Dept. of Rev. v. Rent-A-Center, Inc.

28 January 26, 2015 No. 4

IN THE OREGON TAX COURT

REGULAR DIVISION

DEPARMENT OF REVENUE,

Plaintiff,

v.

RENT-A-CENTER, INC.

& Subsidiaries,

Defendants.

(TC 5224)

Plaintiff Department of Revenue (the department) appealed from a Magis-

trate Division decision as to corporation income tax. The parties initially pro-

ceeded on cross-motions for partial summary judgment seeking a ruling as to

whether the provisions of ORS 317.705(3)(a) were to be read conjunctively or

disjunctively, i.e., whether all three of subparagraphs (A), (B), and (C) in the

statute were to be satisfied or whether one or more, but not necessarily all sub-

paragraphs, could be satisfied. Granting the motion of Defendants (taxpayer) for

partial summary judgment, the court ruled that its analysis of the legislative

history led to a determination that the legislature intended the word “and” to be

read conjunctively within the statute at issue.

Oral argument on cross-motions for partial summary

judgment was held December 2, 2014, in the courtroom of

the Oregon Tax Court, Salem.

Melisse S. Cunningham, Senior Assistant Attorney

General, Department of Justice, Salem, filed the motion and

argued the cause for Plaintiff Department of Revenue (the

department).

Hollis L. Hyans, Morrison and Foerster LLP, New York,

filed the cross-motion and argued the cause for Defendants

(taxpayer).

Decision for Defendants rendered January 26, 2015.

HENRY C. BREITHAUPT, Judge.

I. INTRODUCTION

This income tax matter relating to tax year 2003

is before the court on cross-motions for summary judgment.

Both Plaintiff Department of Revenue (the department) and

Defendants (taxpayer) seek a ruling as to how the provisions

of ORS 317.705(3)(a) are to be read. Such a ruling will be of

Cite as 22 OTR 28 (2015) 29

importance to both parties as they proceed with discovery

and preparation of this case.

II. FACTS

Neither party has suggested that there are any fac-

tual disputes preventing the court from ruling on the proper

reading of the statute.

III. ISSUE

The parties are separated by whether all three

of subparagraphs (A), (B), and (C) in the statute must be

satisfied—as taxpayer argues—or whether “an exchange

of value” may be “demonstrated” by a showing that one

or more, but not necessarily all, of the subparagraphs are

satisfied—as the department argues.

IV. ANALYSIS

A. The Statute

This issue of statutory construction starts, of

course, with the language of the statute—ORS 317.705.1 The

relevant language provides:

“(2) ‘Unitary group’ means a corporation or group of

corporations engaged in business activities that constitute

a single trade or business.

“(3)(a) ‘Single trade or business’ means a business

enterprise in which there exists directly or indirectly

between the members or parts of the enterprise a sharing

or exchange of value as demonstrated by:

“(A) Centralized management or a common executive

force;

“(B) Centralized administrative services or functions

resulting in economies of scale; and

“(C) Flow of goods, capital resources or services demon-

strating functional integration.

“(b) ‘Single trade or business’ may include, but is not

limited to, a business enterprise the activities of which:

1

Unless otherwise noted, the court’s references to the Oregon Revised

Statutes (ORS) are to 2001.

30 Dept. of Rev. v. Rent-A-Center, Inc.

“(A) Are in the same general line of business (such as

manufacturing, wholesaling or retailing); or

“(B) Constitute steps in a vertically integrated process

(such as the steps involved in the production of natural

resources, which might include exploration, mining, refin-

ing and marketing).”

This statutory language was added to ORS chapter 317 in a

special session held in 1984. Or Laws 1984, ch 1, § 4 (Spec

Sess) (the 1984 statute).

In 2007 the legislature amended the language of

the 1984 statute to change the word “and” in the statute to

the word “or.” Or Laws 2007, ch 323, § 1 (the 2007 statute). A

Staff Measure Summary for that change states that the bill

making the change “[c]larifies language pertaining to the

definition of a ‘unitary business.’ ” Staff Measure Summary,

SB 178-A, May 11, 2007. The provisions of the 2007 stat-

ute were expressly prospective only in application. Or Laws

2007, ch 323, § 3 (effective for tax years beginning on or

after January 1, 2007).

