The opinion
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Aramark Corp. v. Harris, Slip Opinion No. 2025-Ohio-2114.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2025-OHIO-2114
ARAMARK CORPORATION, APPELLANT, v. HARRIS, TAX COMMR., APPELLEE.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Aramark Corp. v. Harris, Slip Opinion No. 2025-Ohio-2114.]
Taxation—Commercial-activity tax (“CAT”)—Gross-receipts exclusion in context
of agency relationship—R.C. 5751.01(F)(2)(l) and (N)(2)—
R.C.5751.02(A)—Corporation not entitled to gross-receipts exclusion
under CAT statute, because by keeping for itself reimbursements it received
from its clients for goods and services it purchased for those clients,
corporation did not hold reimbursements on behalf of or as representative
of another and therefore was not acting as clients’ agent—Board of Tax
Appeals’ decision affirmed.
(No. 2023-1540—Submitted February 12, 2025—Decided June 18, 2025.)
APPEAL from the Board of Tax Appeals, No. 2019-2975.
__________________
SUPREME COURT OF OHIO
SHANAHAN, J., authored the opinion of the court, which FISCHER, DEWINE,
BRUNNER, and DETERS, JJ., joined. KENNEDY, C.J., dissented, with an opinion
joined by HAWKINS, J.
SHANAHAN, J.
{¶ 1} Ohio levies its commercial-activity tax (“CAT”) “on each person or
entity with taxable gross receipts above a certain threshold for the privilege of doing
business in Ohio.” Willoughby Hills Dev. & Distrib., Inc. v. Testa, 2018-Ohio-4488,
¶ 1, citing R.C. 5751.01 et seq. The question presented in this case is whether
appellant, Aramark Corporation, has met the requirements for a gross-receipts
exclusion under the CAT statute and is entitled to a refund. Appellee, Tax
Commissioner Patricia Harris, determined that Aramark did not meet the statute’s
exclusion requirements and denied Aramark’s request for a refund. BTA No. 2019-
2975, 7 (Oct. 31, 2019). The Board of Tax Appeals affirmed that decision. BTA
No. 2019-2975, 2023 WL 7431918, *7 (Nov. 6, 2023).
{¶ 2} Aramark appealed, reiterating as its main view that it is subject to the
gross-receipts exclusion under the CAT statute because the reimbursements it
received from certain clients were made within the context of a principal-agent
relationship, with Aramark acting as the clients’ agent for the benefit of the clients’
food-service programs. Alternatively, Aramark argues that the reimbursements it
received from those clients are not subject to the CAT, because those
reimbursements are not taxable gross receipts.
{¶ 3} We affirm the board’s decision, albeit for reasons that differ from
those given by the board.
I. BACKGROUND
{¶ 4} Aramark provides food services to clients in multiple industries, such
as business dining, education, sports and entertainment, healthcare, and corrections.
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To furnish these services, Aramark purchases food, labor, and miscellaneous
materials (e.g., packaging) from third-party vendors.
{¶ 5} Aramark provides these services under two main types of contracts:
profit-and-loss contracts and management-fee contracts. Under a management-fee
contract, the client reimburses Aramark for its purchase of food, labor, and
miscellaneous materials from third-party vendors—thus, taking ownership of the
inventory—and pays Aramark a management fee. Because the management-fee
client owns the inventory, it earns a profit or suffers a loss depending on whether
its register receipts (i.e., sales) exceed its expenses. By comparison, under a profit-
and-loss contract, Aramark maintains ownership of the inventory and keeps the
receipts earned at the register, thus bearing the risk of loss.
{¶ 6} This case concerns the taxability of the reimbursements Aramark
received under its management-fee contracts for the period July 2012 through
December 2016. For that period, Aramark reported and paid the CAT on the
reimbursements it received from its management-fee clients—that is, Aramark paid
the tax on the reimbursements it received for purchasing food, labor, and
miscellaneous materials for its management-fee clients, and it paid the tax on the
management fees it earned under each contract.
{¶ 7} Aramark later filed a $907,532 refund claim with the tax
commissioner for the CAT it paid on the reimbursements received from its
management-fee clients.1 Aramark argued that it was entitled to this refund under
R.C. 5751.01(F)(2)(l), which excludes from the definition of “gross receipts” any
“[p]roperty, money, and other amounts received or acquired by an agent on behalf
of another in excess of the agent’s commission, fee, or other remuneration.” In
Aramark’s view, it acted as an agent for its management-fee clients by making
purchases on their behalf and receiving reimbursement for those purchases from
1. Aramark concedes that the management fees it received are subject to the CAT, and it is not
seeking a refund for the CAT paid on those fees.
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the clients, thereby entitling it to a CAT exclusion for the reimbursement amounts.
