Case Title: Santa Fe Natural Tobacco Co. v. Dept. of Rev.

Citation: 

Docket Number: S069820

State: oregon

Court: Oregon Supreme Court

Date: 2024-06-20T00:00:00Z

Document:
No. 23	
June 20, 2024	
509
IN THE SUPREME COURT OF THE
 STATE OF OREGON
SANTA FE NATURAL TOBACCO COMPANY,
Plaintiff-Appellant,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant-Respondent.
(TC 5372) (SC S069820)
En Banc
On appeal from the Oregon Tax Court.*
Robert T. Manicke, Judge.
Argued and submitted November 9, 2023.
Mitchell A. Newmark, Blank Rome LLP, New York, 
argued the cause and filed the briefs for appellant. Also 
on the briefs were Eugene J. Gibilaro, Blank Rome LLP, 
New York, and Carol Vogt Lavine, Carol Vogt Lavine, LLC, 
Milwaukie.
Darren Weirnick, Assistant Attorney General, Salem, 
argued the cause and filed the briefs for respondent. Also 
on the briefs were Ellen F. Rosenblum, Attorney General, 
Benjamin Gutman, Solicitor General, and Dustin Buehler, 
Assistant Attorney General.
MASIH, J.
The judgment of the Tax Court is affirmed.
______________
	
*  25 OTR 124 (2022).
510	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
Cite as 372 Or 509 (2024)	
511
	
MASIH, J.
	
This appeal concerns whether Santa Fe Natural 
Tobacco Company (“Santa Fe”) is liable for Oregon income 
tax for tax years 2010-13. Santa Fe is a New Mexico cor-
poration selling branded tobacco products to wholesalers, 
who in turn sell to Oregon retailers. The primary issue is 
whether a federal statutory limit on a state’s ability to impose 
income tax on out-of-state corporations, 15 USC section 381 
(“Section 381,” frequently also referred to as “Public Law 
86-272”), precludes Oregon from taxing Santa Fe because its 
business in Oregon is limited. In its simplest form, Section 
381 creates a safe harbor against state income tax for out-
of-state businesses that limit their in-state actions to the 
“solicitation of orders,” provided that the orders are accepted 
out of state and the goods are shipped from out of state. The 
Oregon Department of Revenue (department) concluded 
that Santa Fe’s various actions in Oregon had taken it out­
side the safe harbor of Section 381, thus rendering Santa 
Fe liable to pay Oregon tax. The Tax Court agreed with the 
department that Santa Fe’s actions had made it subject to 
taxation in this state. Santa Fe Natural Tobacco Co. v. Dept. 
of Rev., 25 OTR 124, 165 (2022).1
	
Santa Fe has appealed that decision. For the rea­
sons that follow, we agree with the Tax Court that Santa 
Fe, by having its representatives take “prebook orders” 
from Oregon retailers, took itself outside the safe harbor of 
Section 381(a)(2). Accordingly, we conclude that Santa Fe is 
subject to tax by this state, and we affirm the judgment of 
the Tax Court.2
	
1  Strictly speaking, the tax at issue is Oregon’s corporate excise tax, rather 
than its corporate income tax. Those taxes are related but distinct. See Capital 
One Auto Fin. Inc. v. Dept. of Rev., 363 Or 441, 442-45, 423 P3d 80 (2018) (so 
explaining). The distinction, however, does not affect the proper resolution of the 
issues here; the parties do not dispute that, if the federal statute applies, it pro­
tects Santa Fe against being subject to Oregon’s corporate excise tax. See 15 USC 
§ 383 (“For purposes of this chapter, the term ‘net income tax’ means any tax 
imposed on, or measured by, net income.”). To avoid confusing shifts of terminol­
ogy, we will use the term “income tax” as a shorthand throughout this opinion.
	
2  We need not reach the department’s other contentions or the other aspects 
of the Tax Court’s holding, for reasons discussed at 372 Or at 526 n 12.
512	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
I.  BACKGROUND LAW
	
As noted, the issue in this case involves the proper 
interpretation of 15 USC section 381. As explained below, 
Congress enacted that law because the United States 
Supreme Court’s prior interpretation of constitutional limits 
on state power to tax out-of-state businesses had resulted 
in too much uncertainty. We begin by summarizing the cir­
cumstances that led Congress to enact that statute, then 
turn to an overview of the statute itself.
A.  Prior Law Regarding State Taxation of Interstate 
Commerce
	
The Commerce Clause of the United States 
Constitution gives Congress plenary authority to control
state taxation of interstate commerce, but for most of the 
nation’s existence Congress had never exercised it. Jerome 
R. Hellerstein, Foreword: State Taxation under the Commerce 
Clause: An Historical Perspective, 29 Vand L Rev 335, 335 
(1976); see also US Const, Art I, § 8, cl 3 (setting out Commerce 
Clause). As a result, the only limits on state taxation of inter­
state commerce were imposed by the United States Supreme 
Court, mainly as “violations of the unexercised power of 
Congress to regulate interstate commerce.” Id. (so noting and 
adding that due process and equal protection were involved to 
a lesser extent).3 Up until the New Deal Era, that amounted 
to a simple prohibition on states taxing interstate com­
merce. See Jerome R. Hellerstein, State Franchise Taxation 
of Interstate Businesses, 4 Tax L Rev 95, 95 (1948) (noting “the 
traditional view that under the Commerce Clause interstate 
commerce may not be taxed at all”).
	
During that earlier period, the Supreme Court had 
observed a distinction between “drummers” and “peddlers.” 
Itinerant salespeople carrying goods for immediate delivery 
after sale were classified as “peddlers”; they were considered 
	