B. Interpretive Rules

Until 2006, interpretive rules promulgated by the

department stated that “[e]ach of the three criteria listed in

ORS 317.705(3)(a)(A)-(C) must be present to meet the defi-

nition of ‘single trade or business.’ ” OAR 150-317.705(3)(a)

(2003 ed) (the 2003 Rule). That language did not appear in

the rule until late 1986.2 However, ORS 317.705(3)(a) was

enacted in 1984, effective January 1, 1986. Or Laws 1984,

ch 1, §§ 4, 20 (Spec Sess). Former ORS 314.363(3), which

provided that an “affiliated corporation” constituted part of

a unitary group when “it is engaged in business activities

which are integrated with, dependent upon, or which con-

tribute to the business activities of the group as a whole,”

2

The department first promulgated rules under section 317.705 in 1985, with

a December 31, 1985, effective date. See OAR 150-317.705 (1986 edition). The ini-

tial rule did not include the language at issue, but provided for a consideration

of “all direct and indirect relationships” to determine whether a “single trade or

business exists[.]” Id. The “[e]ach of the three criteria” language was added to the

rule, and the rule was renumbered to OAR 150-317.705(3)(a), effective December

31, 1986. RD 10-1986 (Dec 31, 1986). The reference to the statute itself was added

in late 1987. RD 15-1987 (Dec 10, 1987).

Cite as 22 OTR 28 (2015) 31

was repealed in 1984, also effective January 1, 1986. Or

Laws 1984, ch 1, §§ 18, 20 (Spec Sess). The department’s

rule under ORS 314.363, which also contained those three

factors, remained in the Oregon Administrative Rules until

at least 2003.3 That the rule remained listed, however, can-

not save the department from the express statutory require-

ments of ORS 317.705(3)(a)(A) to (C) or the legislature’s

repeal of former ORS 314.363.

In late 2006 the department amended its interpre-

tive rule (the 2006 Rule) to state that “the presence of one or

two such factors may also demonstrate the flow of value requi-

site for a single trade or business.” See OAR 150-317.705(3)(a)

(2007); REV 11-2006 (Dec 27, 2006) (effective Jan 1,

2007). The rule, read together with OAR 150-305.100-(B)

(2010), would apply to all periods open to examination. See

U.S. Bancorp v. Dept. of Rev., 337 Or 625, 638-39, 103 P3d 85

(2004) (allowing retroactive application of rules). The 2003

year at issue in this case was open to examination at the

time the department took the action about which taxpayer

complains in this case.

C. Only the 1984 Statute is Relevant

Notwithstanding the attempts by each party to

gain some benefit from the provisions and legislative history

of the 2007 statute, the only law relevant to this case is the

1984 statute. The substantive changes made by the 2007

statute were expressly applicable only for years beginning

on or after January 1, 2007. Or Laws 2007, ch 323, § 3.

Any legislative history of the 2007 statute may well

serve to indicate what the intent of that legislature was. It

cannot be considered in determining what the intent of the

1984 legislature was. Comcast Corp. v. Dept. of Rev., 356 Or

282, 327, 337 P3d 768 (2014).

3

OAR 150-314.363-(B) provided that “[a]n affiliated corporation will be con-

sidered a member of a unitary group when the corporation’s business activities

are integrated with, dependent upon, or contribute to the business activities of

the group as a whole.” The rule was not repealed until sometime between 2003

and 2005: OAR 150-314.363-(B) was still present in the 2003 version of the OARs,

while it was absent from the 2005 version.

32 Dept. of Rev. v. Rent-A-Center, Inc.

D. Department Rules Valid Only If Consistent With 1984

Statute

After determination of the proper construction of

the 1984 statute, the court may determine the effect, if any,

of the interpretive rules of the department—and particu-

larly whether the 2006 Rule, upon which the department

relied in taking action against taxpayer, was a permissible

interpretation of the 1984 statute.