The tax commissioner disagreed and denied the refund claim. BTA No. 2019-2975
at 7 (Oct. 31, 2019).
{¶ 8} Aramark appealed to the board. The board affirmed the tax
commissioner’s denial of Aramark’s refund claim, concluding that Aramark had
failed to establish the existence of an agency relationship between itself and its
management-fee clients. Citing principally this court’s decision in Willoughby
Hills, the board determined that to qualify for the agency exclusion, Aramark
needed to show that it was endowed with actual authority to bind its clients to its
activities with third-party vendors. 2023 WL 7431918 at *5. But the board found
nothing in the terms of Aramark’s management-fee contracts that created the type
of relationship necessary for it to qualify for the CAT exclusion as an agent for its
clients. Id. at *5-6. The board also rejected Aramark’s alternative argument that
eschewed reliance on the agency exclusion, finding “illogical” Aramark’s view that
the reimbursements it received from its management-fee clients did not constitute
gross receipts under R.C. 5751.01(F). Id. at *6. This appeal followed.
II. ANALYSIS
{¶ 9} Our function is to determine whether the board’s decision was
reasonable and lawful, see R.C. 5717.04, and we apply de novo review to the
board’s resolution of legal questions, see Willoughby Hills, 2018-Ohio-4488, at
¶ 12.
A. Aramark’s first proposition of law
{¶ 10} Aramark argues in its first proposition of law that the
reimbursements it received from its management-fee clients do not constitute gross
receipts under the CAT statute or under relevant administrative regulations and
guidance, because Aramark received those reimbursements in its capacity as the
clients’ agent. We disagree.
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1. The CAT statute
{¶ 11} We begin by considering the relevant language of the CAT statute.
“In doing so, we do not ask what did the general assembly intend to enact, but what
is the meaning of that which it did enact.” (Cleaned up.) Total Renal Care, Inc. v.
Harris, 2024-Ohio-5685, ¶ 13. “When a statute’s meaning is unambiguous, our
task is at an end—we must apply the statute as written.” Id.
{¶ 12} The CAT is “levied . . . on each person with taxable gross receipts
for the privilege of doing business in this state.” R.C. 5751.02(A). Subject to
certain exceptions, the term “‘gross receipts’ means the total amount realized by a
person, without deduction for the cost of goods sold or other expenses incurred,
that contributes to the production of gross income of the person.” R.C. 5751.01(F).
{¶ 13} At issue here is the gross-receipts exception that arises in the context
of an agency relationship. For purposes of the CAT statute, “gross receipts”
excludes “[p]roperty, money, and other amounts received or acquired by an agent
on behalf of another in excess of the agent’s commission, fee, or other
remuneration.” R.C. 5751.01(F)(2)(l). In the same context, “‘[a]gent’ means a
person authorized by another person to act on its behalf to undertake a transaction
for the other, including . . . [a] person retaining only a commission from a
transaction with the other proceeds from the transaction being remitted to another
person.” R.C. 5751.01(N)(2) (formerly codified in R.C. 5751.01(P), the definition
of “agency” was moved to division (N) of the statute effective Oct. 3, 2023, but
remains substantively unchanged, see 2023 Am.Sub.H.B. No. 33, Section 101.01,
at 27, 2746).
{¶ 14} Contrary to what Aramark argues, Aramark does not meet the
definition of “agent” under R.C. 5751.01(N)(2).2 Decisive here is the statute’s use
2. The dissent would also consider whether Aramark falls within R.C. 5751.01(N)’s general
definition of “agent.” We focus here on the specific definition in R.C. 5751.01(N)(2) because that
is what Aramark focused on in its merit brief. And at oral argument, Aramark reaffirmed its reliance
on R.C. 5751.01(N)(2).
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SUPREME COURT OF OHIO
of the word “retaining,” which is the present participle of “retain.” In the sense
relevant here, “retain” means “to hold or continue to hold in possession or use:
continue to have, use, recognize, or accept: maintain in one’s keeping.” Webster’s
Third New International Dictionary (2002). Here, Aramark has failed to show that
it did not Bhold, have, or keep the reimbursements that it received from its
management-fee clients. Indeed, the record lacks any evidence establishing that
Aramark passed on to its third-party vendors the reimbursements it received from
its management-fee clients.
{¶ 15} Even if Aramark could show that it meets the definition of “agent”
under R.C. 5751.01(N)(2), that would not end the matter, for Aramark would still
need to show that it meets the terms of the gross-receipts exclusion set forth in
R.C. 5751.01(F)(2)(l). We have little difficulty concluding that the reimbursements
Aramark received from its management-fee clients fall outside the exclusion. This
is because Aramark did not “receive[] or acquire[]” the reimbursements “on behalf
of another,” R.C. 5751.01(F)(2)(l). Rather, as our analysis above makes clear,
Aramark acquired the reimbursements on behalf of itself.
