Court Opinion

ID: 2959567
Source: CourtListenerOpinion
Date Created: 2015-09-17 07:06:28.69743+00
Date Added: 2024-06-11T12:46:20.366933
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

SCHOENECKERS INC.,                                                   UNPUBLISHED
                                                                     September 15, 2015
               Petitioner-Appellant,

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

               Respondent-Appellee.

Before: RONAYNE KRAUSE, P.J., and MURPHY and SERVITTO, JJ.

RONAYNE KRAUSE, 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 transaction,” 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 transaction is functionally
indistinguishable from the object of the transaction in Catalina: a sophisticated, dynamic,
custom-targeted behavior modification 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 petitioner’s interactions with its clients
from petitioner’s interactions with its clients’ employees constitutes a failure to “look[]
objectively at the entire transaction.” Consequently, I would reverse.

        The word “transaction” is undefined by any relevant statute, nor did our Supreme Court
define it in Catalina. To “transact” is “‘to carry on or conduct (business, negotiations, 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 independently with its clients and with its clients’ employees, but neither
of those interactions has an independent existence. It is undisputed 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 to perform better and maximize
the clients’ own profits. The vehicle for accomplishing this was Schoenckers’s “business
improvement programs.” So far, I believe these facts are undisputed.

       I differ from the majority because from my perspective, the ultimate disbursement of
physical goods to Schoenckers’s clients’ employees is an integral and inseparable part of
Schoenckers’s interaction with its clients. As the majority notes, in Catalina there were

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ostensibly two interactive occurrences: first, Catalina’s contractual 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 would make no sense, because
neither of them would have been meaningful without the other. I perceive no sound conceptual
distinction between that situation and the situation at bar. The majority, correctly in my opinion,
describes Catalina as “a single transaction that took place between Catalina and its manufacturer
client, a part of which included the providing of coupons.” The 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 merchandise 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 believe 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 own consideration” simply because the clients’ employees were
afforded some measure of individual control over what they ultimately received.

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

                                                            /s/ Amy Ronayne Krause

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