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### STATE OF MICHIGAN

COURT OF APPEALS

SCHOENECKERS INC.,

Petitioner-Appellant, UNPUBLISHED September 15, 2015

v No. 321033 Tax Tribunal DEPARTMENT OF TREASURY, LC No. 00-450419

Respondent-Appellee.

Before: R ONAYNE K RAUSE , P.J., and M URPHY and S ERVITTO , JJ.

R ONAYNE K RAUSE , J. (dissenting)

I respectfully dissent. As I read Catalina Mktg Sales Corp v Dep ’ t of Treasury , 470 Mich 13; 678 NW2d 619 (2004), courts are to look at “the entire tran saction,” id . at 24, and although the situation at bar is less simple than the situation in Catalina , I conclude that there is only one transaction, not two. I conclude that the object of the transa ction is functionally indistinguishable from the obj ect of the transaction in Catalina : a sophisticated, dynamic, custom-targeted behavior modifi cation service consisting of the distribution of incentives to individuals other than the provider’s actual clients, which of necessity entails a transmission of physical objects. I believe that attempting to separate petiti oner’s interactions with its clients from petitioner’s interactions with its clients’ employees cons titutes a failure to “look[] objectively at the entire tran saction.” Consequently, I would reverse.

The word “transaction” is undefi ned by any relevant statute, n or did our Supreme Court define it in Catalina . To “transact” is “‘to carry on or conduct (business, negotia tions, etc.) to a conclusion or settlement.’” Oberlies v Searchmont Resort

, Inc , 246 Mich app 424, 430; 633 NW2d 408 (2001), quoting Random House Webster ’ s College Dictionary (1997). Obviously, Schoenckers interacts independe ntly with its clients and with i ts clients’ employees, but neither of those interactions has an independent existence. It is undi sputed that Schoenckers’s clients were not interested in disbursing gifts to their employees out of the pure goodness of their hearts, but rather because they wanted to incentivize those employees t o perform better and maximize the clients’ own profits. The vehicle for accomplishing this w as Schoenckers’s “business improvement programs.” So far, I believe these facts are undis puted.

I differ from the majority because from my perspective, the ul timate disbursement of physical goods to Schoenckers’s c lients’ employees is an integr al and inseparable part of Schoenckers’s interaction with its clients. As the majority no tes, in Catalina there were-2- ostensibly two interactive occu rrences: first, Catalina’s cont ractual exchange with the manufacturers, and second, the issuance of a coupon to shoppers . Although it is, I suppose, possible to look at each of those occurrences in isolation, doing so wo uld make no sense, because neither of them would have been m eaningful without the other. I perceive no sound conceptual distinction between that situation and the situation at bar. T he majority, correctly in my opinion, describes Catalina as “a single transaction that took place between Catalina and its manufacturer client, a part of which include d the providing of coupons.” Th e instant situation looks like a single transaction that took place between Schoenckers and its clients, a part of which included the providing of miscellaneous merchandise. Obviously, the mer chandise here has more intrinsic value than the slips of paper in Catalina , and Schoenckers interacts more with its clients’ employees than Catalina did with the shoppers. I do not believ e that those facts fundamentally alter the nature of “the entire transaction.” I disagree with the majority’s conclusion that each interaction was “supported by its o wn consideration” simply bec ause the clients’ employees were afforded some measure of indivi dual control over what they ulti mately received.

I therefore conclude that the tribunal adopted a wrong legal p rinciple, and consequently I would reverse.

/s/ Amy Ronayne Krause