3  The underlying restriction comes from an aspect of the Commerce Clause. 
The Commerce Clause itself grants positive authority for Congress “[t]o regulate 
Commerce * 
* 
* among the several States.” US Const, Art I, § 8, cl 3. The United 
States Supreme Court, however, has “consistently held this language to contain a 
further, negative command, known as the dormant Commerce Clause, prohibiting 
certain state taxation even when Congress has failed to legislate on the subject.” 
Comptroller of Treasury of Maryland v. Wynne, 575 US 542, 548-49, 135 S Ct 1787, 
1794, 191 L Ed 2d 813 (2015) (internal quotation marks and citation omitted).
Cite as 372 Or 509 (2024)	
513
to be engaged in intrastate commerce and thus subject to 
state taxation. Comment, Taxation of Itinerant Salesmen, 40 
Yale LJ 1094, 1094-95 (1931) (discussing distinction and cit­
ing cases); Andrew T. Hoyne, Public Law 86-272 - Solicitation 
of Orders, 27 St Louis U LJ 171, 181-82 (1983) (same, and 
including more recent decisions); see, e.g., Memphis Steam 
Laundry v. Stone, 342 US 389, 394 & n 12, 72 S Ct 424, 427, 
96 L Ed 436 (1952) (explaining that the Court “has sustained 
state taxation upon itinerant hawkers and peddlers on the 
ground that the local sale and delivery of goods is an essen­
tially intrastate process whether a retailer operates from a 
fixed location or from a wagon”). By contrast, itinerant sales­
people who solicited orders for goods that would be later deliv­
ered from outside the state were classified as “drummers”; 
they were considered to be engaged in interstate commerce 
because they were only “drumming” up business, not selling 
and delivering products within the state, so they were con­
sidered immune from state and local taxation. Comment, 40 
Yale LJ at 1094-95; Hoyne, 27 St Louis U LJ at 181-82; see, 
e.g., West Point Grocery Co. v. Opelika, 354 US 390, 391, 77 
S Ct 1096, 1097, 1 L Ed 2d 1420 (1957) (holding that “a munic­
ipality may not impose a * 
* 
* tax on an interstate enterprise 
whose only contact with the municipality is the solicitation of 
orders and the subsequent delivery of goods at the end of an 
uninterrupted movement in interstate commerce”).
	
That understanding of the Commerce Clause grad­
ually changed during the twentieth century, when the 
Supreme Court began to allow states to tax a broader range 
of activities than would have been permitted by the earlier 
blanket protection against taxing interstate commerce.
“[S]uch levies were [now] regarded as invalid only if the 
Court thought they subjected interstate commerce to a 
risk of multiple taxation not borne by local commerce.” 
Hellerstein, 29 Vand L Rev at 337. As long as each state’s 
tax was apportioned to reasonably measure that state’s 
nexus with income, it was constitutional. Id.4
	
4  The current test for the constitutionality of state taxation of interstate com­
merce is somewhat more complex. As the United States Supreme Court noted in 
Complete Auto Transit, Inc. v. Brady, 430 US 274, 97 S Ct 1076, 51 L Ed 2d 326, 
reh’g den, 430 US 976 (1977), the Commerce Clause does not prohibit state taxa­
tion of interstate commerce as long as “the tax is applied to an activity with a sub­
stantial nexus with the taxing State, is fairly apportioned, does not discriminate 
514	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
B.  Enactment of Section 381
	
Three decisions by the Court in 1959, however, led 
Congress to have substantial concerns about the state of the 
law. That year, the Court decided Northwestern Cement Co. 
v. Minn., 358 US 450, 79 S Ct 357, 3 L Ed 2d 421 (1959), fol­
lowed shortly afterward by the Court dismissing an appeal 
in Brown-Forman Distillers Corp. v. Collector of Revenue, 
234 La 651, 101 So 2d 70 (1958), appeal dismissed, 359 US 
28 (1959), and then denying certiorari in International Shoe 
Co. v. Fontenot, 236 La 279, 280, 107 So 2d 640 (1958), cert 
den, 359 US 984 (1959). The details of those rulings are not 
important here, but all three decisions effectively upheld a 
state’s ability to tax out-of-state businesses whose in-state 
activities were largely limited to the solicitation of orders.5
	
Congress became concerned that the constitutional 
standards for when an out-of-state business could be subject 
to state income tax were so unpredictable that that lack of 
predictability would itself burden interstate commerce. See 
Heublein, Inc. v. South Carolina Tax Comm’n, 409 US 275, 280 
n 5, 93 S Ct 483, 34 L Ed 2d 472 (1972) (“ ‘Persons engaged in 
interstate commerce are in doubt as to the amount of local 
activities within a State that will be regarded as forming 
a sufficient “nexus,” that is, connection, with the State to 
support the imposition of a tax on net income from inter­
state operations * 
* 
*.’ 
” (Quoting S Rep No. 658, 86th Cong, 
1st Sess at 2-3.)). The burden of compliance could be sub­
stantial, especially for small or medium-sized businesses. 
They might have to “file tax returns in what may eventually 
be each of the 50 States as well as an unpredictable num­
ber of cities, even where the firm maintains no fixed estab­
lishment in those States and cities.” HR Rep No. 936, 86th 
Cong, 1st Sess, at 2. That would require those businesses to 
against interstate commerce, and is fairly related to the services provided by the 
State.” Id. at 279 (summarizing prior case law). See Charles A. Trost, Federal 
Limitations on State and Local Tax § 2:22 (Westlaw 2d ed, updated Nov 2023) 
(identifying Complete Auto Transit as the “landmark case” on the subject).
	
5  Those decisions are reviewed briefly in Wis. Dep’t of Revenue v. William 
Wrigley, Jr., Co., 505 US 214, 220-21, 112 S Ct 2447, 120 L Ed 2d 174 (1992). 
Substantially more details on all three decisions are available in Brian S. 
Gillman, Wisconsin Department of Revenue v. William Wrigley, Jr., Co.: A Step 
out of the Definitional Quagmire of Section 381, 78 Iowa L Rev 1169, 1171-75 
(1993).
Cite as 372 Or 509 (2024)	
515
retain “legal counsel and accountants who are familiar with 
the tax practice of each jurisdiction.” Id. The result would be 
“increases in overhead charges, in some cases to an extent 
that will make it uneconomical for a small business to sell 
at all in areas where volume is small.” Id.
	
Those concerns led Congress to enact Section 381. 
See Wisconsin Dept. of Revenue v. William Wrigley, Jr., Co., 
505 US 214, 222, 112 S Ct 2447, 2453, 120 L Ed 2d 174 (1992) 
(so explaining); Paul E. Guttormsson, Gumming Up the 
Works: How the Supreme Court’s Wrigley Opinion Redefined 
Solicitation of Orders under the Interstate Commerce Tax Act 
(15 U.S.C. 381), 1993 Wis L Rev 1375, 1379-80 (1993); Paul 
J. Hartman, Solicitation and Delivery under Public Law 
86-272: An Uncharted Course, 29 Vand L Rev 353, 358-59 
(1976).
C.  Relevant Provisions of Section 381
	
The case before us involves Section 381(a). Section 
381(a), which has two related restrictions, provides, in part:
	
“(a)  Minimum standards. No State * 
* 
* shall have 
power to impose * 
* 
* a net income tax on the income derived 
within such State by any person from interstate commerce 
if the only business activities within such State by or on 
behalf of such person during such taxable year are either, 
or both, of the following:
	
“(1)  the solicitation of orders by such person, or his 
representative, in such State for sales of tangible per­
sonal property, which orders are sent outside the State for 
approval or rejection, and, if approved, are filled by ship­
ment or delivery from a point outside the State; and
	
“(2)  the solicitation of orders by such person, or his rep­
resentative, in such State in the name of or for the benefit 
of a prospective customer of such person, if orders by such 
customer to such person to enable such customer to fill 
orders resulting from such solicitation are orders described 
in paragraph (1).”
	
