City of Fontana v. Cal. Dep't of Tax & Fee Admin.
Opinion
Richman, J.
*903If a municipality imposes a sales tax, the State Board of Equalization (Board or BOE) has the statutory authority to collect and then remit the tax back to the municipality. But what if more than one municipality claim that the taxable sale occurred within its jurisdiction? Included in the Board's authority is the power to determine where sales of personal property occur, and the correlative power to designate the municipality that will receive any local sales tax that is being collected by the Board. Here, following an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Cities A and B would be "reallocated" to City C. The trial court set aside this decision, issuing a writ of administrative mandamus directing the Board to reconsider the issue.
No one is satisfied with the trial court's action, and thus we have four appellants: (1) the Board, contending that the trial court should have left the Board's decision intact had it-the trial court-applied the correct standard of review and deferred to the Board's administrative expertise; (2) City C, essentially in agreement with the Board, contending that it should be confirmed as the sole recipient of the sales tax, and the Board's decision reinstated; and (3) and (4) Cities A and B, in essence contending that the Board's erroneous reasoning is sufficiently clear that they should be restored as the proper recipients of the sales tax as a matter of law. Cities A and B also contend they are entitled to more than the Board awarded, namely, to "full retroactive allocation."
*24We agree with the Board. Although there are substantial questions about the trial court's approach, and its substantive analysis, they prove immaterial to our review, because the issue before this court is identical to the one before the trial court, namely, whether there is substantial evidence in the administrative record to support the Board's decision. And on our independent *904examination of the administrative record, we have no difficulty in concluding that there is. We further conclude that the manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. In light of these conclusions, we reverse and direct the trial court to enter judgment in favor of the Board. Moreover, because we conclude that cities A and B were not entitled to any relief, we summarily reject their claim they should be given more relief.
BACKGROUND
The Statutory Framework
California has had a state sales tax since 1933. (Stats. 1933, ch. 1020; Rev. & Tax. Code,1 § 6001 et seq., especially § 6051.) Subsequent enactment of the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; § 7200 et seq.) permits counties and municipalities to adopt their own sales taxes. (§§ 7201, 7202, 7202.5.) The Board is statutorily responsible for the "administration" of state and local sales taxes, most particularly the collection and return of local sales tax collections to the taxing locality. (§§ 7051-7060, 7202, subd. (d), 7204.) At issue here is how the Board determines which local government is to be the recipient of local sales taxes.
The sales tax is imposed "for the privilege of selling tangible personal property at retail," and is calculated as a percentage of "the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail." (§ 7202, subd. (a); see § 6051 [same for state tax].) As we explained recently: "The sales tax is imposed on retailers .... 'The retailer is the taxpayer, not the consumer.' [Citation.] The central principle of the sales tax is that retail sellers are subject to a tax on their 'gross receipts' derived from retail 'sale' of tangible personal property.[2 ](§ 6051.) The term 'sale'
*905means '[a]ny transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of *25tangible personal property for a consideration.' (§ 6006, subd. (a).)"3 ( City of South San Francisco v. Board of Equalization (2014)
When last we visited the subject, we concluded that as state law did not address "when transfer of title occurs," the Board did not exceed its authority "by using section 2401, subdivision (2), of the California Uniform Commercial Code to determine that issue." ( City of South San Francisco , supra ,
The concept of transfer of title, particularly where and when it occurs, is central to this controversy.
The Taxpayer's Operations
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Richman, J.
*903If a municipality imposes a sales tax, the State Board of Equalization (Board or BOE) has the statutory authority to collect and then remit the tax back to the municipality. But what if more than one municipality claim that the taxable sale occurred within its jurisdiction? Included in the Board's authority is the power to determine where sales of personal property occur, and the correlative power to designate the municipality that will receive any local sales tax that is being collected by the Board. Here, following an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Cities A and B would be "reallocated" to City C. The trial court set aside this decision, issuing a writ of administrative mandamus directing the Board to reconsider the issue.
No one is satisfied with the trial court's action, and thus we have four appellants: (1) the Board, contending that the trial court should have left the Board's decision intact had it-the trial court-applied the correct standard of review and deferred to the Board's administrative expertise; (2) City C, essentially in agreement with the Board, contending that it should be confirmed as the sole recipient of the sales tax, and the Board's decision reinstated; and (3) and (4) Cities A and B, in essence contending that the Board's erroneous reasoning is sufficiently clear that they should be restored as the proper recipients of the sales tax as a matter of law. Cities A and B also contend they are entitled to more than the Board awarded, namely, to "full retroactive allocation."
*24We agree with the Board. Although there are substantial questions about the trial court's approach, and its substantive analysis, they prove immaterial to our review, because the issue before this court is identical to the one before the trial court, namely, whether there is substantial evidence in the administrative record to support the Board's decision. And on our independent *904examination of the administrative record, we have no difficulty in concluding that there is. We further conclude that the manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. In light of these conclusions, we reverse and direct the trial court to enter judgment in favor of the Board. Moreover, because we conclude that cities A and B were not entitled to any relief, we summarily reject their claim they should be given more relief.
BACKGROUND
The Statutory Framework
California has had a state sales tax since 1933. (Stats. 1933, ch. 1020; Rev. & Tax. Code,1 § 6001 et seq., especially § 6051.) Subsequent enactment of the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; § 7200 et seq.) permits counties and municipalities to adopt their own sales taxes. (§§ 7201, 7202, 7202.5.) The Board is statutorily responsible for the "administration" of state and local sales taxes, most particularly the collection and return of local sales tax collections to the taxing locality. (§§ 7051-7060, 7202, subd. (d), 7204.) At issue here is how the Board determines which local government is to be the recipient of local sales taxes.
The sales tax is imposed "for the privilege of selling tangible personal property at retail," and is calculated as a percentage of "the gross receipts of the retailer from the sale of all tangible personal property sold by that person at retail." (§ 7202, subd. (a); see § 6051 [same for state tax].) As we explained recently: "The sales tax is imposed on retailers .... 'The retailer is the taxpayer, not the consumer.' [Citation.] The central principle of the sales tax is that retail sellers are subject to a tax on their 'gross receipts' derived from retail 'sale' of tangible personal property.[2 ](§ 6051.) The term 'sale'
*905means '[a]ny transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of *25tangible personal property for a consideration.' (§ 6006, subd. (a).)"3 ( City of South San Francisco v. Board of Equalization (2014)
When last we visited the subject, we concluded that as state law did not address "when transfer of title occurs," the Board did not exceed its authority "by using section 2401, subdivision (2), of the California Uniform Commercial Code to determine that issue." ( City of South San Francisco , supra ,
The concept of transfer of title, particularly where and when it occurs, is central to this controversy.
