Fun with Juicy Fruit: A Case Study

Wisconsin Department of Revenue v. William Wrigley, Jr., Co.

Bartley, dissenting:

Pearl Buck once said, “Every great mistake has a halfway moment, a split second, when it can be recalled and perhaps remedied.” The remand of this case was our halfway moment, our chance to recall the original decision in this case—a decision I believe to have been an errant shot that wounded legally-protected salesmanship.

* * *

The issue is whether Wisconsin, by virtue of petitioner’s activities in the state during the years 1973-78, had jurisdiction to impose a franchise tax on petitioner for those years? Or was petitioner immune from taxation because its activities constituted protected solicitation under federal law limiting the jurisdiction of states to tax the income of foreign corporations?

To determine whether any of petitioner’s activities in Wisconsin constituted a jurisdictional basis for the state to tax petitioner, we must apply the jurisdictional rules embodied in our law construed in pari materia with the jurisdictional limits imposed on states by the federal law, P.L. 86-272.

* * *

P.L. 86-272 is set forth at 15 USC Section 381:


No State * * * shall have power to impose * * * a net income tax on the income derived within such State by any person from interstate commerce if the only business activities within such State by or on behalf of such person during such taxable year * * * [constitute] * * * the solicitation of orders by such person, or his representative, in such State for sales of tangible personal property, which orders are sent outside the State for approval or rejection, and if approved, are filled by shipment or delivery from [another state].

* * *


  1. Maintenance of a Business Location

* * *

[The state argued that because] the regional manager at one time conducted sales meetings in his in-residence office, that office [could] gave Wisconsin jurisdiction to tax petitioner.

* * *

[B]ut it’s hard to believe that the [statute’s] draftsmen intended to, in effect, outlaw sales meetings in this state. Wisconsin-based salesmen should not be required to leave our state and travel to garden spots like Waukegan, Illinois, to talk business.

* * *

Borrowing from Southey, one might say that the regulation is “a perfect nonplus and a baffle to all human understanding.” But perhaps it’s better to say that even when read in the best light possible, the regulation’s meaning remains enshrouded in vapors and mists of ambiguity.

* * *

Even the smoothest-talking purveyor of the highest quality snake oil needs a retreat to reflect on strategy, to rehearse tactics, and to inculcate and motivate assistants.

* * *

  1. Usual or Frequent Direct Sales

We deal next with Section Tax 2.82 (4)(a)(5), ante, which gives the state jurisdiction when salesmen make “usual or frequent” sales on the spot, in contradistinction to having the sales accepted by out-of-state personnel. Here petitioner’s salesmen, on the average of once a month, sold $8-$16 worth of gum on their own-that is, by their direct acceptance of customer orders. Respondent seemed to argue that these direct sales were usual and frequent and gave the state jurisdiction.

Again I must disagree. Although there is no question that the sales were direct, I conclude that such sales can only be characterized as unusual and infrequent because they were but a pittance. For example in 1978, direct sales amounted to at most $600 or 7/100,000 of one percent of Wrigley’s $4,392,202 of Wisconsin sales that year. Looking at this in a slightly different perspective, direct sales of Wrigley’s gum were barely enough to supply three avid, two-pack-a-day chewers with enough Juicy Fruit to last through the year. That’s not enough gum to stick jurisdiction on Wrigley even if the chewers are doubling their pleasure.

* * *

  1. Miscellaneous Activities

The last activities we consider are the same we considered in the earlier discussion of miscellaneous activities—the salesmen’s replacement of stale gum, maintenance and location of display cases, the keeping of a stock of gum, display racks, and promotional literature, one salesman’s rental of storage space for such supplies, one regional manager’s holding of annual sales meetings in his home and one meeting in a hotel and his intercession in credit disputes, and both regional managers’ supervision of their salesmen.

* * *

Likewise, the supervisory duties of the regional managers were a necessary part of the solicitation. Salesmen are, it is true, an independent lot usually capable of finding prospects on their own. But free spirits, left totally free, are almost always less effective than when there is some modicum of order imposed. A sales manager serves that order giving operations a gravitational pull that creates cohesion in a galaxy of resplendent sales stars.

* * *

To say that the credit activities or the management or any of the other sales tools listed above are not part of protected salesmanship is to maintain that saws are not part of carpentry, that medicine is not part of doctoring, that briefs are not part of lawyering and that imperiousness is never a part of dissenting opinions.

Published in: on December 1, 2015 at 7:40 am  Leave a Comment  

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