The first provision, Section 381(a)(1), generally pro­
tects an out-of-state business from taxation so long as it 
restricts the actions of its representatives to the solicitation 
of orders for sales within the taxing state. The solicitation 
516	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
must stop short of closing the sale, though; the order must 
be accepted outside the state, and the goods must be shipped 
from outside the state. 15 USC § 381(a)(1); see Charles A. 
Trost, Federal Limitations on State and Local Tax §  10:9 
(Westlaw 2d ed, Nov 2023 update) (summarizing provision).6
	
The requirement that the order be accepted outside 
the taxing state implies an actual decision taking place out­
side the state. As one commentator noted:
“[I]n-state acts which tend to diminish the need for or 
make a total sham of the already highly formal out-of-state 
approval or rejection phase of the interstate solicitation 
process would seem to be properly outside the protection 
intended by Congress.”
Berndt Lohr-Schmidt, Developing Jurisdictional Standards 
for State Taxation of Multistate Corporate Net Income, 22 
Hastings LJ 1035, 1083-84 (1971).
	
The second provision, Section 381(a)(2), explicitly 
incorporates Section 381(a)(1) and functionally extends the 
same protections one additional step beyond direct custom­
ers. As noted, Section 381(a)(1) allows a business to solicit 
orders directly from customers, provided the resulting orders 
are accepted outside the taxing state. Though the phrasing 
is cumbersome, Section 381(a)(2) allows the business to also 
solicit orders from indirect customers—persons who will 
order, not from the business itself, but from the business’s 
in-state direct customers.7 But the business’s solicitation of 
	
6  The provision bears a strong resemblance to the Supreme Court’s ear­
lier case law allowing regarding state and local taxation of “peddlers” but not 
“drummers.”
	
7  To make that abstraction more concrete: A business’s direct customers 
may be wholesalers, while its indirect customers are retailers. Orders from the 
retailers go to the wholesalers, and the wholesalers in turn fill their inventory 
by ordering from the business. Under Section 381(a)(2), the business’s represen­
tatives can solicit retailers to order from wholesalers, provided that (1) the solici­
tation is designed “to enable” the wholesalers to fill the orders; and (2) the whole-
salers’ orders to the business will still come within the safe harbor of Section 
381(a)(1)—that is, the wholesalers’ orders are approved, and the products are 
shipped, from outside the taxing state. See 15 USC § 381(a)(2); Trost, Federal 
Limitations on State and Local Tax §  10.9 (summarizing provision); Wrigley, 
505 US at 233-34 (explaining that Section 381(a)(2) “shields a manufacturer’s 
‘missionary’ request that an indirect customer (such as a consumer) place an 
order, if a successful request would ultimately result in an order’s being filled by 
a [Section] 381 ‘customer’ of the manufacturer, i.e., by the wholesaler who fills 
the orders of the retailer with goods shipped to the wholesaler from out of state.”).
Cite as 372 Or 509 (2024)	
517
such orders is limited to activities that “enable” the busi­
ness’s in-state customers to fill those orders.
	
Under both parts of Section 381(a), however, the 
statutory text requires that the business’s “only busi­
ness activities” in the taxing state fall within the scope of 
“solicitation of orders” for interstate sales. 15 USC § 381(a) 
(emphasis added); see Wrigley, 505 US at 223 (same); Herff 
Jones Co. v. Tax Com., 247 Or 404, 412, 430 P2d 998 (1967) 
(same). “Solicitation of orders” stops short of the business 
making sales. See 15 USC § 381(c) (which permits indepen­
dent contractors not only to solicit orders, but also to make 
sales); Wrigley, 505 US at 229 n 5 (noting that the “activities 
that are most clearly not immunized by the statute” include 
“actual sales” (emphasis in original)). Although de minimis 
violations will not take a business outside the protections of 
Section 381(a), see Wrigley, 505 US at 231, the statute pro­
tects a business whose activities are limited to “solicitation 
of orders” alone. That is the point on which this case turns: 
whether the in-state actions of Santa Fe’s representatives 
went beyond the “solicitation of orders.”
D.  Limits on “Solicitation of Orders”
	
The meaning of the term “solicitation of orders,” 
as used in Section 381(a), has been one of the most difficult 
issues for courts attempting to interpret that statute. Prior 
to the Court’s decision in Wrigley, the state courts had offered 
various interpretations. See Guttormsson, 1993 Wis L Rev at 
1381-85 (reviewing state court cases to date). This court had 
addressed the issue more than once. See Herff Jones Co., 247 
Or at 411-12 (discussing “broad interpretation” seemingly 
adopted in Smith Kline & French v. Tax Com., 241 Or 50, 403 
P2d 375 (1965), but later rejected by Cal-Roof Wholesale v. 
Tax Com., 242 Or 435, 410 P2d 233 (1966)).
	
In Wrigley, the United States Supreme Court inter­
preted the term “solicitation of orders” in detail. Because 
that interpretation guides our decision in this case, we dis­
cuss the facts and the Court’s opinion in that case in some 
detail.
	
William Wrigley, Jr., Co., a gum manufacturer, was 
headquartered in Chicago, but it sent sales representatives 
518	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
into Wisconsin. 505 US at 216. The Supreme Court had to 
determine whether actions taken by Wrigley’s representa­
tives exceeded the safe harbor of Section 381(a). It concluded 
that they did. Id. at 232-33.
	
The Court first considered what “solicitation of 
orders” meant as used in the statute. It began by examining 
the meaning of “solicitation” generally:
“ 
‘Solicitation,’ commonly understood, means ‘asking’ for, 
or ‘enticing’ to, something, see Black’s Law Dictionary 
1393 (6th ed 1990); Webster’s Third New International 
Dictionary 2169 (1981) (‘solicit’ means ‘to approach with a 
request or plea (as in selling or begging)’).”
Id. at 223 (brackets omitted). The Court went on to conclude 
that “solicitation of orders” was not limited to the request 
for a purchase; instead, it included “the entire process asso­
ciated with the invitation.” Id. at 225. Nor was “solicitation 
of orders” limited to activities “essential” to the request to 
purchase: If the wording were limited in that way, the Court 
explained, then
“it would not cover salesmen’s driving on the State’s roads, 
spending the night in the State’s hotels, or displaying 
within the State samples of their product. We hardly think 
the statute had in mind only day-trips into the taxing juris­
diction by emptyhanded drummers on foot.”
Id. at 226. Again, however, “solicitation of orders” does not 
include “actual sales”—which the Court described as one of 
the “activities that are most clearly not immunized by the 
statute.” Wrigley, 505 US at 229 n 5 (emphasis in original).
	