The Taxpayer's Operations
Up to January 1, 2006, Medline Industries, Inc. (Medline), a privately held Illinois corporation, shipped its retail health care products to Medline-owned *906warehouses in the City of Fontana (in San Bernardino County), and the City of Lathrop (in San Joaquin County), which Medline products were then distributed to purchasers from these locations. The shipping was done by Medline Industries Holdings, LP (Medline Holdings) which, according to Medline's senior tax officer, "owns the entire inventory of Medline and Affiliated Subsidiaries in every state, including California," The actual delivery was done by another wholly owned subsidiary, MedTrans LLC (MedTrans).5 The warehouses from which Medline Holdings ships the products are owned by Medline, which leased them to Medline Holdings. Fontana and Lathrop received the amounts collected by the Board for those taxable sales. *26Medline's practices changed by the start of 2006. In August of 2005, an existing wholly owned subsidiary, MedCal Sales, LLC (MedCal), began marketing Medline products from a facility located in the City of Ontario (in San Bernardino County), a building subleased by Medline to MedCal. This building is MedCal's sole facility in California. The shift in operations was the direct result of the "Location Agreement" MedCal executed with the Ontario Redevelopment Agency6 whereby, in exchange for establishing a retail facility in Ontario, 50 percent of the sales tax paid by MedCal would be reimbursed by the redevelopment agency.7 Only a handful of MedCal employees actually work there. But more than 200 MedCal sales representatives, who are not employed or paid by Medline, are "assigned" to Ontario, and work out of that facility. *907The MedCal executive who described himself in his declaration as "responsible for the ... Ontario sales office" described how those orders are generated: "MedCal sells medical supplies and equipment primarily to hospitals, nursing homes, surgery centers, doctors and other healthcare providers. ... [¶] ... [¶] MedCal sells sophisticated medical equipment and supplies that often times require special training. MedCal's accounts require a sales rep to visit, call, instruct, advise, suggest, explain and train on product usage. ... Over 97% of [Medline's, MedCal's, and Medline Holdings's] sales" "are generated through the direct participation of a sales rep.[8 ] After an account has been established, ... the actual sales order for a specific order can enter the fulfillment system through one of five mechanisms ," all of which are electronic, and all of which are directed to the Ontario facility.
The order is reviewed at the Ontario facility. If there is no difficulty or problem with the order, it is "fulfilled" by MedTrans picking up the desired goods at a warehouse and then delivering them to the California customer. MedCal buys the goods from Medline Holdings, and pays MedTrans to deliver them. The customer is told to make payment to MedCal. In short, product distribution was still from the warehouses, but it was at the direction of Ontario, which was now the nerve center of operations. Sales zoomed, and California became one of Medline's largest and fastest growing markets.
*27By January 2007, Medline had sold the Fontana warehouse and relocated its operations to a new warehouse in the City of San Bernardino (in the county of the same name).
Once the Ontario facility began operations, Medline stopped reporting to the Board that sales were occurring at the warehouses. Instead, after obtaining a seller's permit from the Board (see § 6066; Cal. Code Regs., tit. 18, § 1699 ), MedCal began reporting the California sales attributable to its Ontario-based sales force to Ontario. The net result was that Ontario would now get the sales taxes which had previously gone to Fontana and Lathrop. This loss of millions of dollars was not going to be meekly accepted.
Administrative Proceedings Before the Board
Medline's shift of sales operations triggered six years of administrative proceedings before the Board. Initiated by the Cities of Fontana and Lathrop with individual petitions for "reallocation" (per Cal. Code Regs., tit. 18, § 1807 ) filed in November 2006, joined by San Bernardino in 2009, the intent *908was to recoup the amounts of sales tax they would or could have collected had Medline not shifted operations to Ontario. The problem of reallocation was sufficiently ongoing to justify the existence of an "Allocation Group" in the Board's Audit Determination and Refund Section.
The administrative record comprises more than 3500 pages. No substantial purpose would be served by documenting every aspect of the procedural history before the Board. However, some features are germane to this appeal.
The formal petitions for allocation were filed only after the Board's initial investigation concluded that "based on all available information at this time, the City of Ontario will be entitled to the local tax on sales made by MedCal." Fontana and Lathrop protested that the Board's investigation had failed to smoke out the commercial realities uncovered by the cities' own sleuthing.9 The Board's staff was initially unpersuaded, but by 2010 it had reversed course and concluded that the reallocation petitions had merit. And ultimately, over the concentrated opposition of Medline, MedCal, and Ontario, the Board's Appeals Division upheld the reallocation petitions.
Ontario appealed, and in October 2013, the five-member Board held a hearing on Ontario's appeal to reverse the Appeals Division's recommendation. In the course of Ontario's presentation, the Board heard a brief "statement" from a member of the Ontario City Council; a slightly lengthier statement by James Abrams, who gave his job description as "Chief Operating Officer of Medline Industries, Inc.," "the executive officer responsible for Medline's Finance Division"; and Eric Gerstein, Medline's "VP of Tax."10
*28Gerstein's presentation is the most pertinent. He told the Board that according to Medline's internal operating and accounting procedures, goods ordered by a customer are "purchase[d]" by MedCal from Medline Holdings, *909at which point title was transferred from Medline Holdings to MedCal "and from MedCal Sales on to the customer." This practice is "just like your typical drop shipment arrangement." Apart from the work of the sales representatives, and the limited amount of paperwork they generate with new clients, Medline and its subsidiaries have implemented a "streamlined" electronic process. Medline's counsel (MedCal was not separately represented at the hearing) told the Board that MedCal takes title when it purchases the goods sitting in a warehouse, and then transfers title to the customer at or "just before" the goods are shipped by MedTrans. This was identical to what Gerstein told the Board about operation of Medline's paperless system: "electronically," "title would be transferring on to MedCal ... and then from ... MedCal to the customer."
The Board also heard from its legal department, which defended the conclusion of the appeals division that the sale should be deemed to occur at Medline's warehouses, and thus the sales tax should be allocated to the municipalities where the respective warehouse was located. At greater length, counsel for Fontana, Lathrop, and San Bernardino echoed this recommendation.
