Court Opinion

ID: 9852949
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:39:39.428223+00
Date Added: 2024-06-11T09:22:38.442979
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 209. {dissenting). Here's the $300 million1 question: did the R/3 computer program "accommodate the special processing needs" of Menasha? That's the question that the first sentence of Wis. Admin. Code § TAX 11.71(l)(e) requires that we ask. The Commission doesn't answer it, the majority doesn't answer it, and the concurrence doesn't answer it.
¶ 210. Not one of them answers the question in the affirmative. They can't because the 70 disks of the R/3 system did not accommodate the special processing *685needs of Menasha. Not one of them answers the question in the negative. They can't because doing so would undermine their conclusions. We therefore get three separate writings, totaling more than 100 pages of text, where no one addresses the very first sentence of a rule they purport to interpret.
¶ 211. I join the dissent of Chief Justice Abraha-mson. I write separately, however, to address the issue of deference and to emphasize the failure of the Commission, the majority, and the concurrence to ask and answer this necessary question.
¶ 212. In a case where there are differing reasonable interpretations, deference is often given. An interpretation is not reasonable, however, if it ignores the language of the rule or if it is inconsistent with that language. Pfeiffer v. Board of Regents of the University of Wisconsin System, 110 Wis. 2d 146, 154-55, 328 N.W.2d 279 (1983).
¶ 213. Instead of interpreting the language of Wis. Admin. Code § TAX 11.71(l)(e), the Commission altogether ignored the first sentence of the rule it purported to be interpreting. How can we defer to an interpretation of language when no such interpretation exists? The majority follows the Commission in failing to provide any analysis of the first sentence.
¶ 214. As a result of ignoring the first sentence of the rule, the agency here has reached an interpretation that is inconsistent with that sentence. This court gives no deference to an agency's interpretation of a rule that is inconsistent with the language of that rule. Pfeiffer, 110 Wis. 2d at 154-55.
I
¶ 215. The issue here is the interpretation of Wis. Admin. Code § TAX 11.71(l)(e). The first part of the section states as follows:
*686"Custom programs" mean utility and application software which accommodate the special processing needs of the customer. The determination of whether a program is a custom program shall be based upon all the facts and circumstances, including the following....
(Emphasis added.)
¶ 216. The very first sentence of the rule sets forth the definition of "custom programs," and the question in this case is whether the software here fits within the definition of a "custom program." However, the Commission never turns its attention to the definition.
¶ 217. We give agencies varying degrees of deference in interpreting their own rules. See Daimler-Chrysler v. Labor & Indus. Review Comm'n, 2007 WI 15, ¶ 15, 299 Wis. 2d 1, 727 N.W.2d 311. The key premise to that principle is that the agency actually renders an interpretation. In this case, the Commission ignored the defining sentence. It did not even render an interpretation of "custom programs . . . which accommodate the special processing needs of the customer."
¶ 218. How can we give deference to a nonexistent interpretation?
¶ 219. The answer, of course, is that we can't. We owe no deference whatsoever to an agency's failure to interpret a definition clearly set forth in the Wisconsin Administrative Code.
¶ 220. The concurrence attempts to circumvent this problem by claiming that the first sentence is merely part of the definition of custom programs. It accuses the dissents of taking "eight words of a sentence from the definition and saying it is the definition." Concurrence, ¶ 116 (emphasis in original). Instead, the *687concurrence argues that we should give controlling weight deference to the Commission's interpretation.
¶ 221. Yet the concurrence contradicts the Commission outright. The Commission explicitly determined that section 11.71(l)(e) defines "custom programs" in its first sentence. In its decision in this case, the Commission stated:
"Section TAX 11.71(l)(e)(intro) defines custom programs as 'utility and application software which accommodate the special processing needs of the customer.'" (Emphasis added.)
In other words, the Commission agrees with the dissents in this regard.2
¶ 222. Despite the concurrence's protests that it is giving deference to the Commission, its central argument overturns the Commission's explicit determination.
I — I HH
¶ 223. Not only does the Commission fail to analyze the most fundamental provision in the rule — the *688first sentence — it renders an interpretation that directly contradicts that unambiguous provision.
¶ 224. The Commission, as well as the majority and the concurrence, makes the mistake of interpreting the factors listed in section 11.71(l)(e) as the only things to consider when determining whether a computer program is custom. However, if one looks at the factors in conjunction with the definition of "custom programs," it is clear that the factors are based on the assumption that the program in question actually meets the needs of the customer. The factors must be examined in order to determine whether the needs met by the software are "special."
¶ 225. The factors operate within the premise set forth in the very first sentence of the rule: that software "accommodate[s] the special processing needs of the customer." They cannot operate to contradict it.3 The concurrence's claim that the dissents render the rest of the rule "surplusage" misses the mark. The dissents are clear: the factors must be considered, but they cannot be deployed to contradict the definition set forth in the first sentence of the rule.
*689¶ 226. It is undeniable that the R/3 system purchased — the 70 disks containing prewritten software — did not "accommodate the special processing needs of the customer." The processing needs of the customer, Menasha, were only accommodated after other modifications were made.
¶ 227. Put another way, the Commission interpreted section 11.71(1) (e) such that software which does not accommodate the special needs of the customer is a "custom program," which in turn is defined as software that does accommodate the special needs of the customer. "Does not accommodate" is the opposite of "does accommodate."
¶ 228. The Commission's interpretation led it to a conclusion that software which does not accommodate the special processing needs of the customer is "custom." Such an interpretation is thus inconsistent with the plain words of the rule. Because that's what the Commission's interpretation has done, we owe it no deference.
¶ 229. Like the Commission and the concurrence, the majority utterly ignores the first sentence of rule. It does not provide a single word explaining how its conclusion comports with the requirement that custom programs "accommodate the special processing needs of the customer."
¶ 230. The closest the majority comes to such an analysis is its statement that "the rule does not end with the first sentence." Majority op., ¶ 106. I agree— but it most assuredly begins there.
¶ 231. Because its analysis ignores the first sentence and renders an interpretation inconsistent with the language of the rule, we owe no deference to the Commission's interpretation. I therefore respectfully dissent.
*690¶ 232. I am authorized to state that Justice LOUIS B. BUTLER, JR. joins this dissent.

 As an explanation for why the Commission failed to analyze the definition of "custom programs," the concurrence offers a strained interpretation. It surmises that the use of "intro" by the Commission clearly meant that the first sentence of the rule is merely "prefatory material," implying that it is not the definition of "custom programs." Concurrence, ¶ 115 n.3. The use of "intro" carries no such implication.
As noted in Chief Justice Abrahamson's dissent, the use of "intro" simply means that language is "preceding the rule's colon and numbered subunits." Chief Justice Abrahamson's dissent, ¶ 167 n. 39; see Wisconsin Bill Drafting Manual 2007-08, § 1.001(2) at 9. The use of "intro" certainly does not contradict the Commission's clear statement that the first sentence defines "custom programs."

 In other words, whether there was extensive presale consultation and analysis is a factor in determining whether the needs met by the software are special to the customer. If the software does not meet the customer's needs (be they special or general), the software is not custom. Likewise, whether the program is loaded by the vendor, the extent of training required, the amount of maintenance support, the cost of the system, whether the software is a basic operational or prewritten program, and whether an existing system is significantly modified, go to the question of whether any needs accommodated by the software are special to the customer. See Wis. Admin. Code § TAX 11.71(l)(e)l — 7.