{¶ 16} The dissent sees things differently, arguing that Aramark meets the
definition of “agent” under R.C. 5751.01(N)(2) and that the reimbursements
Aramark received from its management-fee clients should be excluded from its
gross receipts under R.C. 5751.01(F)(2)(l). With regard to R.C. 5751.01(N)(2), the
dissent would find that Aramark’s only profit is its management fee because its
process of purchasing goods and services for its management-fee clients and
receiving reimbursement from the clients for those purchases is a financial wash.
See dissenting opinion, ¶ 59-60. As a matter of economic logic, the dissent has a
point. But because profit is not the criterion for establishing whether a person or
entity constitutes an “agent” under the definition set forth in R.C. 5751.01(N)(2),
we do not consider it in our analysis.
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January Term, 2025
{¶ 17} The dissent also would find that Aramark meets the requirements for
excluding the reimbursements it received from its management-fee clients from its
gross receipts under R.C. 5751.01(F)(2)(l) based on the synonymity between “on
behalf of another” and “as the representative of.” See dissenting opinion at ¶ 63-
66. Because Aramark acted as the representative of its management-fee clients in
procuring goods and services, the dissent concludes that the reimbursements
Aramark received from its clients were received “on behalf of another,” R.C.
5751.01(F)(2)(l). But the fact that Aramark purchased goods and services for its
management-fee clients does not end the analysis. What Aramark seeks to exclude
from its gross receipts is “money,” id., that it received from its clients in the form
of reimbursements. And as we explained above, Aramark kept for itself the
reimbursements that it acquired; it did not hold them on behalf of or as the
representative of another. Even if Aramark was acting as an agent when it
purchased goods and services for its management-fee clients, it was acting on
behalf of itself when it received reimbursements from its clients for those
purchases.
{¶ 18} In the end, it is the General Assembly that must prescribe what a
taxpayer may exclude from its gross receipts, and because Aramark has not met the
statutory requirements for the gross-receipts exclusion as an agent, we reject
Aramark’s first proposition of law. Even so, we would be remiss in not addressing
one of the pillars of Aramark’s argument, namely, that Aramark is an agent of its
management-fee clients and therefore subject to the CAT exclusion based on this
court’s decision in Willoughby Hills. For the reasons that follow, we disapprove of
the approach used in that case to interpret the statutory definition of “agent” for
purposes of the CAT. We apply here the definition of “agent” based on the words
the General Assembly used in the statute, not the gloss that was put on those words
in Willoughby Hills.
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SUPREME COURT OF OHIO
{¶ 19} Willoughby Hills was a CAT-refund case in which we addressed the
clause that is now found in R.C. 5751.01(N) providing that an “‘[a]gent’ means a
person authorized by another person to act on its behalf to undertake a transaction
for the other.” See Willoughby Hills, 2018-Ohio-4488, at ¶ 23. We determined that
the statute “does not define the type of authority that must be bestowed on a person
or entity to create an agency relationship for CAT purposes,” id. at ¶ 25, and
provided guidance on the type of authority that would create such a relationship.
{¶ 20} In providing that guidance, this court relied on its decision in
Cincinnati Golf Mgt., Inc. v. Testa, 2012-Ohio-2846. In that case, the City of
Cincinnati had contracted with a company to manage the city’s golf courses. The
question presented was whether the management company’s purchases from third-
party vendors for such things as payroll services were exempt from use tax under
the political-subdivision exemption set forth in R.C. 5739.02(B)(1) because the
company acted as an agent for the city in making those purchases. Id. at ¶ 1; id. at
¶ 19, citing R.C. 5741.02(C)(2). Although the statute did not expressly state that
an agent could claim the principal’s tax exemption, this court agreed that the
exemption could apply to a transaction in which an entity acts as a purchasing agent
for a city. Id. at ¶ 23. To do so, however, we held that the management company
had to show that it had actual authority to act on the city’s behalf, such that it could
bind the city to its purchases. Id. at ¶ 24-25.
{¶ 21} Following the reasoning applied in Cincinnati Golf Mgt., this court
in Willoughby Hills determined that for purposes of the CAT, a person is
“authorized” to act on behalf of another when that person has actual authority to
act as an agent on the other’s behalf. Willoughby Hills at ¶ 27. That was a mistake.