By far the largest part of the hearing was spent on "discussion" and questions by the Board. Some of the questions were answered by Gerstein and Robert Kievert, who worked under Gerstein as Medline's "Director of Tax."11 In response to a question, Gerstein acknowledged there was no writing documenting the passage of title to the customer, and "we don't have that ... legal document ... that would actually clarify that MedCal is purchasing from Industries Holdings." However, "journal entries in the books and records of the companies ... would show that ... the product is being sold from ... Industries Holdings ... to MedCal and then from MedCal to the customer." "[I]t's an internal process, so ... it's something we should have done and, admittedly, didn't document properly."
The following day, the members of the Board announced the decision. Member Betty Yee stated she believed the various documents between Medline entities "were established more to deal with issues of liability among the entities ... and less about ... consideration of ... tax requirements." "But I am ... convinced and ... was compelled by the testimony yesterday about the ... title flow." Member Jerome Horton agreed, cautioning that form should not be elevated over substance. Yee's motion to "find for Ontario" was seconded and passed without discussion.
*910In January 2014, the Board formally decided in Ontario's favor. Disagreeing with the appeals division-which had submitted a 28-page proposed decision and recommendation that the reallocation petitions be granted-the Board unanimously *29denied the petitions. In its five-page decision adopted on January 16, 2014, the Board addressed two points. The first point was stated to be "Whether taxpayer [MedCal] was the person making the taxable sales to California purchasers."12 Based on documents (i.e., "invoices from suppliers," "purchase orders from customers") and representations made "at the Board hearing," the Board determined that MedCal, not Medline, should be treated at the "taxpayer": "We find that title to the goods passed ... to taxpayer and then to taxpayer's California customers based on the credible and persuasive explanations provided by taxpayer's representatives and the corroborating journal entries and financial statements provided by taxpayer. Thus, we conclude that taxpayer is the person who made the subject sales to California customers."
The second issue addressed by the Board was "Whether taxpayer correctly allocated the local tax as sales tax to Ontario." Again, the Board acted on the basis of "statements" made by MedCal's representatives at "the Board's hearing," as well as "declarations signed under penalty of perjury by some inside and outside sales staff who stated that they were employees of taxpayer and knew the Ontario office was their only office for purposes of performing their sales activities."
And thus the conclusion in favor of Ontario: "We find credible and persuasive the statements made by taxpayer's representatives that the outside sales staff principally negotiated the subject sales and that they were assigned to work out of taxpayer's Ontario office when they became employees of taxpayer. This means their selling activities are attributed to the Ontario office even when such activities are done from their homes, on the road traveling to meet customers at their places of business, or at the customers' places of business. Thus, the sales are subject to sales tax based on the undisputed fact that title to the goods passed inside California and based on our finding that the Ontario office participated in the sales by virtue of the activities of the outside sales staff. Since the negotiations by the outside sales staff are *911associated with the Ontario office, we find taxpayer is required to hold a seller's permit for that office. We therefore conclude taxpayer correctly allocated the local tax as sales tax to Ontario."
Proceedings in the Trial Court
The Petition
In April 2014, Fontana, Lathrop, and San Bernardino (hereafter collectively Cities) commenced this action by filing a petition (superseded within a week with a first amended petition) for a writ of administrative mandamus and declaratory relief. The goal was "to obtain redress for over $17 million in local sales tax revenues" that the Board "improperly allocated, since 2006 and continuing to the present day, to ... City of Ontario."
In their first cause of action, styled "Petition for Writ of Mandate-*30Code Civ. Proc. § 1094.5,[13 ]" Cities termed it a "prejudicial abuse of discretion" for the Board to determine that Medline was the retailer. Cities alleged that "the critical evidence ... regarding product title transfer and the intra-enterprise contractual duties between Medline and its various wholly-owned subsidiaries confirms that Medline-not MedCal-has always been, and remains, the retailer. Thus, the local sales tax revenues at issue generated by the sales of Medline products should be allocated to Petitioners, as they were before 2005."
Expanding on this point, Cities further alleged: "The 'retailer' is Medline, not MedCal, as evidenced by: (a) the chain of title, including invoices from Medline's suppliers showing Medline as the purchaser, purchase orders from California customers issued to Medline, invoices to customers prepared by Medline showing Medline as the seller and calling for payment to Medline's location, and payments from California customers to Medline; and (b) multiple agreements between Medline, MedCal, and other wholly-owned Medline subsidiaries, including a subsidiary named Medline Industries Holdings, LP ('Holdings'), which clarify that Medline uses its subsidiaries to approve Medline 's customers' sales orders and to manage Medline's sales to customers, and that title to the goods sold to California customers generally rests *912with Holdings through the time of transit to the customer, at which time the sale from Holdings to Medline is completed and, in turn, the sale from Medline to the California customer is completed."
In their other cause of action, Cities sought declaratory relief to the effect that the Board's decision was incorrect, thus obliging it "to correct, reallocate, and redirect to Petitioners ... the ... past incorrect payments of sales tax revenues to Ontario," those payments totaling $17,667,453 "as of October 2013."
Cities prayed for: (1) issuance of a writ of administrative mandamus commanding Ontario and MedCal "to either return to [the Board] or to pay directly to Petitioners all of the local sales tax revenues at issue, in the correct amounts due ... totaling no less than $17,667,453 as of October 2013, along with additional local sales tax revenues since October 2013, ... plus pre-judgment interest" and (2) "declaratory relief, as set forth above and/or otherwise consistent with the relief sought herein."
The Trial Court's Decision
The matter was submitted to the court on the basis on the administrative record; a "Joint Compendium" submitted by Cities of 34 exhibits (29 of which were already in the administrative record); written briefs; and extensive argument.
The court's decision came in the form of a detailed 26-page order that obviously reflected considerable industry and thought. The first subject addressed was the standard of review the court would use. The court concluded that the administrative mandamus review did not involve a fundamental vested right, but rather "merely economic" interests-"the allocation of sales taxes among local governments"
*31-and thus it would review the Board's decision "under the substantial evidence standard." (See, e.g., Benetatos v. City of Los Angeles (2015)
The court then considered "whether to defer to the BOE's evaluation of witness credibility and the court finds that such deference is not appropriate in this case. As permitted by 18 CCR [Cal. Code Regs., tit. 18] 5523, the *913Medline entities presented their case through representatives and, as permitted by 18 CCR 56523.7(d), the representatives did not testify under oath. In this circumstance, the BOE had no opportunity to observe the demeanor, manner, or attitude of any percipient witness. In this circumstance, the BOE, listening to unsworn hearsay representations, and the court, reviewing those representations on a paper record, are equally well situated to consider the credibility of the witnesses."