E. Construction of the 1984 Statute

The court first looks to the text of the statute.

The conjunctive word “and” found in the statutory listing

of factors indicates that each and every one of the factors

must exist if a single trade or business is to be found. As

already mentioned, this is the reading of the 1984 statute by

taxpayer.

Although the department acknowledges that the

word “and” is typically read as conjunctive, it states “[i]t is

universally held * * * that ‘and’ may be construed to mean

‘or’ when necessary to effectuate the intention of the legisla-

ture and to avoid an unreasonable or absurd result.”

Accepting the argument of the department that in

some cases “and” may be read disjunctively rather than con-

junctively where necessary to effect legislative intent, the

court next consults the statutory context to determine if it

provides an indication of legislative intent.

The context in which the (3)(a) factors are found

does not lead to a definite conclusion. Although paragraph

(3)(b) lists other examples of what may constitute a “single

trade or business,” its provisions are examples only. They

do not purport to supplant the predicate requirements of

paragraph (3)(b). Stated differently, in all cases paragraph

(3)(a) must be satisfied. In some cases a business having

those factors may also be of the type described in paragraph

(3)(b).

With neither text nor context leading to a definite

conclusion, the court looks to legislative history to deter-

mine whether the legislature intended the word “and” to be

read disjunctively or conjunctively.

Cite as 22 OTR 28 (2015) 33

Although the department “acknowledges that the

1984 legislative history indicates witnesses before a legisla-

tive committee interpreted ‘and’ in the [conjunctive] sense,”

neither the department nor taxpayer has provided the court

with any testimony of witnesses.4

The court has reviewed the legislative history of the

1984 Special Session and found the following:

Unitary apportionment was a major concern of

the legislature in 1984. The Joint Interim Committee on

Revenue and School Finance (the Joint Committee) met

multiple times in 1984 and discussed unitary taxation at

many of these meetings. Minutes, Joint Committee, Feb 3,

1984, 3-4; Minutes, Joint Committee, Mar 15, 1984, 5-7;

Minutes, Joint Committee, Mar 16, 1984, 2-4; Minutes, Joint

Committee, May 31, 1984, 7-9; Minutes, Joint Committee,

Jun 1, 1984, 1-3.

Indeed, there was pre-session review of the bill by

taxpayers and counsel for taxpayers and the government.

Tape recording, Special Committee, HB 3029, July 26, 1984,

Tape 94, Side B (statement of Elizabeth Stockdale) (“We tried

4

As discussed below, representatives, senators, the legislative revenue offi-

cer, and the department’s own representative discussed these changes at length

in meetings of both the House Special Committee on Revenue (the Special

Committee) during the 1984 special session and in the Joint Committee the week

before. These discussions, and in fact the existence of the Joint Committee’s

meetings the week before the special session, would not be immediately appar-

ent from a review of the minutes or audio recordings of the Special Committee

limited to specifically identified sections of the bill. There was little discussion

of the proposed amendments in Elizabeth Stockdale’s review of section 4 of the

bill (the section which added the changes that are in question here). Tape record-

ing, Special Committee, HB 3029, July 25, 1984, Tape 89, Side A (statement of

Elizabeth Stockdale). The relevant discussion of section 4 highlighted below actu-

ally occurred during discussion of section 17 of the bill. Tape recording, Special

Committee, HB 3029, July 25, 1984, Tape 90, Side A (statement of Elizabeth

Stockdale).

As for the Joint Committee meetings the week before, nothing in the exhibits

or minutes of the Special Committee would readily lead one to realize that those

prior meetings occurred or were relevant to the special session. However, shortly

following the discussion of section 4 and other times over the course of the Special

Committee’s meetings on July 25 and 26, 1984, Stockdale made references to

discussions from “last week” (as well as a reference to “last time” in the first part

of the first day of the special session), that led the court to discover the extensive

discussions that occurred in the earlier Joint Committee meetings. Tape record-

ing, Special Committee, HB 3029, July 25, 1984, Tape 89, Side A (statement of

Elizabeth Stockdale).