At the same time, the Supreme Court also rejected 
the suggestion that “solicitation of orders” should be under­
stood to mean whatever conduct might be considered rou­
tine or customary in the course of a solicitation. Accepting 
that suggestion, the Court reasoned, would
“convert[ 
] a standard embracing only a particular activity 
(‘solicitation’) into a standard embracing all activities rou­
tinely conducted by those who engage in that particular 
activity (‘salesmen’). If, moreover, the approach were to be 
applied (as respondent apparently intends) on an indus­
try-by-industry basis, it would render the limitations of 
Cite as 372 Or 509 (2024)	
519
[Section] 381(a) toothless, permitting ‘solicitation of orders’ 
to be whatever a particular industry wants its salesmen to 
do.”
Id. at 227 (footnote omitted).
	
The Court instead concluded that a business activ­
ity would be a protected “solicitation of orders” as long as 
the only business purpose for the activity was to help solicit 
orders. The “clear line” separating a protected “solicitation” 
from unprotected activities was drawn
“between those activities that are entirely ancillary to 
requests for purchases—those that serve no independent 
business function apart from their connection to the solicit­
ing of orders—and those activities that the company would 
have reason to engage in anyway but chooses to allocate to 
its in-state sales force.”
Id. at 228-29 (emphasis in original; footnote omitted).
	
The Supreme Court then offered some examples 
of how that test would apply. A business activity would not 
exceed the scope of the “solicitation of orders” if it involved 
giving a sales representative a car and a stock of samples: 
“the only reason to do it is to facilitate requests for pur­
chases.” Id. at 229. But having sales representatives repair 
or service the business’s products would exceed the “solicita­
tion of orders,” and so would not be protected by Section 381, 
because
“there is good reason to get that done whether or not the 
company has a sales force. Repair and servicing may help 
to increase purchases; but it is not ancillary to requesting 
purchases, and cannot be converted into ‘solicitation’ by 
merely being assigned to salesmen.”
Id. (citing Herff Jones for proposition that there is “no 
[Section] 381 immunity for sales representatives’ collection 
activities”).
	
The Court then turned to the facts before it and 
considered whether the activities by Wrigley’s representa­
tives exceeded the scope of “solicitation of orders.” Three 
activities were important to the Court’s decision. The first 
two involved representatives contacting Wrigley’s indi­
rect customers—retailers—on behalf of Wrigley’s direct 
520	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
customers—wholesalers. See 505 US at 218; William Wrigley, 
Jr. Co. v. Dept. of Rev., 160 Wis 2d 53, 64-65, 465 NW2d 800, 
804 (1991), rev’d on other grounds, Wrigley, 505 US 214 (pro­
viding additional details). First, the representatives would 
offer free gum displays and seek to have them prominently 
displayed. Wrigley, 505 US at 218. If the retailer did not have 
sufficient gum in stock to fill the displays, then the represen­
tative would fill the display with a stock of gum that the rep­
resentative had brought. Id. The retailer would be charged 
for the gum, however, by a mechanism—the “agency stock 
check”—that involved the retailer paying the wholesaler, 
not directly paying Wrigley. Id. Second, the representatives 
would check the retailer’s stock and replace any gum that 
had gone stale. Id. at 218-19. The replacement of stale stock 
was done without charge. Id. And third, Wrigley gave its 
sales representatives—who resided in Wisconsin—approx­
imately $1,000 worth of gum each to perform those two 
actions. Id. at 217-18. The Court concluded that all three of 
those activities exceeded the scope of “solicitation of orders.”
	
First, the Supreme Court explained that Wrigley’s 
representatives had exceeded the scope of “solicitation of 
orders” when they replaced stale gum:
“Wrigley would wish to attend to the replacement of spoiled 
product whether or not it employed a sales force. Because 
that activity serves an independent business function quite 
separate from requesting orders, it does not qualify for 
[Section] 381 immunity.”
Id. at 233. The Court rejected the argument that replace­
ment was a “ 
‘promotional necessity’ designed to ensure con­
tinued sales.” Id. For an activity to be protected by Section 
381’s safe harbor, the Court explained, “it is not enough that 
the activity facilitate sales; it must facilitate the requesting 
of sales, which this did not.” Id. (emphases in original; foot­
note omitted).
	
Second, the Court concluded that Wrigley’s repre­
sentatives had exceeded the scope of “solicitation of orders” 
when they placed gum into retailers’ displays (the “agency 
stock checks”). Specifically addressing Section 381(a)(2), the 
Court explained that Wrigley’s actions had an independent 
business purpose beyond mere solicitation:
Cite as 372 Or 509 (2024)	
521
“It might seem * 
* 
* that setting up gum-filled display 
racks, like Wrigley’s general advertising in Wisconsin, 
would be immunized by [Section] 381(a)(2). What destroys 
this analysis, however, is the fact that Wrigley made the 
retailers pay for the gum, thereby providing a business pur­
pose for supplying the gum quite independent from the 
purpose of soliciting consumers. Since providing the gum 
was not entirely ancillary to requesting purchases, it was 
not within the scope of ‘solicitation of orders.’ 
”
Id. at 234 (emphasis in original; footnote omitted). Even though 
the retailers were making those payments to the wholesalers 
and not to Wrigley directly, the payments were sufficient to 
take Wrigley out of the safe harbor of Section 381(a)(2).
	
Finally, the Court concluded that Wrigley, by stor­
ing gum in-state, also exceeded the scope of “solicitation of 
orders” because the vast majority of that gum was used to 
replace stale gum or the “agency stock checks,” which were 
not themselves protected activities. Id.
	
With that understanding of the background of 
Section 381 and how it has been interpreted by the Supreme 
Court, we turn to the facts developed in the Tax Court regard­
ing the scope of Santa Fe’s activities in relation to wholesalers 
and retailers in Oregon, before explaining why those activi­
ties took Santa Fe outside of Section 381’s safe harbor.
II.  FACTS AND PROCEEDINGS
A.  Facts
	
The parties stipulated to the underlying facts. We 
set out below only those facts relevant to our decision, taken 
from the stipulation and its attached exhibits. All facts 
should be understood to refer to tax years 2010-13.
	