First, because the statutory definition says nothing about the type of authority a
person must have to qualify as an agent for CAT purposes, we should have left the
statute as we found it. By requiring a showing of actual authority for a person to
qualify as an “agent,” we imposed an interpretive gloss on the definition, departing
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January Term, 2025
from settled rules of statutory interpretation by inserting words into the statute that
the General Assembly did not prescribe. See In re Application of E. Ohio Gas Co.,
2023-Ohio-3289, ¶ 13 (“In matters of statutory interpretation, this court cannot
insert or delete words.”). Second, Cincinnati Golf Mgt. was the wrong place to
look for guidance when deciding Willoughby Hills. The issue in Cincinnati Golf
Mgt. involved an agency exemption for purposes of the use tax, not the CAT. And
“agent” is statutorily defined with regard to the CAT, whereas in Cincinnati Golf
Mgt., there was not an applicable statutory definition, so this court used a definition
of “agency” as previously used by Ohio’s courts of appeals and otherwise referred
to the Restatement of the Law 3d, Agency. See Cincinnati Golf Mgt. at ¶ 20, 24.
{¶ 22} The interpretive gloss we adopted in Willoughby Hills has led the
parties in this case to base their arguments on whether Aramark had actual authority
to make purchases on behalf of its management-fee clients. We can hardly fault the
parties for this—we invited it in deciding Willoughby Hills the way we did.
Unfortunately, in that case we stepped outside the bounds of our statutory-
interpretation principles. We accordingly disapprove of Willoughby Hills to the
extent that it requires a showing of actual authority on the part of the taxpayer to
qualify as an agent for purposes of the CAT. Decisions involving the CAT’s agency
exclusion should focus on the meaning of the relevant statutory language. See
Great Lakes Bar Control, Inc. v. Testa, 2018-Ohio-5207, ¶ 9, quoting Scalia &
Garner, Reading Law: The Interpretation of Legal Texts 56 (2012) (“‘The words of
a governing text are of paramount concern, and what they convey, in their context,
is what the text means.’ ” [Boldface deleted in Great Lakes Bar Control.]).
{¶ 23} We could stop there. Because Aramark has not met the statutory
definition of “agent” to qualify for the CAT exclusion, that ends the inquiry—no
matter what the tax commissioner has said to the contrary in a rule or other
administrative guidance. However, because Aramark has relied on administrative
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sources issued by the tax commissioner, we address Aramark’s arguments based on
those sources below.
2. Administrative sources
{¶ 24} Aramark claims that it qualifies for a CAT refund under the agency
exclusion based on (1) Adm.Code 5703-29-13, (2) an advisory opinion the tax
commissioner issued in 2008, and (3) a final determination the tax commissioner
issued in another case in 2019.
{¶ 25} We start by considering the rule and the advisory opinion together.
Even assuming that these two sources could furnish an independent basis for
excluding from taxation reimbursements Aramark received from its management-
fee clients (which they do not), Aramark’s argument based on these administrative
sources fails.
{¶ 26} Although Aramark does not expressly say so, it ties its argument in
support of an agency relationship to Adm.Code 5703-29-13(C)(2)(c). That
subsection of the administrative rule addresses a fact pattern involving a general
contractor engaged by a property owner to construct a building, with the general
contractor acting as the owner’s agent and in the owner’s best interests under the
terms of a contract. The advisory opinion applies that rule to an analogous fact
pattern. See 2008 Ohio Tax Commr.Ops. No. 08-0012, https://dam.assets.ohio.gov
/image/upload/tax.ohio.gov/legal/08cat_opinion080012_ral.pdf (accessed
Apr. 4, 2025) [https://perma.cc/EEJ9-HNN2]. In both the rule and the advisory
opinion, the tax commissioner contemplates that the general contractor can exclude
from its gross receipts the money it receives from the owner to pay the
subcontractors because, in that situation, the general contractor is acting as a
“conduit” for the payments made by the owner to the subcontractors. See
Adm.Code 5703-29-13(C)(2)(c); 2008 Ohio Tax Commr.Ops. No. 08-0012, at 2.
{¶ 27} But here, Aramark is not acting as a payment conduit. The record
shows that Aramark incurs expenses on behalf of its management-fee clients, then
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January Term, 2025
receives reimbursement from the clients. Nothing in the record establishes that
Aramark passes these reimbursements on to its third-party vendors. Aramark’s
reliance on its contract with the University of Toledo does not point in a different
direction. The portions of that contract Aramark cites in support of its position say
nothing about a procedure for passing reimbursements on to third-party vendors
through Aramark; rather, the contract speaks solely to the university’s obligation to
pay Aramark for the costs that Aramark incurs.
{¶ 28} Finally, Aramark relies on a final determination the tax
commissioner issued in a 2019 tax-refund claim. But in that final determination,
the tax commissioner addressed a question arising under Ohio’s use tax, not the
CAT. See In re Sodexo Operations, L.L.C., Ohio Dept. of Taxation, Final
Determination, Refund Claim No. 201203999 (Jan. 28, 2019). For this reason
alone, Aramark’s reliance on that final determination is misplaced.
