Yabsley

Respondent Cingular Wireless, LLC (Cingular), advertises a cellular phone for sale at half the retail price if the purchaser also enrolls in a calling plan package. The California Code of Regulations requires that the sales tax must be computed against the nonsale price of the product. The regulation permits, but does not require, that the charge be passed on to the customer. Cingular does so without informing the customer prior to sale that the tax will be based on the full price of the cell phone. The amount of tax is shown on the sales invoice furnished to the customer at the time of sale.

Appellant Richard Yabsley alleges that Cingular engaged in unfair competition in violation of Business and Professions Code section 17200 [1] and misleading advertising in violation of section 17500 by failing to inform the consumer that the tax would be imposed on the full price of the cell phone. The trial court sustained Cingular's demurrer to Yabsley's first amended complaint without leave to amend finding that the provisions of California Code of Regulations, title 18, section 1585 (Regulation 1585) [2] requiring the payment of such a tax provided a "safe harbor" from a…