34 Dept. of Rev. v. Rent-A-Center, Inc.

by having this thing reviewed by taxpayers and taxpayer’s

um, tax practitioners as well as Department of Revenue

staff and, and I’ve had other attorneys in the Department

of Justice look at, look at the language to try to, to get out of

the bill as many vaguenesses as possible.”).

The language at issue was discussed in pre-session

committee meetings. On July 19, 1984, Governor Atiyeh

presented his initial proposed bill to the Joint Committee.

Minutes, Joint Committee, July 19, 1984, at 4. Following the

Governor’s general discussion of the policy reasons behind

the proposed changes to Oregon’s worldwide tax structure,

Assistant Attorney General Elizabeth Stockdale represent-

ing the Department of Revenue spent considerable time

explaining the bill’s provisions. The relevant discussion

from her explanation to the Joint Committee was as follows:

Stockdale: “We’ve attempted here, in section 4 to tighten

up our definition of what a unitary business is what a uni-

tary group is for purposes of sorting those nonunitary cor-

porations out of the consolidated return. And uh, in the

hopes that when taxpayers try to decide what should stay

in what should go out for the Oregon base they’ll have an

easier time of it. Uh and so there are specific requirements

um that are specified in the in the bill in order to do this

and they’re, they’re consistent with the, the Oregon rules

that we have now—administrative rules and court cases

that uh have been handed down both by the State of Oregon

courts and the United States Supreme Court.”

*****

Senator Nancy Ryles: “So then there really are no

changes, you’re just spelling it out in the law that way?”

Stockdale: “Well there is one change um, that I should

point out and that is that um in the definition of single

trade or business which is part of the unitary group defi-

nition if you’ll look at ah, subsection 3, ah, subparagraph

capital B at the end of that it says ‘and.’ Our current prac-

tice um has been, has used an ‘or’ there. So there will have

to be one element from each of these three uh, capital A,

capital B, capital C, for there to be a unitary relationship.

Centralized management or common executive force, and

centralized administrative services or function, and either

flow of goods or capital resources or services.”

Cite as 22 OTR 28 (2015) 35

*****

Stockdale: “Well, the current—uh, most of our litiga-

tion um, involving multi-state issues has in the past has

involved what is a unitary business. It’s been a very diffi-

cult definition to get a hold of um, the Supreme Court has

had difficulties with it the states have had difficulties with

it, taxpayers have had difficulties with it. As we go—have

have gone through time and the courts have seen more and

more kinds of businesses and tried to apply the unitary

concept to them we’ve gotten a few rules ah, laid down

with a little more specifics than contributing to, dependent

upon, and integrated with. And so we’re trying to incorpo-

rate those into our statute so that it’s clear that we’re try-

ing to follow those rules. There still will be, I’m sure, room

for dispute under this definition. There is no way you can

perfectly define what a unitary business is because every

business is different and it’s a factual determination. But

this is an attempt to, to put some of those rules into the

statute. And uh, and try to assist in uh defining what it is.

What a unitary business is.”

Representative John Schoon: “Elizabeth, now I under-

stand you say that a unitary business would have to have A,

B, and C—capital A, capital B, and capital C. Uh, I really

thought uh, when I read this that it would have been ‘or’ in

between each of those three items and uh, uh from what

you’d said earlier uh as the Supreme Court has defined

a uh, unitary business because I thought that any one of

those factors—and I was particularly looking for the uh

capital resources flowing where nothing else existed—in

fact I thought you’d used that as an example, of where a

company could be unitary if it was merely supported by

capital resources not necessarily through centralized man-

agement or purchasing.”

Tape recording, Joint Committee, July 19, 1984, Tape 81,

Side B (emphasis added). Section 4 of the Governor’s draft

bill remained unchanged from this date to the bill’s pas-

sage. See Testimony, Joint Committee, July 19, 1984, Ex 9.