B. Aramark’s second proposition of law
{¶ 29} In Aramark’s second proposition of law, which it advances as an
alternative to its agency-based arguments, Aramark argues that the reimbursements
it received from its management-fee clients do not constitute gross receipts, because
they did not contribute to the production of gross income. We disagree.
{¶ 30} Aramark bases its argument on R.C. 5751.01(F), which provides that
“‘gross receipts’ means the total amount realized by a person, without deduction for
the cost of goods sold or other expenses incurred, that contributes to the production
of gross income of the person.” The problem with Aramark’s argument is that it
fails to account for the rest of division (F) of the statute. Relevant here is
R.C. 5751.01(F)(1), which provides examples of gross receipts. The example in
R.C. 5751.01(F)(1)(b) is most apt; it identifies as gross receipts “[a]mounts realized
from the taxpayer’s performance of services for another.” Here, the evidence
establishes that Aramark received reimbursements from its management-fee clients
in exchange for performing services for those clients under its contracts with them.
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Under R.C. 5751.01(F)(1)(b), those reimbursements constitute gross receipts for
Aramark.
{¶ 31} In an attempt to illustrate why the reimbursements it received from
its management-fee clients should not be counted as gross receipts, Aramark uses
an example given in a CAT information release in which the tax commissioner
defined “taxable gross receipt.” However, Aramark’s reliance on that information
release is unavailing. The information release presents a hypothetical scenario in
which a customer purchases $75 in groceries but presents a check to the grocery
store cashier for $100. See Ohio Dept. of Taxation, Information Release No. CAT
2005-17, at 1 (rev. Apr. 2006), https://dam.assets.ohio.gov/image/upload
/tax.ohio.gov/commercial_activities/information_releases/cat200517.pdf
(accessed Apr. 4, 2025) [https://perma.cc/A5HY-UL9S]. Upon receiving the
check, the cashier hands the customer $25 in cash, retaining $75 for the customer’s
purchase of groceries. Id. In the information release, the tax commissioner
concludes that the grocery store is required to include only $75 in its calculation of
gross receipts because that is the amount that contributes to the store’s production
of gross income. Had the grocery store charged the customer a fee for essentially
providing the customer with a check-cashing service, that fee would be included in
the store’s gross receipts. Aramark argues that its facts are analogous to the facts
in the hypothetical: Aramark receives reimbursements from its management-fee
clients in the same way the grocery store received a check for $25 in excess of the
amount of groceries it sold. Aramark’s reasoning does not follow. Unlike in the
grocery store scenario, Aramark receives reimbursements and those
reimbursements remain with Aramark. They are not paid to Aramark’s third-party
vendors. The reimbursements do contribute to Aramark’s gross income.
{¶ 32} We reject Aramark’s second proposition of law.
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III. CONCLUSION
{¶ 33} The Board of Tax Appeals’ decision is reasonable and lawful. We
therefore affirm its decision.
Decision affirmed.
__________________
KENNEDY, C.J., joined by HAWKINS, J., dissenting.
{¶ 34} To do business in Ohio, companies must pay the commercial-activity
tax (“CAT”). Exempt from that tax, however, are “agents” who receive payments
“on behalf of another.” Appellant, Aramark Corporation, manages food and labor
services for its clients in Ohio and across the country and sometimes enters into
management-fee contracts with those clients. Under a management-fee contract,
Aramark purchases goods and labor on its clients’ behalf. The clients reimburse
Aramark for those purchases and pay it a management fee for its services. Because
Aramark meets the statutory definition of “agent” under that arrangement and
because Aramark’s clients reimburse it “on behalf of another,” I dissent from the
court’s judgment affirming the decision of the Board of Tax Appeals (“BTA”).
Instead, I would reverse the BTA’s decision and remand the case to the BTA for
recalculation of Aramark’s tax obligation.
Law and Analysis
Introduction
{¶ 35} The CAT is an annual tax on gross receipts for “the privilege of doing
business in this state.” R.C. 5751.02(A). “Gross receipts” are “the total amount
realized by a person,” R.C. 5751.01(F), or a corporation, R.C. 5751.01(A).
{¶ 36} But that definition “is not without limits.” Willoughby Hills Dev. &
Distrib., Inc. v. Testa, 2018-Ohio-4488, ¶ 14. Relevant here, R.C. 5751.01(F)(2)(l)
exempts from the CAT “[p]roperty, money, and other amounts received or acquired
by an agent on behalf of another in excess of the agent’s commission, fee, or other
remuneration.” (Emphasis added.)
