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Court of Appeal, Second District, Division 2, California.

SAV-ON DRUGS, INC., a corporation, Petitioner, v. SUPERIOR COURT of the State of California, FOR the COUNTY OF LOS ANGELES, Respondent; Allen E. BOTNEY, in behalf of himself and all others similarly situated, Real Party in Interest.

Civ. 44192.

Decided: September 05, 1974

Lawler, Felix & Hall, Richard D. DeLuce, Bruce R. Corbett, Los Angeles, for petitioner. No appearance for respondent court. Allen E. Botney, Encino, for real party in interest.

Real party in interest as plaintiff is a retail consumer and patron of defendants and on behalf of himself and those similarly situated (Consumers), has pending a class action against Sav-On and five other named and various DOE defendants operating retail super markets (Retailers), to recover for himself and Consumers an amount equal to the excess sales tax reimbursement charged to Consumers by Retailers for purchases made by Consumers for the years 1967–1971, both inclusive.

It is alleged that Consumers paid to Retailers a sales tax on purchases, which tax Retailers collect for the State of California; Retailers issue trading stamps on such purchases to Consumers in proportion to the amount of the purchases, but transmit to the State a tax on the total amount of the purchase after the cost of the stamps has been deducted from the total purchase price paid by the Consumers. Revenue & Taxation Code section 6054.5 makes it unlawful for any person to retain sales taxes paid by a consumer and collected by a retailer for payment to State.

The Board of Equalization, recognizing that stamps are issued and that retailers do discount the cost thereof from gross receipts, has, to prevent a violation of section 6054.5, promulgated a Regulation published as California Administration Code section 1700(d)(2)(B)2 (Stamp Regulation).

Petitioner on behalf of the named defendants contends that the applicable law of State and controlling regulations enacted by the State Board of Equalization have been complied with.

Consumers allege that none of the three methods of Stamp Regulation were com plied with and that Retailers retained a portion of the excess tax reimbursements paid by Consumers and, as a consequence, Retailers were unjustly enriched in an amount ‘considerably more than $250,000’ and Consumers ask leave ‘to insert the exact amount * * * when the same becomes known * * *.‘

Petitioner Sav-On objected to Consumers' Interrogatories 40, 41 and 42 in a fourth set of interrogatories served upon it by Consumers.

The thrust of the petitioners' objections in respect of the interrogatories is that the questions call for confidential and privileged information. Petitioner relies on section 7056 of the Revenue & Taxation Code. (Webb v. Standard Oil Co. (1957) 49 Cal.2d 509, 319 P.2d 621; Aday v. Superior Court (1961) 55 Cal.2d 789, 796, 13 Cal.Rptr. 415, 362 P.2d 147; Crest Catering Co. v. Superior Court (1965) 62 Cal.2d 274, 277, 42 Cal.Rptr. 110, 398 P.2d 150.)

Petitioner was ordered to answer and requests this court to prohibit the trial court from enforcing its order.

In essence Consumers seek by the numbered interrogatories to obtain information as to the difference, if any, in the amount of sales tax reimbursements charged to Consumers and the amount thereof paid to State.

Interrogatory 40 refers to Interrogatory 35, which reads: ‘In connection with taxable retail sales in which defendant Sav-On Drugs, Inc. dispensed Blue Chip trading stamps, was the amount of cash collected by defendant as sales tax reimbursement greater than that paid by it as sales taxes.’ Petitioner answered: ‘No, when the permissible deductions and adjustments allowed by the laws of California are properly considered in the payment of the sales tax.’

The real party in interest complained that the interrogatory called for a simple ‘yes' or ‘no’ answer and that petitioner's response was ‘evasive to the point of being meaningless.’ The trial court stated in its Minute Order of April 1, 1974: ‘If plaintiff wishes he may address further inquiry to the qualification placed on the answer to that interrogatory.’ Interrogatory 40 seeks specific information for the years 1967–1971, inclusive, as to any deductions or adjustments made by Retailers in respect of sales tax returns and the regulation or law which permits them. 41 inquiries whether for the years stated Retailers filed Combined State and Local Sales & Use Tax Returns with Board of Equalization on a form attached, and 42 inquiries where copies of the forms so filed are located; who has possession of the copies and asks whether such copies would be voluntarily made available to Consumers for examination or copying.

In pertinent part section 7056 of Revenue & Taxation Code provides: ‘* * * it is unlawful for the board or any person having an administrative duty under this part to make known in any manner whatever the business affairs, operations, or any other information pertaining to any retailer or any other person required to report to the board or pay a tax pursuant to this part, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any return, or to permit any return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person.’

The language of section 7056 governing sales tax is substantially similar to the statute which applies to the other tax returns, we assume it is logical and fair to apply it to sales tax returns.

Webb, Aday and Crest cited by petitioners hold that a court may not require production of personal, corporate and employment tax returns. None of the interrogatories at bench are addressed to Board of Equalization and none of the interrogatories request petitioners or any Retailers to produce copies of any tax returns.

Since all or some of the information sought by Consumers is presumably availa ble to petitioners and other Retailers from their books and records and to the extent that such information is available such information is not governed by the limitations set forth in the statute or the cases cited.

Petitioners charge that Consumers seek to accomplish indirectly what cannot be done directly. However, neither the statute or the cases cited authorize a litigant to refuse to produce information relevant and material in a lawsuit. Retailers could be required at the time upon proper subpoena or notice to produce books, etc. (Code Civ.Proc., § 2031) containing evidence in respect of the numbered questions. We find no reason why it should not be provided in discovery proceedings. (Oceanside Union School Dist. v. Superior Court (1962) 58 Cal.2d 180, 190, 23 Cal.Rptr. 375, 373 P.2d 439.)

This court will not anticipate that Consumers in the future may make a demand upon the Board of Equalization for the information requested in the numbered interrogatories or a demand upon Retailers for copies of their tax returns.

Alternate writ heretofore issued is vacated; the Order to Show Cause is discharged; the petition is denied and the order of the trial court affirmed.

I see no real difference between a retailer being forced to produce his tax returns and being forced by the use of discovery procedures to provide to a vexatious litigant the information which is contained thereon. If Sav-On Drugs, Inc. is in fact over-collecting or underpaying sales tax, the problem is one for the State Board of Equalization.

In my opinion, law suits such as the present one are nothing more than calculated harassment of legitimate businesses and can serve no valid purpose other than to provide fees for the lawyers who generate this type of litigation.

Forcing Sav-On Drugs to disclose the kind of information here sought creates a dangerous precedent which, if followed to its logical extreme, can completely destroy the confidentiality of tax records. I would grant the writ.

ROTH, Presiding Justice.

FLEMING, J., concurs.