The language at issue was discussed again during

the Special Session. Stockdale discussed it in an inter-

change between her and Representative Wally Priestly:

Representative Wally Priestly: “Uh, just back to kind of

confirm this point under section 4, on page 4, the uh, the

36 Dept. of Rev. v. Rent-A-Center, Inc.

definition of the unitary group which is now going to go from

50 to 80 percent of ownership, [Stockdale: “mm hm”] in

addition to that we’re also limiting it by the, by the use of the

word ‘and’ so that it has to meet all of these conditions rather

than just just each condi—one of the conditions [Stockdale:

“That’s right.”] using the word ‘or’—is that right?”

Stockdale: “That’s right.”

Priestly: “Why do we, why is that beneficial, um, ah,

couldn’t, could we not go with the consolidated uh, filing

and uh maintain the broader-based unitary group by, by

having it ‘or’ so that these people could have, might have

uh as it turns out now they could have a single trade or

business, they could be centralized management, central-

ized administrative services, and maybe not have a flow of

goods and capital resources, and then they fall out of the

unitary. Why is it—why do we need to make it ‘and’ versus

‘or’?”

Stockdale: “The idea of changing that—we’re trying to

tighten up the definition of unitary. Even though there’s

been a lot of litigation over the years as to what constitutes

unitary business, it’s such a fact-intensive determination

that there are some—there are still probably many cases

where there’s a legitimate argument as to whether there’s

a unitary business or not because of what the elements

are that are there if there’s a strong centralized manage-

ment um, but there’s no flow of services or goods or capital

resources among the, among the members or if there’s uh,

uh some flow of goods but it’s not a lot and there’s nothing

else. And, and so we still wind up with qualitative kinds

of judgments that have to be made about the facts that

are presented and the uh, the attempt in this definition

is to say rather than have the total amount of, of flexibil-

ity that creates with—with flexibility on one side, doubt on

the other on the part of taxpayers and the department as

to what really is a unitary business by tightening that up

and trying to, trying to eliminate some of the gray area, of

those, those businesses that fall in the gray area we’re not

really sure whether they’re unitary, we’re not really sure

whether they’re not—we wind up in court trying to argue

about it and it really is expensive and time consuming for

everyone, just making a choice to say okay…”

Tape recording, House Special Committee on Revenue, HB

3029, July 25, 1984, Tape 90, Side A (emphases added).

Cite as 22 OTR 28 (2015) 37

The following day, Jim Scherzinger from the

Legislative Revenue Office, also reiterated use of the word

“and”:

“Uh, uh, Policy Option B is definition of a unitary group

and this bill, the Governor’s bill does redefine what a uni-

tary group is. Imagine that my summary of the [inaudible]

and my summary of the current law, the Governor’s bill

is, is totally uh, on point but I can get maybe Elizabeth is

much better at explaining all the nuances of shifting the

definition, but under current law, uh, the the unitary group

is defined as an affiliated base [inaudible] with dependent

on or contributing to a unitary business and the director

has a, a deal of latitude, he has some latitude in the defi-

nition to uh, in the, and the taxpayer does to seek modifi-

cation of the unitary treatment. And in this bill, redefines

the, the unitary group ah and specifically has a ‘and’ when

it comes to centralized management, integrated functions

and centralized administrative services. And secondly, says

that in that area where you have to, to, you may appeal for

a uh, a different treatment than what the law says that

uh, that you must show that it violates your constitu—your

that violates your constitutional rights. To be treated the

way the law—as opposed to leaving the discretion totally

[inaudible].”

Tape recording, House Special Committee on Revenue,

HB 3029, July 26, 1984, Tape 94, Side B (statement of Jim

Scherzinger) (emphasis added).5

Additionally, the Legislative Revenue Office’s rev-

enue analysis of the proposed bill described the amend-

ment thus: “[c]hanges definition of unitary group to corpo-

rations engaged in a single trade or business that requires

(a) centralized management, (b) integrated functions, and

(c) centralized administrative services.” Testimony, House

Special Committee on Revenue, HB 3029, July 25, 1984,

5

Scherzinger’s reference to “Policy Option B” comes from an exhibit to

testimony in the Special Committee. Testimony, House Special Committee

on Revenue, HB 3029, July 26, 1984, Ex 1. The document, prepared by the

Legislative Revenue Office, was titled “Unitary Policy Options” and contained six

policy options. Id. Policy Option B (“Definition of Unitary Group”) listed “Current

Law” as “Affiliated business integrated with, dependent upon, or contributing

to unitary business.” Id. at 1. It listed under “Governor’s Bill” the following:

“Affiliated business requiring centralized management, integrated functions,

and centralized administrative services.” Id. (underscoring in original).

