Dave Stafford for www.theindianalwyer.com
A Fort Wayne attorney’s lawsuit alleging Kroger stores in Indiana have for years knowingly failed to collect and remit state sales tax on hundreds of non-exempt food items and other goods will be heard in state court after a judge denied the grocers’ bid to transfer the suit to federal court.
Michael D. Harmeyer filed a whistleblower complaint in Marion Superior Court in which he alleges more than 1,400 unique items were purchased since 2014 at Kroger and affiliated stores in Indiana where sales tax should have been collected but wasn’t. The products range from candy and prepared foods to magazines, kitchenware and trees.
Harmeyer presented his findings to the Indiana Attorney General’s Office as a qui tam complaint under the Indiana False Claims Act that would entitle him to a percentage of any amount recovered on behalf of the state. Last year, though, the attorney general’s office and Office of the Inspector General declined to intervene in the case, according to the record, but Harmeyer proceeded with the case.
Citing the state’s refusal to intervene among other things, Kroger moved to venue the complaint in federal court, but Chief Judge Jane Magnus-Stinson this week denied the motion in the District Court for the Southern District of Indiana in Indianapolis. She ruled that even though Indiana officials didn’t intervene in Harmeyer’s complaint, the state was nevertheless a real party in interest in the case, and the federal court therefore lacked jurisdiction to hear the dispute. The suit was remanded to Marion Superior Court for further proceedings.
The state court record includes Harmeyer’s itemized, 122-page shopping list spreadsheet that lists dates and stores where he says items were purchased that he alleges do not qualify for Indiana’s food sales tax exemption. The items were purchased at Kroger, and at Food 4 Less, Jay C, Owen’s, Pay Less Super Markets, Ruler Foods and Scott’s Food and Pharmacy stores that operate under Kroger’s corporate umbrella, almost always with no tax paid. The spreadsheet also includes dates and purchases of a few similar goods at non-Kroger grocers such as Meijer and Walmart, and the amount of tax that was paid at those stores.
Under the Indiana False Claims Act, a whistleblower is entitled to 15 to 25 percent of any amount recovered if the state intervenes, or 25 to 30 percent if the state does not.
Harmeyer and the attorneys who represent him, Helmer Martins, Rice & Popham of Cincinnati, did not immediately reply to messages seeking comment Friday, nor did attorneys who represent Cincinnati-based Kroger in this action, Smith Fisher Maas Howard & Lloyd of Indianapolis. A Kroger spokesperson also did not immediately reply to messages seeking comment Friday.
The suit is State of Indiana ex. rel Harmeyer v. The Kroger Co. et al., 1:17-cv-538.