The court then moved to the issue of transfer of title under section 6006, specifically the "Fact Issue" of "Which Medline entity was the 'retailer' that transferred title to consumers." Because "[t]he intent of the parties is the most important factor in determining if, when, or where title has been transferred," the court then addressed a number of documents in the administrative record to discover "[t]he factual issue" of "the identification of the retailer." Its examination led the court to conclude "[t]he evidence is consistent and shows that during the relevant time period, the customers of the Medline entities thought that they were receiving title from Medline." "These documents strongly suggest that customers thought that they were buying the products, and obtaining title, from Medline," which "the customers understood that Medline ... was the ... entity responsible for paying sales tax."
The court's examination of a number "[c ]ontracts between and among the Medline entities " showed that a number of them "state that Medline ... was transferring title to the customers." Moreover, "At the BOE hearing, [four] Medline witnesses testified consistently and repeatedly that the Medline entities did not have contracts stating that ... title to goods was transferred from Holdings to MedCal."
Next, "The internal bookkeeping entries of the Medline entities show that Holdings sold goods to MedCal and that MedCal recorded revenue from customers. The internal bookkeeping entries of the MedCal entities reflect the internal intent or understanding of the Medline entities, but do not reflect the 'objective manifestations of agreement or objective expressions of intent' of the parties in the retail transactions. Therefore, the bookkeeping entries of the Medline entities are not relevant to the issue of which entity passed title to the customers in the retail transactions."
Lastly, the court looked to "Statements of Representatives " at the hearing before the Board. "Cities were represented by Ms. Sturdivant, who stated ... that she conducted a transaction with the Medline entities and that MedCal was never mentioned. Medline's representatives stated that Ms. Sturdivant's transaction was representative of approximately 1.3% of Medline's retail sales to California customers. [¶] Medline's representatives stated that *32Holdings purchased goods from suppliers, then Holdings stored the goods in warehouses, then MedCal sales representatives negotiated sales of the goods, then *914MedCal notified Holdings of the intended sale, then Holdings passed title to MedCal, and then MedCal passed title to the customers. Medline's representatives stated that 98.7% of Medline's retail sales to California customers were conducted this way."
The court's legal analysis proceeded as follows:
(1) "There is no substantial evidence to support the BOE's factual conclusion that MedCal passed title to consumers and therefore was the retailer .... The law and the evidence compel the conclusion that Medline passed title to the customers and was therefore the retailer. The law required the BOE to focus on the intent of the parties to the retail transactions and to discern that intent from the contracts between the parties to the retail transactions. The contracts with customers and the invoices to customers clearly identify Medline ... as the seller. The contracts among the Medline entities clearly state that Medline ... was to sell the goods to the customers. California law follows the objective theory of contracts under which 'the parties' undisclosed intent or understanding is irrelevant to contract interpretation.' [Citation.] Looking at the contracts, it is clear that under California law it was Medline ... that sold the goods to, and passed title to, the customers. Furthermore, the Supply Agreements [aka Corporate Program Agreements] signed in 2010 address the issue of sales taxes specifically and state that it is Medline Industries, Inc. ... that was responsible for the sales taxes on the Products and Services provided to customers. ...
"Medline argued that the BOE was permitted to ignore the understandings of the consumers who received title and ignore the language of the contracts between and among the Medline entities and instead find MedCal passed title to consumers because under the terms of contracts that did not exist, Holdings was supposed to have transferred title to MedCal so MedCal could then transfer title to consumers. This argument is based largely on the internal understandings and journal entries of the Medline entities. This argument must fail because it is contrary to the clear terms of the actual contracts and can be viewed as a de facto attempt to reform the contracts to include MedCal as a party. [Citation.] The journal entries among the Medline entities might inform the interpretation of the contracts among the Medline entities, but they certainly cannot change the terms of the contracts between the Medline entities and their customers."
(2) "Alternatively, Medline's argument can be viewed as an attempt to treat Medline's subsidiary corporations as Medline divisions. Mr. Gerstein, Medline's Vice President of Tax, stated, 'our customers, frankly, don't care which legal entity it is, they care about buying Medline product and getting the Medline Reputation and quality that comes with it.' ....
*915"Based on the current record, the BOE could not, and the court will not, ignore the separate corporate existence of the subsidiaries and treat them as the alter egos of Medline. The Corporate Program Agreements are on their faces between Medline and certain customers and the invoices direct the customers to pay Medline. It would be peculiar if, in a contract dispute between a customer and Medline, a court were to find that the customer's contract claim was actually against MedCal, which is never mentioned in any of the Corporate Program Agreements." (Fn. omitted.)
(3) "The contemporaneous documentary evidence of bookkeeping entries within and among the various Medline entities shows *33that the Medline entities operated as though title to the goods were transferred from Holdings to MedCal so that MedCal could then transfer title to customers. The accounting for sales among corporate entities up the supply chain is not relevant to the inquiry of what the parties to the retail transaction intended. The contracts and invoices suggest that customers thought they were being billed by, were paying, and were receiving title from, Medline (parent). Perhaps more importantly, the Medline entities cannot create a fictitious alternative chain of title not based on, and in derogation of, the language in the pertinent contracts. Medline's assertions that the Medline entities intended MedCal to have title and used internal bookkeeping entries consistent with the notion that MedCal had title does not require, or support, a finding that MedCal actually had title."
(4) "Medline argues that its transactions are electronic and that as a result there is no 'paper trail' of title. The user of paper or electronic records is beside the point. The point is that there is no substantial evidence to support the conclusion that MedCal transferred title to consumers. Medline's internal accounting entries, whether electronic or on paper, cannot change the parties to the taxable retail transactions."
(5) "The court finds that the BOE failed to apply established California law on the transfer of title, and that under the correct application of California law there is no substantial evidence for the BOE's factual finding that MedCal (the sales entity) transferred title to the customers and was responsible for paying the sales tax."
(6) "Having found that there is no substantial evidence for the BOE's conclusion that MedCal was the retailer, the court does not reach the issue of which Medline entity was the 'retailer.' That is a factual issue for the BOE on remand. Similarly, the court does not reach the issue of where the 'retailer' is located, as that too is a factual issue for the BOE on remand."