38 Dept. of Rev. v. Rent-A-Center, Inc.

Ex 4 (emphasis added). Finally, Stockdale, in her initial dis-

cussion of section 4 in the special session, referred to the

requirements in the definition of unitary group as “elements.”

Tape recording, House Special Committee on Revenue, HB

3029, July 25, 1984, Tape 89, Side A (statement of Elizabeth

Stockdale).

These focused and specific discussions of how the

statute is to be read can support no other conclusion than

that the 3(a) factors must be read conjunctively. Indeed, it

is rare that a question presented in court was so specifically

and definitively discussed in the legislative process.

The court concludes that the legislature in 1984

intended that ORS 317.705(3)(a) be read as requiring all

three factors be present if there was to be a finding of a “sin-

gle trade or business.”

F. Court Opinions

The department argues, however, that this court

has indicated on more than one occasion that the legisla-

ture intended its definition of a unitary business to reach

the limitations on such concept under the Constitution of

the United States.6 The department then observes that case

law of the United States Supreme Court indicates that the

presence of all three factors listed in the 1984 statute are

not required to pass constitutional muster. The depart-

ment concludes that the 1984 statute should be construed

as extending to the constitutional limit and not the more

restrictive conjunctive reading propounded by taxpayer.

The first problem with this argument of the depart-

ment is its implicit premise that court opinions after the

adoption of legislation can foreclose conclusions based on

the intent of the legislature that brought the legislation into

force. That is not an acceptable conclusion.

Secondly, the opinions of this court on which the

department relies do not in fact supply a basis for the argu-

ment of the department.

6

The cases are Maytag Corp. v. Dept. of Rev., 12 OTR 502 (1993) and Ann

Sacks Tile & Stone, Inc. v. Dept. of Rev., 20 OTR 377 (2011).

Cite as 22 OTR 28 (2015) 39

G. Maytag

In Maytag Corp. v. Dept. of Rev., 12 OTR 502 (1993),

this court was faced with a problem of unitary relation-

ship among a group of enterprises shortly after the deci-

sion of the United States Supreme Court in Allied Signal v.

Director, Tax Div., 504 US 768 (1992) and approximately a

decade after the decision of that court in Container Corp. v.

Franchise Tax Board, 463 US 159 (1983) and the adoption

of the 1984 statute. The years at issue in Maytag were 1984

through 1987. Maytag, 12 OTR at 503. The 1984 statute was

effective for the 1986 and following years and thus applied

to at least some of the years at issue in Maytag.

This court first addressed the significance of

Container Corp., in the determination of whether, constitu-

tionally, a unitary business relationship existed among sev-

eral corporations.7 This court stated “[i]t would appear that

the Oregon statutes before and after Container Corp. intend

to assert jurisdiction to the full extent allowed by the Due

Process Clause.” Maytag, 12 OTR at 506.

However, this court’s discussion as to the scope

of the 1984 statute continued by saying that its view was

“reinforced by the presumption of the administrative rule

that a business is unitary from the mere presence of one of

three factors.” 12 OTR at 506 (emphasis added). In a footnote

immediately following that language this court stated “[t]he

court in Container Corp. found a similar presumption in the

California law to be reasonable.” Id. n 3.

Only after that discussion did this court find that

the legislature in 1984 intended to assert jurisdiction to

tax to the full extent allowed by due process. This court

then surveyed United States Supreme Court precedent as

to constitutional limits.8 Id. at 507-08. Although this court

in Maytag discussed the unitary factors found in the 1984

7

The unitary relationship among business entities is often referred to

as “enterprise unity.” See Jerome R. Hellerstein & Walter Hellerstein, State

Taxation ¶ 8.07[2][a] (3d ed 1998).