Santa Fe is a New Mexico corporation operating 
out of state. Santa Fe had no offices or inventory of its own 
located in Oregon.
	
During the relevant tax years, Santa Fe sold 
tobacco products only to wholesalers.8 Wholesalers in turn 
	
8  During 2010, Santa Fe made some direct sales to Oregon retailers. The 
department does not rely on those sales to establish Santa Fe’s tax liability. 
Accordingly, our analysis will proceed as though Santa Fe had not made any 
in-state sales during the relevant tax years.
522	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
sold Santa Fe’s products to retailers; retailers then resold 
the products to consumers.
	
Santa Fe sent its employees into Oregon to persuade 
Oregon retailers to order Santa Fe’s products from whole-
salers. Many of those wholesalers were also located in 
Oregon. When a representative visited an Oregon retailer 
in person and convinced the retailer to agree to order Santa 
Fe’s products from a wholesaler, the representative could 
take one of two actions.
	
One option was for the representative to leave 
the retailer a “sell sheet order.” The sell sheet order forms 
were prepared by Santa Fe. They were captioned “Santa Fe 
Natural Tobacco Account Profile” and included blank spaces 
for the retailer’s account name, number, shipping informa­
tion, and Santa Fe product selection. The representative 
would “write the quantities of each item on the appropriate 
wholesaler sell sheet and leave the sheet with the retailer” 
for the retailer to send to the wholesaler. A sell sheet order 
was just a “suggestion” to buy; “[i]t is up to the retailer to 
follow through and purchase the product.” Thus, a sell sheet 
order would seem to be a classic example of the type of solic­
itation that falls within the safe harbor of Section 381, and 
the department does not contend that Santa Fe’s actions 
regarding sell sheet orders took it outside the safe harbor of 
Section 381.
	
Another option for the representative, however, was 
to take a “prebook order.” In some ways, prebook orders were 
similar to sell sheet orders. Like the sell sheet order forms, 
the prebook order forms were also prepared by Santa Fe and 
had a caption at the top identifying Santa Fe rather than 
the wholesaler. A prebook order would also be filled out by 
Santa Fe’s representative.
	
The prebook order process, however, diverged from 
the sell sheet order process in ways that, as we will explain, 
made the process more like the facilitation of sales within 
Oregon, rather than solicitation of orders that could be 
accepted or rejected by Santa Fe’s Oregon wholesalers. Below 
the caption “Santa Fe Natural Tobacco Company Prebook 
Order Form,” the form included the words “Sold To,” “Date,” 
Cite as 372 Or 509 (2024)	
523
and “Delivery Date.” The prebook order form would imme­
diately be signed by the retailer on the line labeled “Buyer 
Name” and “Buyer Signature.” The representative would 
then personally send the order to the wholesaler by hard 
copy, phone, fax, or email/electronic delivery (but usually by 
fax).
	
When a wholesaler received a prebook order, that 
triggered a provision of a contractual agreement with Santa 
Fe: the “Distributor Incentive Program Agreements” (“incen­
tive agreements”). As relevant here, the incentive agree­
ments required every wholesaler to “accept and process”
prebook orders. The 2011 incentive agreement, for example, 
provided that wholesalers must
“[a]ccept and process pre-book orders initiated by [Santa 
Fe] on behalf of their retail accounts. These pre-books will 
be in the form of hard copy, fax, and/or email.”
The other incentive agreements were functionally identical. 
As we will explain, the incentive agreements imposed sub­
stantial economic penalties on any wholesaler who refused 
to accept a prebook order.
	
The incentive agreements provided for wholesalers 
to receive incentive payments as a rebate from Santa Fe for 
each carton that the wholesaler sold.9 Each of the incentive 
agreements provided that a breach of the agreement would 
be cause for Santa Fe to cease making incentive payments on 
cartons sold. Beginning with the 2011 version of the incen­
tive agreement, Santa Fe’s declaration of a breach would 
not only entitle it to discontinue future payments to the 
wholesaler; Santa Fe expressly had the right to require the 
wholesaler to repay all those payments already made under 
the incentive agreement. Santa Fe was also given exclusive 
discretion to determine whether a wholesaler had complied 
	
9  Under the 2010 incentive agreement, the rebate was 20 cents per carton, 
rising to 40 cents per carton for every carton sold beyond the previous year’s 
sales.
	
Under the 2011 and 2012 incentive agreements, a wholesaler could receive 
up to 50 cents per carton: 20 cents credited to the invoice when the product 
was shipped, with additional quarterly payments of 30 cents per carton “to 
those [wholesalers] which fully meet * 
* 
* all [incentive agreement] Rules and 
Procedures.” Whether a wholesaler had fully met all incentive agreement rules 
and procedures was “to be determined by [Santa Fe] in its sole discretion.”
524	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
with the terms of the incentive agreements. Moreover, a 
wholesaler was not permitted to purchase Santa Fe’s prod­
ucts “unless [the wholesaler] entered into a[n] [incentive 
agreement].”10
	
Because 
the 
incentive 
agreements 
expressly 
required wholesalers to accept and process prebook orders 
and imposed substantial economic penalties on any whole­
saler who refused to do so, Santa Fe trained its trade rep­
resentatives to emphasize prebook orders, not sell sheet 
orders. Those materials expressly described a prebook order 
as “a guaranteed order.” Those materials added that pre­
book orders “ensure the order will be placed” and “ensure 
that line extensions sold in [sic] during the sales call will 
be ordered and placed in distribution within the outlet/
account.”
	
Santa Fe also set a “specific prebook goal” for its 
trade representatives; “only valid prebooks [could] be 
counted towards that goal.” Santa Fe’s materials for its rep­
resentatives directed them to “[a]lways attempt to place pre-
booked orders.” Santa Fe had a “role play” for its representa­
tives where the stated objective was “[t]o get a pre-book”; it 
concluded with the representative asking the retailer, “How 
about if I prebook these styles through your wholesaler for 
you today[?]”
	
During the relevant tax years, Santa Fe’s trade rep­
resentatives placed an average of 13.3 prebook orders per 
month from Oregon retailers.
	
In contrast to prebook orders, none of the incentive 
agreements addressed sell sheet orders in any way. Sell 
sheet orders, the materials state, are not guaranteed and 
are a mere “suggestion” for the retailer to order.
	