(7) As to the "Remedy," "The court will remand the matter to the BOE with instructions to vacate the Summary Decision in Case No. ID 435564 *916dated 1/16/14. [¶] The BOE may then conduct further hearings and issue a decision on the identity of the retailer for purposes of California sales taxes as well as the location of the retailer for purposes of allocating local sales taxes. In any such decision, the BOE must reconsider the issue of which entity passed title to consumers and was the retailer in light of this court's opinion and California law on the transfer of title .... In any such decision, the BOE may exercise its judgment and discretion in evaluating the evidence and reaching factual conclusions. [¶] On remand, the BOE may also address whether, or how, to reallocate the tax revenue for the years in question."
A judgment directing issuance of a writ of mandate to the Board was entered in due course, from which these timely appeals were perfected by all the parties.14
DISCUSSION
The Standard of Review
Although the able briefs of counsel for the parties cover a wide area of subjects, the actual inquiry before us is quite limited. However, we are met at the outset with a unbridgeable gulf between what the *34parties see as the proper standard of review for this court, and the trial court.
Given the parties' agreement that no fundamental right is involved, and there being no question that the Board proceeded in the manner required by law, this court on review would apply the identical standard as the trial court-is there substantial evidence in the administrative record to support the Board's summary decision No. ID 435564? (E.g., Benetatos v. City of Los Angeles , supra ,
The Board appears to accept this, in part. Its sole argument in its opening brief is stated in these terms: "The judgment should be reversed because substantial evidence supports the Board's decision; and the Superior Court *917erred in rejecting competent evidence and failing to correctly apply the substantial evidence standard." The specifics cited for the second claim is that the Board based its decision in large part "on convincing and compelling live witness testimony," and because "[w]itness credibility is within the sole purview of the Board as the factfinder," the trial court erred by failing "to defer to the Board's evaluation of witness credibility" and "in rejecting testimony it deemed hearsay" that was not given under oath. In addition, "the superior court did not properly apply the substantial evidence standard because it drew its own inferences regarding consumers' intent from conflicting evidence, rather than considering the facts in favor of the BOE Decision and giving them every reasonable inference." "Instead, the superior court wrongly ... resolved conflicts in the evidence in the Cities' favor." "If the superior court had correctly applied the substantial evidence standard of review, by considering 'the facts in the light most favorable to the Board, giving it every reasonable inference and resolving all conflicts in its favor' [citation], it would have easily upheld the Board's decision."
Cities do not argue that a fundamental right is involved, and they concur that "the standards governing this court's review are identical to those used by the trial court." Even though they ostensibly prevailed in the trial court, Cities nevertheless maintain the trial court employed the wrong standard of review, which they see as far more restricted than does the Board or did the trial court. This is how they frame the issue:
"The trial court determined that the BOE failed to proceed in the manner required by law, because it 'failed to apply established California law on the transfer of title.' In short, the BOE failed to properly interpret and apply the determinative Revenue and Taxation Code provisions. The central issue presented to the trial court was whether the BOE erred in its legal determination on undisputed facts that MedCal, and not Medline, was the retailer under Revenue & Taxation Code section 6015(a)(1). The facts establishing the identity of the retailer were not disputed; rather, they were memorialized in Medline's own written transactional documents, to which Medline is bound, and which cannot be contradicted by extrinsic evidence.
"It is well established that the application of the tax statutes to undisputed facts, as was involved here , presents a question of law to the trial court. [Citation.] The *35BOE's application of law is not entitled to deference under the circumstances. [¶] ... [¶]
"Because the BOE failed to properly apply the governing statutes and regulations to undisputed evidence, the independent judgment (or independent review) standard applies here. The relevant facts in the record were undisputed, and assessing witness credibility was not an issue. The key issues *918involved application of the statutory and regulatory framework to those undisputed facts to determine whether Medline's documented transfer of title to California customers justified allocation of the tax revenues at issue to Ontario, based upon the BOE's interpretation that MedCal, not Medline, was the retailer under the statute. ...
"Even though interpreting the applicable statutes and applying them to the undisputed facts presented a purely legal issue, the trial court instead characterized 'the identification of the retailer' as a factual issue, and it concluded that 'there is no substantial evidence to support the BOE's factual conclusion that MedCal passed title to consumers and therefore was the retailer as defined in Rev. and Tax 6015(a)(1).' Although the trial court applied the wrong standard, in doing so, it reached the correct conclusion. There was no substantial evidence supporting the BOE's finding that MedCal was the retailer." (Italics added.)
Much of this disagreement is attributable, particularly from Cities' perspective, to the trial court's decision. For example, the court did state at the start of its decision that it "finds that the BOE failed to apply established California law on the transfer of title, and that under the correct application of California law there is no substantial evidence for the BOE's factual finding that MedCal (the sales entity) transferred title to the customers and was responsible for paying the sales tax." This could be interpreted as the trial court determining that the Board either (1) committed an error of law ("failed to apply established California law") or (2) made a factual finding in the absence of substantial evidence to support it. In truth, the trial court's decision does seem to straddle this distinction by concluding that without substantial evidence that MedCal passed title the Board could not designate MedCal as the seller (or "retailer" in the trial court's language).
Initially, Cities appear to want to finesse the point. By repeatedly emphasizing that there are only "undisputed facts," Cities would transmute the issue of whether Medline or MedCal passed title into a question of law to which we would bring our independent review. (See, e.g., Microsoft Corp. v. Franchise Tax Bd . (2006)
But then Cities focus upon the trial court's later sentence, that "the law and the evidence compel the conclusion that Medline passed title to the customers and was therefore the retailer," which they describe as the trial court's "central holding." Cities further assert "The record supports no other reasonable conclusion," thus making the trial court's remand to the Board a pointless exercise. In fact, Cities view the issue as so patently obvious that *919the Board should simply be directed by the writ of mandate to reach the same conclusion (i.e., reallocate from Ontario to Cities) as did the appeals division. In short, the keystone of Cities' argument is the claimed absence of a factual dispute as to whether Medline or MedCal passed title to the customers. As will be shown, this is a profound misreading of the administrative record. *36The manner in which we resolve these appeals is not a novel issue for this court, as illustrated by our discussion in Sierra Club v. California Coastal Com. (1993)
"Our review is governed by Code of Civil Procedure section 1094.5, which defines prejudicial abuse of discretion as an agency's decision being unsupported by its findings or its findings being unsupported by the evidence (id., subd. (b)). Where support for findings is challenged, abuse of discretion exists if 'the findings are not supported by substantial evidence in light of the whole record' (id., subd. (c)).
