranchisees.

http://www.nj.com/business/index.ssf/2013/03/bamboozled_coffee_tax_creates.html(access
edMarch8,2015).
2

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53. Despite the publicscrutinyofNJ.comarticle,customercomplaints,andknowledgeofthetax

regulations, Defendants continue to flaunt the law by assessing asurchargeonprepackaged
coffeeintheguiseofasalestaxtothisday.

FACTSCOMMONTOTHECLASS
54. Plaintiffs bring this action as a ClassactionpursuanttoRule23ofthe FederalRulesofCivil
Procedure,onbehalfofthemselvesandallotherssimilarlysituatedasfollows:
All New York citizens who purchased fromDefendantsprepackagedcoffeeandany
other taxexempt item during the period of three (3) years from the filing of this
action to present, whom were assessed a surcharge on the purchase price of the
prepackagedcoffeeand/oranyothertaxexemptproductintheguiseofasalestax.

55. Subject to additional information obtained through further investigation and discovery, the
foregoingdefinitionoftheClassmaybeexpandedornarrowedbyamendmentorcomplaint.
56. ExcludedfromtheClassisanypersonorentityinwhichDefendanthasacontrolling
interest,andtheofficers,directors,employees,affiliates,subsidiaries,legalrepresentatives,
heirs,successors,andtheirassignsofanysuchpersonorentity,togetherwithanyimmediate
familymemberofanyofficer,director,oremployeeofsaidcompanies.Alsoexcludedfrom
membershipintheClassisanyJudgeorMagistratepresidingoverthisactionandmembers
oftheirfamilies.
57. Thisactionisproperlymaintainableasaclassaction.
58. Given thenatureofthe businessinvolved,membersoftheClassaresonumerousthatjoinder
of all members, whether otherwiserequiredorpermitted,isimpracticable.Theexactnumber
ofClassmembersandtheiraddressescanbedeterminedthroughappropriatediscovery.
59. PlaintiffsaremembersoftheClasstheyseektorepresent.
60. The Class is believed to include more than 1,000 customers. As aresult,joinderofallclass

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 11 of 15

membersinasingleactionisimpracticable.
61. ThereareimportantquestionsoflaworfactcommontotheentireClass,including:
a.

whether Defendants have a policy and practice of assessing a surcharge in the

guiseofasalestaxonprepackagedcoffeeand/orothertaxexemptproducts
b.

whetherDefendantsactionsviolatedGBL349(NewYorkDeceptiveBusiness

PracticesAct)
c.

whetherDefendantsconductconstitutedabreachofcontract

d.

whetherDefendantsconductconstitutedunjustenrichment

e.

whetherDefendantsconductconstitutednegligence

f.

whetherDefendantsconductconstitutedfraud

g.

whether Plaintiffs and the members of the Class are entitled to damages,

includingtrebledamagesand
h.

whetherDefendantsprofitedfromtheunlawfulpracticesdescribedherein.

62. Plaintiffs claims are typical of the claims oftheClass,andPlaintiffshavethesameinterests

astheotherClassmembers.
63. Plaintiffs will fairly and adequately represent and protecttheinterestsofthe Class.Plaintiffs
have retained able counsel with extensive experience in breach of contract, consumer fraud
and class action litigation. The interests of the Plaintiffs are coincident with, and not
antagonisticto,theinterestsoftheotherClassmembers.
64. Defendants misconduct alleged in this Complaint is generally applicable to, and indeed
directly affects, the entire Class. Accordingly, finalinjunctivereliefwithrespecttotheClass
asawholeisappropriateandwarranted.
65. The prosecution of separate actions by individual members of the Class would create a risk

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 12 of 15

of inconsistent or varying adjudications with respect to individual Class members, which

wouldestablishincompatiblestandardsofconductforDefendant.
66. A Class action is superiortootheravailable methodsforthefairandefficient adjudicationof
this controversy. Because the damages suffered by individual members of the Class may be
relatively small, the expense and burden of individual litigation make it impossible for the
members of the Class individually to redress the wrongs done to them. The Class is readily
definable, and prosecution of this action as a Class action will eliminate the possibility of
repetitious litigation. Plaintiffs willencounternodifficulty inmanagingthisactionasaClass
action.