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{¶ 37} The majority relies on R.C. 5751.01(N)(2)3 to determine whether
Aramark is an agent for its management-fee clients. That provision states that
“‘[a]gent’ means a person authorized by another person to act on its behalf to
undertake a transaction for the other, including . . . [a] person retaining only a
commission from a transaction with the other proceeds from the transaction being
remitted to another person.” The majority reasons that Aramark is not an agent for
its management-fee clients under R.C. 5751.01(N)(2), because Aramark does not
“retain” only a commission from the transactions it undertakes on their behalf.
Majority opinion, ¶ 14. The majority also states that Aramark does not acquire any
reimbursements “on behalf of another.” Id. at ¶ 15.
{¶ 38} But that reasoning is flawed in three ways. First, by ignoring the
comma preceding the word “including” in R.C. 5751.01(N), the majority fails to
apply the general definition of “agent,” which Aramark satisfies. The majority
should have read the words preceding the comma as a complete sentence and read
the list following “including” as nonexhaustive. Second, Aramark is an agent under
R.C. 5751.01(N)(2) as well because it does retain only a commission from its
transactions with its management-fee clients. Third, the majority misunderstands
the meaning of the phrase “on behalf of another,” R.C. 5751.01(F)(2)(l).
{¶ 39} Accordingly, this dissent begins with the general definition of
“agent” in R.C. 5751.01(N) and proceeds to consider the example definition of
“agent” in R.C. 5751.01(N)(2). It then concludes by addressing the meaning of “on
behalf of another” in R.C. 5751.01(F)(2)(l).
Aramark is an agent under R.C. 5751.01(N)
{¶ 40} Determining whether Aramark is exempt from the CAT returns us to
a familiar place, statutory interpretation. As this court has long explained, “[t]he
3. Effective October 3, 2023, the definition of “agency” that was formerly codified in
R.C. 5751.01(P) was moved to division (N) of the statute. See 2023 Am.Sub.H.B. No. 33, Section
101.01, at 27, 2746. The definition itself remained substantively unchanged.
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January Term, 2025
question is not what did the general assembly intend to enact, but what is the
meaning of that which it did enact.” Slingluff v. Weaver, 66 Ohio St. 621 (1902),
paragraph two of the syllabus. And as always, this court applies clear and
unambiguous statutes as written. See Boley v. Goodyear Tire & Rubber Co., 2010-
Ohio-2550, ¶ 20, citing Cheap Escape Co., Inc. v. Haddox, L.L.C., 2008-Ohio-
6323, ¶ 9.
{¶ 41} R.C. 5751.01(N) defines “agent” as “a person authorized by another
person to act on its behalf to undertake a transaction for the other, including any of
the following.” (Emphasis added.) The statute’s grammatical structure conveys
that the phrase before “including” should be read as a complete sentence that
defines “agent.” See Look Ahead Am. v. Stark Cty. Bd. of Elections, 2024-Ohio-
2691, ¶ 19 (applying rules of punctuation to determine the plain meaning of a
statute).
{¶ 42} Moreover, the term “including” does not limit us to looking at only
the enumerated examples that follow, because as this court has recognized,
“‘[i]ncluding’ is a word of expansion rather than one of limitation or restriction.”
In re Hartman, 2 Ohio St.3d 154, 156 (1983); Craftsman Type, Inc. v. Lindley, 6
Ohio St.3d 82, 83 (1983) (same). “[T]he term ‘including’ is not one of all-
embracing definition, but connotes simply an illustrative application of the general
principle.” Fed. Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 99
(1941). For these reasons, the court’s analysis should have started—and ended—
with R.C. 5751.01(N).
{¶ 43} As noted above, an “agent” under R.C. 5751.01(N) is “a person
authorized by another person to act on its behalf to undertake a transaction for the
other.” (Emphasis added.) The statute does not define “authorized,” so we apply
its ordinary meaning. See Satterfield v. Ameritech Mobile Communications, Inc.,
2018-Ohio-5023, ¶ 18. Both prior judicial construction and dictionaries are useful
for discerning the ordinary meaning of terms that a statute leaves undefined. See
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Carcieri v. Salazar, 555 U.S. 379, 388-389 (2009); see also State v. Turner, 2020-
Ohio-6773, ¶ 18.
{¶ 44} This court has previously defined the term “person authorized” as a
person who is “endowed with authority.” Willoughby Hills Dev. & Distrib., 2018-
Ohio-4488, at ¶ 24, citing Webster’s Third New International Dictionary (2002).
Black’s Law Dictionary (10th Ed. 2014) defines “authorize” as “[t]o give legal
authority; to empower” or “[t]o formally approve; to sanction.” So, Aramark is an
agent if its management-fee clients give it the “authority” to “undertake a
transaction,” R.C. 5751.01(N), on their behalf.