" 'The "in light of the whole record" language means that the court reviewing the agency's decision cannot just isolate the evidence supporting the findings and call it a day, thereby disregarding other relevant evidence in the record. [Citation.] Rather, the court must consider all relevant evidence, including evidence detracting from the decision, a task which involves some weighing to fairly estimate the worth of the evidence. [Citation.]' ( Lucas Valley Homeowners Assn. v. County of Marin (1991)
"The County and Commission urge that the trial court misapplied the standard, improperly reweighing the evidence. ..." "[T]he ... argument is academic in the procedural posture of this case. Our review standard on appeal is identical to the trial court's. ( Bixby v. Pierno, supra,
The Supreme Court subsequently summarized the point with more economy: "An appellate court's review of the administrative record for ... substantial evidence ... is the same as the trial court's: The appellate court reviews the agency's action, not the trial court's decision; in that sense appellate judicial review ... is de novo." ( Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007)
Moreover, our Supreme Court has directed that "a trial court must afford a strong presumption of correctness concerning the administrative findings, and the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence." ( *37Fukuda v. City of Angels (1999)
It must be conceded that the tenor of the trial court's lengthy order is troubling. It appears to reflect a de novo review, with no suggestion of deference to the final result of the extensive administrative proceedings. It does seem to approach the matter from the perspective of Cities-stating what does not support the Board instead of looking to see what does-thus appearing to put the burdens of persuasion and proof on the Board. Also, it is disconcerting to see the statements made at the hearing by Medline officers-which obviously could support the Board's decision-virtually dismissed out of hand. True, they did not address the Board under oath, but no one at the hearing suggested that they should. As the Board notes, its rules allow for " 'hearsay evidence,' " particularly when, as occurred here, it was received without objection.15 (Cf.
*9213 Witkin, Cal. Evidence (5th ed. 2012) Presentation at Trial, § 37, p. 85 ["No constitutional provision is violated if unsworn testimony is received, and thus a party waives its objection to unsworn testimony by failing to object to it at trial."]; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 369, p. 427 ["Incompetent or otherwise inadmissible evidence admitted without objection will sustain the judgment."].) The Board was told at the outset that "the taxpayer's representatives are here to participate in this hearing," which, as already recounted, is what they did. That participation also took the form of answering questions from members of the Board, again with no protest by Cities. In these circumstances, the oral statements have the fullest potency to sustain the Board's decision.16 (See 1 Cal. Administrative Mandamus, supra , § 6.153, pp. 6-118-119 and decisions cited.)
A bit of practical reality should also be observed. The Board initially allotted Ontario, assisted by Medline and MedCal, a total of 15 minutes to present their appeal. Once again, 15 minutes . Even assuming that the Board had already familiarized itself with the 350 pages of Ontario's brief and exhibits, it would be a formidable job *38of advocacy for Ontario's counsel to acquaint the Board with the six years of administrative proceedings concerning this fact-intensive and fact-specific controversy. Midway during the hearing, the Board allowed Ontario, Medline, and MedCal an additional two minutes, but this would hardly have lightened their burden of persuasion. With time at a premium, it is hardly any wonder that counsel did not waste any by putting his "witnesses" under oath. Moreover, this was the same informality followed by the other parties at the hearing.
Finally, it is puzzling to ponder the trial court's conclusion that the Board "had no opportunity to observe the demeanor, manner, or attitude of any percipient witness." After all, we are talking about the persons who addressed the Board at the hearing, so each person's "demeanor, manner, or attitude" was perceivable-indeed, perceived-by the Board, which went to the trouble to twice single out those persons as "credible and persuasive" in its final decision. As for whether these persons qualified as "percipient" or personally knowledgeable about the information in their respective statements, no such hesitation was voiced to the Board, and in any event does not appear to be required by the Board's rules. (See fn. 15, ante .)
*922Not only must we presume the correctness of the Board's decision, we must also add a very hefty dose of deference by reason of the nature of the topic and the process. "[U]nder California's sales tax law," "the taxability question, whether a particular sale is subject to or is exempt from sales tax, is exceedingly closely regulated, complex, and highly technical. A comprehensive administrative scheme is provided to resolve these and other tax questions and to govern disputes between the taxpayer and the Board. Under these administrative procedures, it is for the Board in the first instance to interpret and administer an intensely detailed and fact-specific sales tax system governing an enormous universe of transactions." ( Loeffler v. Target Corp . (2014)
Given that no fundamental right is at issue, it is more than appropriate for courts to defer to the Board's expertise in resolving this issue. (See, e.g., *39Bixby v. Pierno, supra,
The possibility of disagreement ordinarily inheres in the substantial evidence standard. (See, e.g., Martin v. Alcoholic Bev. etc. Appeals Bd . (1961)
This is why we emphasize that the primary focus of our inquiry is whether the administrative record has substantial evidence that supports the Board's decision. Our review for substantial evidence is no less than a fresh and complete reexamination of the administrative record. In that sense Cities are correct in classifying our review as independent, but they are mistaken in seeing the problem as purely one of law resting on the "undisputed facts" in that record. Some historical facts may not be controverted, but, as will be *924shown, we are certainly in the realm where conflicting *40inferences may be drawn from the entirety of the administrative record. And those inferences must be drawn in favor of the Board's determination. (E.g., Interstate Brands v. Unemployment Ins. Appeals Bd . (1980)
Thus, Cities cannot merely point to evidence that supports the trial court's decision, nor can they selectively cull the administrative record for the bits and pieces that may not support the Board. Cities must go beyond that, establishing that the evidence in the administrative record is so comprehensively one-sided that the Board's decision was not only against the weight of that evidence, it was a decision so lacking in support that it cannot command the assent of reasonable minds.
The Board's Decision Is Supported by Substantial Evidence
At no point has any party disputed that taxable sales of personal property, i.e., Medline products, were being made in California by a retailer. Whether the retailer was Medline or MedCal was the central issue before the Board. How the Board resolved that issue depended upon how it would handle the issue of when title to the taxable personal property was transferred by the retailer. Determining when title passed would also determine who was the retailer.17 Was title passed by MedCal in Ontario, as the Board concluded, or was it by Medline, as the Board's staff and appeals division concluded, or by Medline when its products were shipped from its warehouses in Fontana, Lathrop, and San Bernardino?