10  The 2011 and 2012 incentive agreements were emphatic on the point:
	
“[The wholesaler] agrees that all of its obligations under this [incentive 
agreement] are material, that full performance of all of its obligations under 
this [incentive agreement] is essential, and that [Santa Fe] has no obliga­
tion to accept any product orders from, or make any monetary payments to, 
[the wholesaler] if [the wholesaler] breaches or in any way fails to perform in 
whole or part any provision or requirement of this [incentive agreement].”
Cite as 372 Or 509 (2024)	
525
B.  Proceedings Below
	
During the relevant years, Santa Fe timely filed 
Oregon tax returns. It reported no Oregon taxable income, 
instead asserting that its activities in Oregon fell within the 
protections of Section 381.
	
The department audited Santa Fe’s tax returns 
and rejected Santa Fe’s claimed immunity. The depart­
ment assessed deficiencies for every tax year, from a low of 
$395,947 for tax year 2010, to a high of $771,122 for tax year 
2013 (not including substantial understatement penalties 
and interest for each year).
	
Santa Fe appealed to the Regular Division of the 
Tax Court,11 where the matter was tried on stipulated facts. 
Santa Fe argued that prebook orders were the mere solici­
tation of orders from indirect customers and so protected by 
Section 381(a)(2). Santa Fe contended that prebook orders 
differed from sell sheet orders only through the “ministerial 
act” of having Santa Fe’s sales representative, rather than 
the retailer, transmit the order by pressing the button on a 
fax machine.
	
The department conceded that prebook orders, “in 
isolation,” could have been protected by Section 381(a)(2). 
But it emphasized that the prebook orders did not exist in 
isolation, because Santa Fe had used the incentive agree­
ments to require wholesalers to “accept and process” those 
orders. The department contended that Santa Fe “went 
beyond mere solicitation” because its employees, while in 
Oregon, delivered signed orders to wholesalers who had 
already agreed, in advance, to “accept and process” orders 
transmitted by Santa Fe’s employees.
	
On that point, Santa Fe replied that the incentive 
agreements only required wholesalers to “accept and pro­
cess” prebook orders, not to “fulfill” them.
	
11  There was an initial appeal to the Magistrate Division of the Tax Court. 
For purposes of this opinion, it is sufficient for us to discuss only the proceedings 
in the Regular Division; the Magistrate Division is not a court of record, and the 
Regular Division hears appeals from the Magistrate Division de novo. See Village 
at Main Street Phase II v. Dept. of Rev., 356 Or 164, 167-68, 339 P3d 428 (2014) (so 
explaining). We will generally use “Tax Court” to refer to the Regular Division.
526	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
	
Although the Tax Court ultimately was not per­
suaded by the department’s argument regarding the “accept 
and process” requirement of the incentive agreements (the 
court concluded that “accept” was ambiguous, see 25 OTR at 
151-53), the court nevertheless ruled in favor of the depart­
ment. Relying on the Supreme Court’s decision in Wrigley, 
the court held that the prebook orders were more than a 
“solicitation” because those orders had served an indepen­
dent business purpose for Santa Fe beyond requesting the 
orders. “Writing down and forwarding the order for the
[r]etailer on the spot made the difference between a poten­
tially meaningless oral ‘yes’ and an actual order that was 
more likely to result in a sale.” 25 OTR at 155-56. The Tax 
Court also concluded that Santa Fe’s actions had exceeded 
the scope of Section 381 in a way that was not de minimis. Id. 
at 156-58. Because Santa Fe had exceeded the protections of 
Section 381(a)(2), the court concluded that it was subject to 
taxation in Oregon.12 Santa Fe appealed that decision to this 
court.
III.  DISCUSSION
	
The only issue before us is whether Section 381 
“cuts off” Oregon’s authority to tax Santa Fe’s transactions 
within this state. It is undisputed that Oregon otherwise 
has authority to tax Santa Fe for income obtained here.13 In 
	
12  The Tax Court also ruled in favor of the department on a separate ques­
tion. The department had made an alternative argument that, because the incen­
tive agreements required wholesalers to accept any and all returns of products by 
retailers, Santa Fe had also exceeded the protections of Section 381(c). That sub­
section provides that an out-of-state business is protected against being taxed 
in-state for the actions of “independent contractors,” provided that the activities 
of the independent contractors on behalf of the business “consist solely of mak­
ing sales, or soliciting orders for sales, of tangible personal property.” 15 USC 
§ 381(c). The department contended—and the Tax Court agreed—that Santa Fe’s 
act of requiring wholesalers to accept all returns took Santa Fe outside the pro­
tections of Section 381. 25 OTR at 134-50.
	
As related to the “prebook orders,” however, Santa Fe’s representatives were 
not “independent contractors,” but Santa Fe employees, and so they were not enti­
tled to make in-state “sales” by Section 381(c); instead, their activities were lim­
ited to “solicitation of orders.” And because we conclude in this opinion that Santa 
Fe’s activities in Oregon fell outside the safe harbor of Section 381(a)(2), we need 
not reach the merits of the Tax Court’s alternative holding that Santa Fe had also 
fallen outside the safe harbor created by Section 381(c).
	
13  Santa Fe does not contend, for example, that Oregon’s income tax here 
would violate the federal constitutional limitations imposed by the “dormant 
Commerce Clause.”
Cite as 372 Or 509 (2024)	
527
other words: Santa Fe is liable for Oregon income tax unless 
the Section 381 safe harbor applies.
A.  Standard of Review and Burden of Proof
	
In the Tax Court, Santa Fe (as the party challeng­
ing the department’s decision) had the burden to show, by a 
preponderance of the evidence, that its actions fell within the 
protections of Section 381. See ORS 305.427 (both before Tax 
Court and on appeal, “the party seeking affirmative relief” 
has burden of proof by “a preponderance of the evidence”); 
Baisch v. Dept. of Rev., 316 Or 203, 211, 850 P2d 1109 (1993) 
(“A taxpayer seeking relief from a decision of the Department 
denying a deduction bears the burden of showing by a pre­
ponderance of the evidence that the deduction is allowable.”).
	
We rely on the stipulated facts and exhibits, and we 
review the Tax Court’s legal conclusions for errors of law. 
ORS 305.445.
B.  Analysis
	
As we will explain, Santa Fe’s representatives went 
beyond soliciting orders on behalf of wholesalers. Because 
the wholesalers had already been committed by the terms 
of their incentive agreements to accept any prebook order, 
Santa Fe’s representatives were doing more than “enabling” 
wholesalers to sell Santa Fe products to retailers. Instead, 
they were “requiring” wholesalers to sell those products and 
facilitating those sales. That exceeded the scope of the per­
mitted “solicitation of orders.”
	