{¶ 45} Aramark has shown that it has the authority to undertake transactions
for its management-fee clients. Consider testimony that Christopher Moore,
Aramark’s national account director for Nationwide Insurance Company, gave at
the hearing before the BTA. He testified that under its management-fee contracts,
Aramark “purchase[s] food and hire[s] the labor . . . on behalf of the clients” and
that “Aramark is reimbursed for all food, labor,” and nonfood items that it
purchases.
{¶ 46} Moore even gave an example of how a management-fee contract
works: If Aramark enters into a contract with Sysco, one of its suppliers, to purchase
$10,000 worth of product to supply to Nationwide, then Nationwide receives a
$10,000 invoice from Aramark. But if Aramark goes over the client-approved
budget, Nationwide still must reimburse Aramark. After completing the
transaction, Aramark retains only the management fee that Nationwide pays it, but
Nationwide benefits from Aramark’s “economy of scale,” allowing Nationwide to
“focus on [its] core business.”
{¶ 47} Aramark’s account manager for Hilliard City Schools, David
Wilson, stated the same. He testified that under Aramark’s contract with Hilliard
City Schools, the school district “pays all of the expenses” associated with the
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goods that Aramark provides the school district and that “in addition to reimbursing
Aramark for costs associated with the program, there is a fee that’s included.”
{¶ 48} Aramark presents four management-fee contracts—with Hilliard
City Schools, the Columbus College of Art and Design, Nationwide Insurance, and
the University of Toledo—all of which confirm the above testimony.
{¶ 49} Hilliard City Schools. In this contract, “[i]f [Aramark] is procuring
goods or services which are being charged to [Hilliard City Schools], [Aramark] is
acting as an agent” under the contract. That language gives Aramark the power to
contract on the school district’s behalf. See Saunders v. Allstate Ins. Co., 168 Ohio
St. 55, 58-59 (1958) (“acts of an agent within the scope of what he is employed to
do and with reference to a matter over which his authority extends are binding on
his principal”). Furthermore, the contract provides that “[a]ny rebates, discounts,
or commissions” that Aramark receives “must be returned to the nonprofit school
food service account” because “[o]nly net costs may be charged to [Hilliard City
Schools].”
{¶ 50} The contract also lists in columns the labor expenses for which
Hilliard City Schools must reimburse Aramark, stating the following: “[Aramark]
guarantees to [Hilliard City Schools] that [Aramark] shall be responsible for the
expenses as checked under Column I,” and “[Aramark] shall factor these expenses
into the fees that will be billed to [Hilliard City Schools].” The provision that
requires Aramark to return rebates, discounts, or commissions to the school account
indicates that Aramark is simply making purchases for Hilliard City Schools. These
provisions require the school district to reimburse Aramark, meaning that Aramark
has the authority to “undertake transactions” on the school district’s behalf.
{¶ 51} Columbus College of Art and Design. The Columbus College of Art
and Design contract states that Aramark is the college’s “exclusive agent,” with the
responsibility of purchasing “food, supplies and services,” and that the college
“shall be billed for purchases made [under the contract] as such food and supplies
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are utilized in the Campus Food Service Program.” Again, these provisions indicate
that Aramark has the power to undertake transactions on its clients’ behalf because
the clients must reimburse Aramark for the costs it incurs.
{¶ 52} Nationwide Insurance. The Nationwide contract gives Aramark the
ability to bind Nationwide for certain expenses. Nationwide must reimburse
Aramark “for costs incurred . . . in providing services to locations.” Aramark
itemizes those expenses and invoices them to Nationwide, and the contract requires
Nationwide to reimburse Aramark within 30 days. This language empowers
Aramark to undertake transactions on Nationwide’s behalf for which Nationwide
must reimburse Aramark.
{¶ 53} University of Toledo. The University of Toledo’s contract is the
same. It states that the university “shall be billed for purchases made [under the
contract] as such food and supplies are utilized in the Dining Services Operations.”
Consistent with the other contracts Aramark introduces, it makes purchases on the
University of Toledo’s behalf for which the university must reimburse Aramark.
{¶ 54} In a footnote, the majority takes issue with the discussion in this
section, stating that it does not address R.C. 5751.01(N) because that is not what
Aramark focused on in its brief. Majority opinion at ¶ 14, fn. 2. However, the
BTA’s decision addressed whether Aramark was an agent under the general
definition in R.C. 5751.01(N). BTA No. 2019-2975, 2023 WL 7431918, *4-5
(Nov. 6, 2023). And in circumstances in which a lower tribunal may make the same
mistake again, “our prudential policy against addressing arguments not raised by
the parties is not a barrier to addressing and remedying a clear mistake before it is
repeated.” State ex rel. Maxcy v. Saferin, 2018-Ohio-4035, ¶ 14.
{¶ 55} In sum, under R.C. 5751.01(N), Aramark is an agent because its
arrangements with its management-fee clients allow it to undertake transactions
with third parties on behalf of those clients, who must then reimburse Aramark for
the costs associated with those transactions.
