Wisconsin Department of Revenue v. William Wrigley, Jr., Company

PETITIONER: Wisconsin Department of Revenue
RESPONDENT: William Wrigley, Jr., Company
LOCATION: Office of Walter Nixon, Souther District Court of MS

DOCKET NO.: 91-119
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: Wisconsin Supreme Court

CITATION: 505 US 214 (1992)
ARGUED: Jan 22, 1992
DECIDED: Jun 19, 1992

E. Barrett Prettyman, Jr. - on behalf of the Respondent
F. Thomas Creeron, III - on behalf of the Petitioner

Facts of the case


Media for Wisconsin Department of Revenue v. William Wrigley, Jr., Company

Audio Transcription for Oral Argument - January 22, 1992 in Wisconsin Department of Revenue v. William Wrigley, Jr., Company

Audio Transcription for Opinion Announcement - June 19, 1992 in Wisconsin Department of Revenue v. William Wrigley, Jr., Company

William H. Rehnquist:

The opinion of the Court in No. 91-119, Wisconsin Department of Revenue versus William Wrigley, Jr., Company will be announced by Justice Scalia.

Antonin Scalia:

This is a petition for writ of certiorari to the Supreme Court of Wisconsin.

Between 1973 and 1978 the respondent, William Wrigley, Jr., Company, a Chicago-based corporation, sold chewing gum in Wisconsin through a sales force consisting of a regional manager and various field representatives, all of whom engaged in various activities in addition to just requesting orders from customers.

Wisconsin orders were sent to Chicago for acceptance and were filled by shipment through common carrier from outside of Wisconsin.

In 1980, the petitioner here, Wisconsin Department of Revenue, concluded that Wrigley's in-state business activities during the years in question had been sufficient to support Wisconsin's imposition of a franchise tax on the corporation.

Wrigley maintained that it was immune from the tax under Section 381(a) of Title 15 of the United States Code.

That section prohibits a state from taxing the income of a corporation whose only business activities within the state consist of "solicitation of orders" for tangible goods.

Provided that the orders are sent outside the state for approval and the goods are delivered from out of state.

Ultimately, the Wisconsin Supreme Court disallowed the tax.

Obviously, the statutory phrase, "solicitation of orders", includes any speech or conduct that explicitly or implicitly proposes a sale.

We think it must mean more than that, however.

If the statute is not to be rendered a practical nullity, solicitation must also cover the entire process associated with inviting an order.

On the other hand, the statutory phrase should not be interpreted so broadly as to include all activities that are routinely or even closely associated with solicitation or customarily performed by salesmen.

In our view, solicitation of orders as used in Section 381(a) covers those activities that are entirely ancillary to requests for purchases, that is, those activities that serve no independent business function apart from their connection to the soliciting of orders.

Those activities that the company would have reason to engage in any way but simply chooses to allocate to its in-state sales force are not covered.

We also conclude that there is a de minimis exception to the activities that forfeit the statutory immunity, the legal maxim de minimis non curat lex, the law does not take account of trifles.

Whether a particular activity is sufficiently de minimis to avoid the loss of the statutory immunity depends upon whether that activity establishes a non-trivial additional connection to the state.

Applying these standards, we conclude that Wrigley's Wisconsin business activities were not limited to the solicitation of orders.

The sales representative's practice of replacing stale gum, for example, served an independent business function since Wrigley would need to take care of spoiled goods even if it did not have a sales force.

Similarly, the representative's occasional sales to retailers who had agreed to install new display racks obviously served the independent purpose of earning a profit on those items.

And because the vast majority of the gum stored by Wrigley in Wisconsin was used in connection with these activities, that storage and the indirect rental of space for that storage was in no sense ancillary to solicitation.

Moreover, these non-immune activities when considered all together are not de minimis.

Accordingly, we conclude that Wrigley was not entitled to tax immunity under the statute and we, therefore, reverse the judgment of the Wisconsin Supreme Court.

Justice O'Connor has filed an opinion concurring in part and concurring in the judgment; Justice Kennedy has filed a dissenting opinion in which the Chief Justice and Justice Blackmun join.