We begin with the “prebook order” itself. As noted, 
such orders used a form prepared by Santa Fe and filled 
out by Santa Fe’s representatives on behalf of their indirect 
customers, the Oregon retailers. Under the terms of all the 
incentive agreements, wholesalers were contractually obli­
gated to accept and process those orders, and their right to 
receive future payments under the incentive agreements 
was contingent on complying with that contractual require­
ment.14 Starting in 2011, Santa Fe added “sticks” to the 
	
14  We do not suggest that that the prebook order requirements were the only 
duties that the incentive agreements required wholesalers to undertake. The 
incentive agreements imposed at least one other primary and affirmative duty 
on the wholesalers: to accept product returns. The wholesalers had other duties, 
528	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
incentive agreements to match the “carrot” of future pay­
ments. See 372 Or at 523-24 (discussing in detail). First, 
all wholesalers had to participate in the incentive agree­
ments, so all future business with Santa Fe depended on 
the wholesalers accepting and processing those prebook 
orders. Second, a wholesaler who breached the incentive 
agreements by failing to accept and process prebook orders 
would not only lose those future payments under the incen­
tive agreements, it would also be required to repay any pay­
ments already received. Again, the 2011 and 2012 incentive 
agreements expressly provided that
“all of [the wholesaler’s] obligations under this [incentive 
agreement] are material, that full performance of all of its 
obligations under this [incentive agreement] is essential, 
and that [Santa Fe] has no obligation to accept any prod­
uct orders from, or make any monetary payments to, [the 
wholesaler] if [the wholesaler] breaches or in any way fails 
to perform in whole or part any provision or requirement of 
this [incentive agreement].”
	
When Santa Fe contractually required wholesalers 
to “accept and process” prebook orders, then, the wholesaler 
understood that it must comply with that obligation or the 
wholesaler would face substantial economic penalties and 
lose the right to continue selling Santa Fe products. As a 
result, the incentive agreements went beyond “facilitat[ing] 
the requesting of sales” and instead “facilitate[d] sales” by 
Santa Fe’s representatives, Wrigley, 505 US at 233 (empha­
sis omitted), because the wholesalers had already been com­
mitted, by contract and by financial penalties, to complete 
the transaction. As such, prebook orders went beyond the 
scope of “solicitation of orders.”15
though those largely seem to have been negative (e.g., wholesalers were prohib­
ited from selling Santa Fe’s products in a manner that would violate state or 
federal law) or in support of the main duties (e.g., wholesalers were required to 
retain records and permit Santa Fe to perform audits). The point remains, how­
ever: Santa Fe considered the acceptance and processing of prebook orders to be 
so important that it put the requirement into a contract that imposed substantial 
economic penalties for any breach.
	
15  As noted, the Tax Court had concluded that the “accept and process” pro­
vision was ambiguous in a legal sense. For wholesalers, however, the economic 
realities represented by the phrase were entirely unambiguous: wholesalers had 
to accept prebook orders or become subject to immediate economic penalties by 
Santa Fe. That economic reality is much more relevant than the mere possibility 
Cite as 372 Or 509 (2024)	
529
	
The term “solicitation of orders” is used in both 
Section 381(a)(1) and Section 381(a)(2). The Supreme Court’s 
ordinary principles of statutory interpretation direct us to 
construe “solicitation of orders” to have the same meaning 
in both sections. See Sullivan v. Stroop, 496 US 478, 484, 110 
S Ct 2499, 2504, 110 L Ed 2d 438 (1990) (the “normal rule of 
statutory construction [is] that identical words used in dif­
ferent parts of the same act are intended to have the same 
meaning” (internal quotation marks and citations omitted)); 
Wrigley, 505 US at 225 (noting same principle).
	
Section 381(a)(1) shows that a “solicitation” does not 
include accepting the order (or shipping the goods). Again, 
that subsection protects “solicitation of orders” so long as 
“[the] orders are sent outside the State for approval or rejec­
tion, and, if approved, are filled by shipment or delivery 
from a point outside the State.” The requirement that the 
approval occur outside the state might seem to be a mere 
formality, see Lohr-Schmidt, 22 Hastings LJ at 1083-84 (so 
noting), but it is necessary.
	
The requirement that acceptance occur outside the 
state does not apply to Section 381(a)(2), of course; the text 
of Section 381(a)(2) shows that a business’s representatives 
may solicit orders on behalf of direct customers within the 
taxing state. But in both contexts, the activity must be lim­
ited to a “solicitation” of orders.
	
In Wrigley, the Supreme Court explained that 
“solicit” means “asking for” or “enticing to” or “approach 
with a request or plea.” 505 US at 223 (internal quotation 
marks and citations omitted)). Nothing suggests that Santa 
Fe’s representatives told retailers about the provision of 
the incentive agreements requiring wholesalers to “accept 
and process” prebook orders, much less that the represen­
tatives used it as a selling point to encourage the retailer 
that expensive litigation might eventually lead to a court decision that would 
permit a wholesaler to refuse a prebook order without penalty.
	
For its part, Santa Fe argues that it is significant that the incentive agree­
ments use the words “accept and process,” rather than “fulfill.” “Fulfill” is not a 
legal term of art, however. Santa Fe offers no authority or support for its implicit 
suggestion that the phrase “accept and process” unambiguously excludes a 
requirement that the wholesalers “fulfill” the order.
530	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
to buy Santa Fe’s products. To the contrary: The sample 
“role plays” for representatives did not mention the “accept 
and process” obligation at all. From the perspective of the 
retailer, a prebook order was just a sell sheet order that 
someone else turned in for them. But it was no such thing 
from the perspective of a wholesaler—or from the perspec­
tive of Santa Fe, which had used the incentive agreements 
to make prebook orders amount to “guaranteed order[s].” 
Prebook orders, as something that wholesalers had already 
committed themselves to accept, thus facilitated the sale 
and not the solicitation. See Wrigley, 505 US at 233 (“[I]t is 
not enough that the activity facilitate sales; it must facilitate 
the requesting of sales, which this did not.” (Emphases in 
original.)).
	