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Aramark is an agent under R.C. 5751.01(N)(2)
{¶ 56} Aramark is an agent under R.C. 5751.01(N), but it is also an agent
under R.C. 5751.01(N)(2), the provision the majority uses to analyze this case.
R.C. 5751.01(N)(2) defines “agent” as “including . . . [a] person retaining only a
commission from a transaction with the other proceeds from the transaction being
remitted to another person.” (Emphasis added.) The issue is whether Aramark
“retain[ed] only a commission from” the transactions it entered into for its
management-fee clients.
{¶ 57} The majority states that Aramark “has failed to show that it did not
hold, have, or keep the reimbursements that it received from its management-fee
clients.” Majority opinion at ¶ 14. The majority even finds that “the record lacks
any evidence establishing that Aramark passed on to its third-party vendors the
reimbursements it received.” Id.
{¶ 58} But the ordinary meaning of “retain” refutes that interpretation. To
“retain” means “to hold or continue to hold in possession or use: continue to have,
use, recognize, or accept: maintain in one’s keeping.” Webster’s Third New
International Dictionary (2002).
{¶ 59} Aramark has ongoing relationships with its clients and third-party
vendors. So, as Moore testified, when a management-fee client reimburses
Aramark for one monthly invoice, it uses those funds to pay for the next month’s
goods and services, meaning that the only profit Aramark “continues to hold” is its
management fee. That being the case, the record does contain evidence that under
a management-fee contract, Aramark passes along to its third-party vendors the
reimbursements from its clients.
{¶ 60} The example that Moore gave during his testimony helps illustrate
that Aramark retains only a commission from its management-fee clients. Say
Aramark purchases, on a client’s behalf, $10,000 worth of food from Sysco; the
client must reimburse Aramark its $10,000 and pays Aramark a management fee.
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Aramark uses that money to pay for next month’s order. In the end, Aramark
“retains” only a management fee.
{¶ 61} The majority agrees “[a]s a matter of economic logic” that
Aramark’s profit is only its management fee. Majority opinion at ¶ 16. But the
majority ultimately dismisses that fact as irrelevant, reasoning that “profit is not the
criterion” for determining whether Aramark is an agent under R.C. 5751.01(N)(2).
Majority opinion at ¶ 16. I agree. Rather, the court should consider only what
Aramark “retains,” which is a management fee.
{¶ 62} Consequently, Aramark is an agent under R.C. 5751.01(N)(2)
because it remits its proceeds monthly.
Aramark’s clients reimburse it “on behalf of another”
{¶ 63} Because Aramark is an agent, the final question is whether
Aramark’s clients reimburse it “on behalf of another,” R.C. 5751.01(F)(2)(l).
{¶ 64} The majority misunderstands the meaning of “on behalf of another,”
reasoning that “Aramark acquired the reimbursements on behalf of itself” because
it does not “retain” the proceeds it receives, majority opinion at ¶ 15.
{¶ 65} But that does not comport with the plain meaning of the phrase. The
majority should have applied the phrase’s dictionary definition. “The plain and
ordinary meaning of ‘on behalf of’ is ‘in the interest of: as the representative of: for
the benefit of.’” Thomas v. Logue, 2023-Ohio-3522, ¶ 27 (Kennedy C.J.,
dissenting), quoting Webster’s Third New International Dictionary (1993).
{¶ 66} Aramark procures goods and services for its management-fee
clients, so the “representative of” part of the definition makes the most sense here.
Aramark acts as its clients’ representative because it procures from its third-party
vendors goods and services to its clients’ benefit. But even reading R.C.
5751.01(F)(2)(l) as requiring an agent to act in the interest or benefit of another
leads to the same result. That is because Aramark acts in the interests of its clients
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when purchasing goods and services from its third-party vendors by obtaining for
those clients the benefits of Aramark’s economy of scale.
Conclusion
{¶ 67} The General Assembly created an exemption to the CAT that applies
when a corporation acts as an “agent . . . on behalf another,” R.C. 5751.01(F)(2)(l).
Aramark qualifies for that exemption. Because the majority holds the opposite, I
dissent. I would reverse the BTA’s decision and remand the case to the BTA for
recalculation of Aramark’s tax obligation.
__________________
Reed Smith, L.L.P., and Paul E. Melniczak, for appellant.
Dave Yost, Attorney General, and Raina Nahra Boulos and Daniel Kim,
Assistant Attorneys General, for appellee.
Taft Stettinius & Hollister, L.L.P., Jeremy Hayden, Philip D. Williamson,
and Javan A. Kline, urging reversal for amicus curiae, Ohio Chamber of
Commerce.
__________________
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