Title
As previously noted, this court recently concluded that because state law did not "address when transfer of title occurs" for purposes of *925determining when a retail sale was "consummated" under section 7205, the Board did not exceed its authority "by using section 2401, subdivision (2), of the California Uniform Commercial Code to determine that issue." ( City of South San Francisco , supra ,
California Uniform Commercial Code section 2401 does not have a lot to say about the mechanics of determining where or when title to tangible personal property is passed by a retailer to a consumer. It was not always so.
Prior to 1965, the problem of passing title was a fertile field of dispute. (See, e.g., Kidd, The Passage of Title (1960) 14 Wyo. L.J. p. 25 ["The problem of finding the intention of the parties is extremely difficult, and has left us with a mass of confusing and conflicting cases."].) That changed when the Uniform Commercial Code became effective in California. In the words of a prominent commentator: "Unlike pre-Code law in which the location of title to goods determined many important issues arising under sales contracts, the Code de-emphasizes title practically to the vanishing point. ... [I]n resolving the legal consequences ... arising from the contract of sale, basically nothing depends on the location of title." (Henson, The Law of Sales (1985) p. 89; see 4 Witkin, Summary of Cal. Law (10th ed. 2005) Sales, § 124, p. 122.) "The application of Section 2-401 is extremely limited, ... for virtually noting [sic ] in Article 2 [governing sales of goods] depends on title," but the provision does retain a modest utility, in that "[r]ules for determining the location of title appear to be stated principally to fulfill a need arising occasionally under tax law or criminal law."18 (Henson, The Law of Sales, supra , at pp. 91, 89, fns. omitted.)
*926California Uniform Commercial Code section 2401 may have been intended to reduce the importance of title in many contexts, but it did not eliminate the concept when applying sections 6006 and 7205. There is no basis for concluding that the former statute made irrelevant the extensive body of case law devoted to the issue of passage of title, because our Supreme Court had already held that those decisions were effectively incorporated in the definition of "sale" in section 6006. ( Select Base Materials, Inc. v. Board of Equalization (1959)
That case law looked primarily to the intent of the contracting parties to determine when title passed, and that determination was ordinarily treated as an issue of fact. (E.g., South S.F. Pkg. etc. Co. v. Jacobsen (1920)
*42Overly Mfg. Co. v. State Bd. of Equalization (1961)
Documents
Traditionally, the most significant source of intent would be the written contract, if the parties made one. (See Sakamu v. Zellerbach Paper Co . (1938)
It may be, as Medline's top tax officer told the Board, that Medline runs a "very lean" operation (see fn. 10 and accompanying text, ante ), but it is certainly not a tidy one in terms of its administrative paper trail. This is most evident with respect to certain contractual arrangements Medline had with Medline Holdings and MedTrans prior to formation of MedCal. These arrangements are spelled out in four two-page agreements, all dated January 1, 2005, governing storage and shipment of *43Medline products. These agreements were the centerpiece of the trial court's documentary analysis, and the keystone for its conclusion that "it was Medline ... that sold the goods to, and passed title to, the customers."
The most pertinent of these writings is the "Warehouse Services Agreement." In brief, it specifies that Medline will provide Medline Holdings "with general warehousing services of its finished goods and product [purchased according to the "Distribution Agreement"] ... including ... the preparation of product for shipment," in exchange for which Medline Holdings will pay Medline a "monthly fee of $1.28 per square foot of warehouse space" as well as "charges ... for services rendered" to be billed "on a periodic basis." The agreement also provides that "while title to the finished goods and product *928will rest with [Medline Holdings], the risk of loss to such finished goods and product will rest with [Medline] while in its possession." The "Transportation Services Agreement" between Medline Holdings and MedTrans has a like provision stating "while title to the finished goods and product while being shipped will rest with [Medline Holdings], the risk of loss to such finished goods and product will rest with [MedTrans] while in its possession."
None of these four writings specifies a term for performance. However, each is scrupulous in specifying that one Medline entity will be charged for products, services, or facilities furnished to another Medline entity, and the formula for calculating compensation. None appears to have been replaced or superseded with a new agreement taking account of MedCal's formation. Had Medline been a little less "lean" and taken the trouble to prepare updated agreements, this controversy would have been greatly simplified, and perhaps even obviated.
For the trial court, the documents it examined "strongly suggest that customers thought that they were buying the products, and obtaining title, from Medline," which "the customers understood ... was the ... entity responsible for paying sales tax." The trial court's selective examination of documents in the administrative record led it to conclude the "evidence is consistent and shows that during the relevant time period, the customers of the Medline entities thought they were receiving title from Medline." Our own examination of the entire record, with due regard for the limited nature of allowable judicial review, requires that these questions be resolved in favor of the Board's decision.
Certainly there was a mass of documentary evidence that the Medline employees who serviced customers up to 2006 were rebranded as MedCal employees as MedCal was being inserted into the existing retail network. The same evidence showed that the new MedCal sales representatives uniformly told prospective customers that they (the representatives) worked exclusively for MedCal. When existing customers communicated with a sales representative via e-mail, the response identified the sender as working for MedCal. In support of its decision, we presume the Board found this evidence credible.
Moreover, it is undisputed that when a new account was opened, the customer filled out a "Customer Credit Application and Agreement" on a form headed "MEDCAL SALES LLC, 3350 Shelby Street, Suite 200, Ontario, CA 91764 ." And it was shown that MedCal sales reps were paid on a commission basis, that is, on the basis of what they sold . From all this documentation, the Board argues, "a reasonable person could infer that the customers thought MedCal, not Medline, transferred title," an inference the trial court erroneously *44failed to draw in favor of the Board's decision. *929True, there are the four "Corporate Program Agreement[s]" executed by Medline with large institutional clients. As correctly noted by the trial court, none of these agreements-governing provision of "all Medline and non-Medline brand ... products offered for sale by Medline"-mentions MedCal. Plus, three of the four agreements were executed after MedCal began operations. On the other hand, the agreements affect what must be a miniscule number of customers, the overwhelming majority (98.7%) of which purchase online with the assistance of MedCal sales reps.