That conclusion also follows from the full definition 
of “solicitation of orders” that the Supreme Court articu­
lated in Wrigley. The “accept and process” obligation that 
Santa Fe imposed was not “entirely ancillary to requests 
for purchases.” Id. at 228 (emphasis omitted). The prebook 
order process, as set up by the incentive agreements, instead 
served an “independent business function apart from their 
connection to the soliciting of orders,” id. at 228-29: It 
allowed Santa Fe’s representatives to go beyond requesting 
sales and into facilitating sales on behalf of wholesalers, and 
to quickly have orders filled from stock that Oregon whole­
salers were, in effect, holding for Santa Fe in-state. A whole­
saler could not refuse to “accept and process” a single Santa 
Fe prebook order without risking future incentive payments 
for every Santa Fe product that it sold to every retailer, and, 
starting in 2011, a wholesaler risked being required to 
repay every incentive payment that it had already received 
for sales to every retailer. Thus, Santa Fe was doing far more 
than simply “enabling” Oregon wholesalers to sell Santa 
Fe’s products.16
	
16  The Tax Court reached a similar conclusion, but on much narrower 
grounds. It correctly recognized that prebook orders increased the chances of a 
sale of Santa Fe’s products, but the court’s analysis seems to have relied almost 
entirely on the act of Santa Fe’s representative transmitting the prebook order to 
the wholesaler. See 25 OTR at 154-56. Our holding does not rely on the narrow 
act of transmission. We conclude that prebook orders should be considered in 
light of the contractual obligations and economic realities that Santa Fe’s incen­
tive agreements imposed on wholesalers.
Cite as 372 Or 509 (2024)	
531
	
As we will explain, Santa Fe used prebook orders—
bolstered by the incentive agreements—in the same way 
that the gum manufacturer in Wrigley used “agency stock 
checks.” Again, Wrigley’s representatives would fill free 
gum displays using the stock of gum that the representative 
had brought into the state, requiring the retailer to pay a 
wholesaler for the gum. See Wrigley, 505 US at 218. Wrigley 
thus had exceeded the scope of Section 381(a)(2) in two dif­
ferent ways. First, “Wrigley made the retailers pay for the 
gum, thereby providing a business purpose for supplying 
the gum quite independent from the purpose of soliciting 
consumers.” Id. at 234 (emphasis in original). Second, the 
representatives’ in-state stock of gum to fill the displays—a 
stock that the retailers had to pay for—also exceeded the 
protections of Section 381. Id.
	
That parallels what Santa Fe did here. When Santa 
Fe’s representatives obtained a prebook order from an 
Oregon retailer, they were not just soliciting orders. They 
were facilitating sales on behalf of wholesalers, who were 
for practical purposes already committed to accept those 
sales. And, because Oregon wholesalers had no true ability 
to decline the sale, the wholesaler’s stock of Santa Fe prod­
ucts functioned as if Santa Fe itself had stored the stock 
in-state—also falling outside the scope of Section 381(a).
	
In our view, then, prebook orders cannot be reduced 
to a Santa Fe representative performing the “ministerial” 
act of “push[ing] the button on a fax machine,” as Santa Fe 
argues. (Emphasis omitted.) That framing would ignore the 
economic structure that Santa Fe had constructed around 
“prebook orders,” using its incentive agreements with whole-
salers.
	
Considered in its factual and legal context, then, 
Santa Fe and its representatives exceeded the scope of “solic­
itation of orders” as that term is used in Section 381(a)(2) 
when they obtained prebook orders from Oregon retailers.
C.  Prebook Orders Were Not De Minimis
	
That does not end our analysis. In Wrigley, the 
Supreme Court further explained that “the venerable maxim 
de  minimis non curat lex (‘the law cares not for trifles’)” 
532	
Santa Fe Natural Tobacco Co. v. Dept. of Rev.
applies to Section 381. 505 US at 231. A company should not 
become “liable for hundreds of thousands of dollars in taxes 
if one of its salesmen sells a 10-cent item in state.” Id. In the 
context of Section 381, the Court held that
“whether in-state activity other than ‘solicitation of orders’ 
is sufficiently de  minimis to avoid loss of the tax immu­
nity conferred by [Section] 381 depends upon whether that 
activity establishes a nontrivial additional connection with 
the taxing State.”
Id. at 232.
	
The Court then explained why it concluded that the 
de  minimis principle did not protect Wrigley under those 
facts:
“Wrigley’s sales representatives exchanged stale gum, as 
a matter of regular company policy, on a continuing basis, 
and Wrigley maintained a stock of gum worth several thou­
sand dollars in the State for this purpose, as well as for the 
less frequently pursued (but equally unprotected) purpose 
of selling gum through ‘agency stock checks.’ Although the 
relative magnitude of these activities was not large com­
pared to Wrigley’s other operations in Wisconsin, we have 
little difficulty concluding that they constituted a nontriv­
ial additional connection with the State.”
Id. at 235.
	
Here, the parties stipulated that Santa Fe’s repre­
sentatives obtained an average of 13.3 prebook orders per 
month from Oregon retailers. That, combined with exhibits 
showing Santa Fe’s strong emphasis on its representatives 
obtaining prebook orders, is sufficient for us to conclude that 
its actions were not de minimis. Like Wrigley, Santa Fe was 
engaging in the unprotected activity “as a matter of regu­
lar company policy, on a continuing basis.” Id. The number 
of such orders per month is also not de minimis. Thus, “we 
have little difficulty concluding that they constituted a non­
trivial additional connection with the State.” Id.17
	
17  Although the record does not give the value of prebook orders or compare 
the size of those orders to Santa Fe’s other sales within the state, we agree with 
the Tax Court: In this context, the burden rested on Santa Fe to come forward 
with evidence that the sales were trivial. ORS 305.427 (both before Tax Court 
and on appeal, “the party seeking affirmative relief” has burden of proof by “a 
preponderance of the evidence”); see 25 OTR at 157-58 (so concluding).
Cite as 372 Or 509 (2024)	
533
III.  CONCLUSION
	
For the reasons set out above, we conclude that 
Santa Fe’s business activities—specifically, the pursuit of 
prebook orders by its representatives in Oregon, invoking 
incentive agreement contractual provisions used by Santa 
Fe to ensure that wholesalers treated each one of those 
orders favorably—exceeded the scope of permitted “solici­
tation of orders” under Section 381(a)(2). We further agree 
that Santa Fe’s activities were not de minimis. Accordingly, 
Santa Fe was subject to Oregon income tax.
	
The judgment of the Tax Court is affirmed.
	
Unlike the Tax Court, however, we would add that it is far from clear that the 
size of a business’s protected activities has any bearing on whether the unpro­
tected activities create a nontrivial additional connection. See Wrigley, 505 US at 
235 (unprotected activities made nontrivial additional connection, even though 
“the relative magnitude of these activities was not large compared to Wrigley’s 
other operations in Wisconsin”).