8

In doing so this court appears to have treated the tests for asset unity found

in Allied Signal to be an additional test for enterprise unity. This approach has

been held to be in error. MeadWestvaco Corp. v. lll. Dept. of Rev., 553 US 16, 29-30,

128 S Ct 1498, 170 L Ed 2d 404 (2008).

40 Dept. of Rev. v. Rent-A-Center, Inc.

statute, its final conclusion seems to be based on the opera-

tional versus investment criteria of the Allied Signal deci-

sion. That certainly weakens any basis for treating Maytag

as definitively concluding that as few as one statutory factor

would suffice to support a conclusion that two entities were

in a unitary relation.

More importantly, in relying on “the administrative

rule” to conclude that the presence of one of three factors

could support a unitary finding, this court unfortunately

relied on an administrative rule, OAR 150-314.615-(E), that

had been promulgated under the statutes in effect prior

to the adoption of the 1984 statute. That rule was clearly

not an acceptable interpretation of the 1984 statute and its

application to at least some of the years at issue in the case.

The legislative history referenced above makes clear that

the legislature intended that the 1984 statute would change,

and make more objective, the standards for determining

unitary relationships among business entities. In addition,

the department rule containing a conjunctive reading of the

3(a) factors was applicable for years beginning on or after

January 1, 1986.

In Maytag this court did not address the question,

presented now, as to how to read the 1984 statute and the

apparently conjunctive language of paragraph (3)(a). Nor did

the court address the legislative history of the 1984 statute

on the question now presented. Maytag cannot be viewed as

a reason for this court to now address the question before it

by reference to the ultimate test of legislative intent.

H. Ann Sacks Tile & Stone, Inc.

The department also points to this court’s decision

in Ann Sacks Tile & Stone, Inc. v. Dept. of Rev., 20 OTR 377

(2011) for the proposition that the reach of chapter 317 is to

the constitutional limits. In Ann Sacks this court stated:

“Under ORS 317.018 and the case law of this court, the leg-

islature is considered in ORS 317.070 to have extended the

reach of the excise tax to the limit defined by the federal

constitution. Maytag Corp. v. Dept. of Rev., 12 OTR 502

(1993); see also Amer. Refrig. Transit Co. v. Tax Com., 238

Or 340, 395 P2d 127 (1964) (appealed from Amer. Refrig.

Trans. Co. v. Commission, 1 OTR 429 (1963).”

Cite as 22 OTR 28 (2015) 41

Ann Sacks, 20 OTR at 380-81 (2011). That quotation

comes from a portion of the decision in Ann Sacks dealing

with the question of whether the taxpayer there was “doing

business” within the meaning of ORS 317.070. The issue

was whether a company was subject to the jurisdiction of

Oregon, not whether a company concededly subject to such

jurisdiction was in a unitary relationship with another com-

pany. The 1984 statute was in no way at issue in Ann Sacks.

Further, the court’s citation to Maytag and to

Amer. Refrig. Transit should be read as somewhat confus-

ing. Maytag did not deal with jurisdiction of Oregon over a

taxpayer. Amer. Refrig. Transit did deal with that question.

That jurisdictional question is quite different from the scope

of the 1984 statute in taking into consideration the income

of affiliates bearing a unitary relationship with a company,

here taxpayer, over which there is no question that Oregon

has jurisdiction.

For the foregoing reasons, the case law of this court

cannot be seen as an impediment to reading the 1984 stat-

ute in the way the Oregon Legislature intended it to be read.

V. CONCLUSION

The 1984 statute governs this case. Under the 1984

statute, the provisions of paragraph (3)(a) of the statute are

to be read conjunctively. All of the factors stated in para-

graph (3)(a) must be satisfied. To the extent that the depart-

ment wishes to apply its 2006 rule retroactively to the 2003

year, that rule cannot be given effect as it is inconsistent

with the governing statute.

The motion of taxpayer is granted and that of the

department is denied. Now, therefore,

IT IS ORDERED that Defendants’ Motion for

Partial Summary is granted; and

IT IS FURTHER ORDERED that Plaintiff’s Cross-

Motion for Partial Summary Judgment is denied.