COUNTONE
VIOLATIONSOFNEWYORKGENERALBUSINESSLAW

349

67. The allegations contained in each paragraph set forth above in this Complaint are
incorporatedbyreferenceasiffullysetforthherein.
68. Plaintiffs and the members of the Class are customers of Defendants. Plaintiffs bring this
actionpursuanttoNewYorkGeneralBusinessLaw349.
69. Defendants have engaged in deceptive practices by assessing a surcharge on the sale of
prepackagedcoffeeand/orothertaxexemptproductsundertheguiseofasalestax.
70. Such actions and failures to act have caused direct, foreseeable, and proximate damages to
PlaintiffsandothermembersoftheClass.

COUNTTWO
BREACHOFCONTRACT

71. The allegations contained in each paragraph set forth above in this Complaint are
incorporatedbyreferenceasiffullysetforthherein.

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72. Defendants misconductconstitutesa materialbreachofcontract,and abreachoftheimplied

covenantofgoodfaithandfairdealing.
73. Assuch,PlaintiffsandtheClasshavebeeninjured.
COUNTTHREE
UNJUSTENRICHMENT

74. The allegations contained in each paragraph set forth above in this Complaint are
incorporatedbyreferenceasiffullysetforthherein.
75. Defendants, through their wrongful conduct described above, have reaped substantial
financialbenefitsattheexpenseofplaintiffs.
76. Defendantsprofitswouldhavebeenreduced,butfortheirwrongfulandunlawfulconduct.
77. Accordingly, Defendants have been unjustly enriched by their unlawful and wrongful
conduct. Defendants should not be allowed to retain the proceeds and benefits conferred
uponthembyPlaintiffsandtheClass.
78. In equity and good conscience, it would be unjust and inequitable to permit Defendants to
enrichthemselvesatPlaintiffsandtheClassexpense.
79. Therefore, Defendants must disgorge their unjustly acquired profits and other monetary
benefits resulting from their unlawful conduct and provide restitution to Plaintiffs and the
Class.
COUNTFOUR
NEGLIGENCE

80. TheallegationscontainedineachparagraphsetforthaboveinthisComplaintare
incorporatedbyreferenceasiffullysetforthherein.

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81. Defendants breached a duty to Plaintiffs and the Class members by failing to properly train
theiragents,resultingintheaforementioneddamages.
COUNTFIVE
FRAUD

82. The allegations contained in each paragraph set forth above in this Complaint are
incorporatedbyreferenceasiffullysetforthherein.
83. Defendants willful and material misrepresentations to Plaintiffs and the Class, which
PlaintiffsandtheClassreasonablyreliedupon,resultedintheaforementioneddamages.

WHEREFORE, Plaintiffs, individually, and on behalf of the Class, prays for

judgment,asfollows:
a.

declare this action to be a proper Class actionandcertifyPlaintiffsasrepresentatives

and Counsel as Class Counsel of the Class, and enter an order requiring Defendants to bear
thecostsofthenoticeunderRule23oftheFederalRulesofProcedure
b.

order Defendants to reimburse PlaintiffsandmembersoftheClassduetoDefendants

deceptivepractices
c.

orderDefendantstodisgorgeallprofitsmadeasaresultofitsdeceptivepractices

d.

award Plaintiffs and Class members their cost and disbursements incurred in

connection with this action,includingreasonableattorneysfees,andexpertsfees,andother

expensesincurredinprosecutingthisaction
e.

grantpunitivedamages,prejudgmentandpostjudgmentinterestand

f.

othersuchreliefastheCourtmaydeemjustandproper.

JURYTRIALDEMANDED

Case 1:16-cv-00932 Document 1 Filed 02/08/16 Page 15 of 15

Plaintiffsherebydemandatrialbyjury.
Dated:

February8,2016
NewYork,NY

Respectfullysubmitted,

MAYERLAWGROUP,LLC

s/CarlJ.Mayer
CarlJ.Mayer,Esq.
ZacharyJ.Liszka,Esq.
1180AvenueoftheAmericas,Suite800
NewYork,NY10036
phone:(212)3824686
fax:(212)3824687
cyberesquire@aol.com
zachliszka@gmail.com

LAWOFFICEOFTEDM.ROSENBERG

TedM.Rosenberg,Esq.ID#033562011
RobertRosenberg,Esq.ID#015121981
321NewAlbanyRd.
Moorestown,NJ08057
(856)6089999

AttorneysforthePlaintiffsandtheClass