By LawInspectsVictoria Secret Class Action Lawsuit involves the plaintiff Abraham Lizama and Victoria’s Secret, and concerns allegations that Victoria’s Secret overcharged its customers for sales tax on purchases delivered to addresses in the state of Missouri from facilities located outside the state. Victoria’s Secret LLC is a brand which sells lingerie, clothing and beauty products through its retail stores and a dedicated online store.
The class action lawsuit against Victoria’s Secret was filed by Abraham Lizama, alleging that the company violated the Missouri Merchandizing Practices Act by assessing tax rates on online purchases delivered to locations within Missouri at a higher rate than required by the tax code of Missouri. As per the latest news, Victoria’s Secret has agreed to a settlement in order to resolve the claims made in the class action lawsuit.
Details of the Class Action Lawsuit against Victoria’s Secret
In June 2021, Abraham Lizama, on behalf of himself and other similarly affected customers, filed a class action lawsuit against Victoria’s Secret in a district court in Missouri. The defendants named in the lawsuit are Victoria’s Secret Stores, LLC and Victoria’s Secret Direct, LLC, collectively known as Victoria’s Secret.
The 15-page Victoria Secret Class Action Lawsuit alleged that Victoria’s Secret Stores, LLC and Victoria’s Secret Direct, LLC charged taxes on purchases delivered to addresses in Missouri from outside the state at a much higher rate than Missouri’s use tax rate of 4.225% for goods shipped to customers within the state from an out-of-state facility.
According to the lawsuit, interstate sales in Missouri are taxed at a rate of 4.225% in addition to any applicable sales tax. However, retail sales as may be made in commerce between Missouri and any other state of the United States, is exempted from sales tax, which is known as “in commerce” exemption. The “in commerce” exemption is subjected to taxation under Missouri’s use tax law. Thus, any taxable transaction involving in-bound transfer of a tangible personal property from a location outside Missouri to a purchaser in Missouri is exempted from sales tax but is subjected to the compensating use tax. In this scenario, Victoria’s Secret was required by law to charge a use tax at the rate of 4.225%, and any local use tax applicable at the delivery address of a purchaser. Instead, the company charged sales tax at a higher rate than the use tax rate of 4.225% on orders placed through its website or remotely, which were shipped to addresses in Missouri from out-of-state facilities.
The plaintiff, Abraham Lizama, cited his own example in the lawsuit. Lizama claimed he purchased multiple products from Victoria’s Secret website for delivery to an address in Chesterfield, Missouri. Since the items were shipped from outside the state, the applicable use tax on the same was 4.225%, but Victoria’s Secret charged sales tax at the rate of 8.740% which was much greater than the legally applicable tax.
Victoria Secret Class Action Lawsuit sought compensatory damages for Lizama and other affected customers, along with attorney’s fees and a permanent injunction directing Victoria’s Secret to refrain from collecting excess tax in the future.
Court Proceedings
A district court in Missouri remanded the Victoria Secret Class Action Lawsuit to state court. This order was appealed by Victoria’s Secret Stores, LLC and Victoria’s Secret Direct, LLC in the United States Eighth Circuit of Appeals. While the defendants appealed to move the lawsuit to the federal district court under the Class Action Fairness Act, the plaintiff moved to remand the case to state court.
Lizama argued that Victoria’s Secret failed to establish that the amount in controversy exceeds $5 million. Victoria’s Secret, on the other hand, argued that the injunctive relief of $1.7 million must be added to the $3.3 million which both parties agreed to be in controversy. It is pertinent to note here that $5 million is the threshold amount for federal diversity jurisdiction in a class action lawsuit where a member of the class and defendant are from different states.
In June 2022, the US Eighth Circuit Court of Appeals denied the appeal moved by Victoria’s Secret, and remanded the lawsuit to the Circuit Court of St. Louis County, Missouri.
Settlement
In March 2025, Victoria’s Secret agreed to a settlement in the class action lawsuit. Missouri residents who purchased at least one product from the company’s website between May 18, 2016 and May 18, 2023, and the product was shipped from outside Missouri, are eligible for compensation. Moreover, purchases made at a higher tax rate than the vendor’s use tax rate also qualify.
The final approval hearing for the settlement agreement is scheduled for June 2, 2025.