Perhaps most tantalizing, and enigmatic, are the "Supply Agreement[s]" executed by various customers. All have the prefatory recital that "Customer and Medline intend to establish a vendor-vendee relationship." But three of the agreements begin by stating the agreement is between the customer "and Med Cal Sales, LLC, an Illinois corporation ('Medline')," and these documents are executed by "MED CAL SALES, LLC." The fourth states that the agreement is between the customer and "Medline ... and its wholly owned consolidating subsidiaries, MedCal Sales ... and Medline Industries Holdings," all of which hereafter "collectively referred to as 'Medline.' " This agreement was executed on behalf of "MEDLINE INDUSTRIES." Each agreement provides that "Customer shall be responsible for the payment of all applicable sales ... tax incurred by Medline ... on all Products ... provided to Customer" "[t]o the extent these taxes are applicable. One hundred percent (100%) thereof shall be added to invoices and paid in full by Customer." And all but one of these agreements also provides where notices required by the agreement are to be sent: "If for Medline, to: [¶] Med Cal Sales, LLC [¶] One Medline Place [¶] Mundelein, Illinois 60060."
The inference just quoted by the Board can be reinforced with these documents. Granted, with the exception of the "Corporate Program Agreement[s]," the status and function of MedCal is somewhat opaque. However, reading them from the perspective of upholding the Board's decision does add some clarity. Thus, the sales tax provisions do not expressly say that Medline will incur sales tax liability because it is the sole entity selling Medline products in California or to California customers. The "[t]o the extent these taxes are applicable" language is open to the interpretation that Medline may not automatically or necessarily incur such liability. The entirety of the agreements can be read as establishing that when they say Medline they intend to mean MedCal. Three of the supply agreements are easily read to identify MedCal as the real contracting party and the entity that will pull the laboring oar in performing the agreement, meaning also that it is MedCal that will provide the goods and receive payment from the customer for those goods. The fourth can be read to the same conclusion, because "Medline" as used in that agreement is a collective designation that expressly *930includes MedCal.22 The "Notices" *45provision in every one of the agreements can be read as requiring that any "communication"-including complaints, requests, or queries-is to be directed to MedCal, and only to MedCal. Even in the absence of formal novations, the Board could conclude from the supply agreements that MedCal was being inserted as a new party to the rights and obligations of the existing administrative services, warehouse services, distribution, and transportation services agreements.
Documents may be important, even dispositive, but they should not be made a litmus test. Nor should the four corners become a fetish. It is a bedrock principle of taxation that substance is more important than form. (E.g., Microsoft Corp. v. Franchise Tax Bd., supra ,
Here, contrary to Cities' reading that the writings cited by the trial court are "controlling [and] cannot be disputed or altered by extra-contractual evidence of 'internal intent,' " we conclude those documents are far from dispositive. It is therefore appropriate to widen the focus to "the conduct of the parties ... and the circumstances of the case," which may be established by parol evidence. ( Woodbine v. Van Horn , supra ,
*931Diebold, Inc. v. State Bd. of Equalization , supra ,
Circumstantial Evidence
As already noted, at the hearing the Board was in effect told that the sole reason for creating MedCal and inserting it into the existing distribution process was to reduce the amount of sales tax that Medline, as an entire entity, would pay.23 This parol evidence testimony was received in full conformity with the Board's *46rules ( Cal. Code Regs., tit. 18, §§ 5523.6 - 5523.7, quoted at fn. 15, ante ), and was thus entirely legitimate for the Board's consideration and reliance. The Board could also draw this conclusion from the location agreement between MedCal and Ontario, which includes the recital that "MedCal agrees to conduct its business so that the place of sale for all Taxable Sales ... will be to [Ontario] pursuant to the Sales Tax Law" There is no evidence that Ontario, or any of the Medline entities, believed or behaved as if the administrative services, warehouse services, distribution, and transportation services agreements were ineffective in achieving the goal of moving the situs of taxable transactions to Ontario, which would constitute circumstantial evidence that the parties to those agreements accepted them as effective in achieving the desired result. " ' "It is to be assumed that parties to a contract best know what was meant by its terms, and are the least liable to be mistaken as to its intention; that each party is alert to his own interests, and to insistence on his rights, and that whatever is done by the parties contemporaneously with the execution of the contract is done under its terms as they understood and intended it should be ...." ' [¶] ... 'This was a practical construction placed upon the contract by the parties themselves, which renders it immaterial to consider what might be the literal construction of its terms.' " ( Crestview Cemetery Assn. v. Dieden (1960)
There is more "conduct of the parties ... and the circumstances of the case." Remember, following delivery of the ordered goods, the customer would continue to deal only with MedCal sales reps and employees. If the customer had complaints, they would be addressed to, and handled by, the same MedCal sales representative who helped place the order. Additionally, it was MedCal that the customer *47paid for the goods.24 The Board could treat this as circumstantial evidence that the customer believed title to the goods was coming from MedCal. (E.g., Wallace Berrie & Co. v. State Bd. of Equalization (1985)
There is more. As already noted, Medline official Gerstein explained to the Board how the order and shipping process operated to pass title from MedCal to the customer. Again, this was evidence of ponderable force. ( Cal. Code Regs., tit. 18, §§ 5523.6 - 5523.7 ; Woodbine v. Van Horn , supra ,
The reasons for Medline's changes were explicit-and never denied. The strategic intent could not be clearer. As one member of the Board noted at the hearing, Medline was simply following the celebrated observation of Learned Hand: "[T]here is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands." ( Commissioner of Internal Revenue v. Newman (2d. Cir. 1947)
To this end, Medline implemented an extensive restructuring of its operations. It interjected a new actor, and made it the employer of record for personnel formerly paid by Medline. As part of its "very lean" operating ethos (see fn. 10 and accompanying text, ante ), Medline reflected the restructuring *48by integrating MedCal operations into its internal paperless accounting system, which was scrupulous in billing MedCal for goods it purchased and services it used from other Medline entities, specifically, Medline Holdings and MedTrans. Gerstein was closely questioned at the hearing about MedCal's operations, both as to coverage of the various written agreements. The Board could have disbelieved the evidence of Medline's centralized accounting practices, and the explanation of what certain entries betokened (see Northrop Corp. v. State Bd. of Equalization , supra ,
So, which entity is the "retailer" that made the "sale" that involved "transfer of title"? ( §§ 6015, 6006, subd. (a).) Is it MedCal, as the Board's staff initially concluded and the Board ultimately concluded, or is it Medline, as the Board's staff and Appeals Division intermediately concluded? Given the *935administrative U-turns, either result could command substantial evidence from this administrative record, and neither would be compelled as a matter of law. Either result could be reached by reasonable administrators. (E.g., Pratt v. Rosenthal , supra ,
It is for administrative agencies " ' "to weigh the preponderance of conflicting evidence" ' " before them ( Eden Hospital Dist. v. Belshe , supra ,
The Board could reasonably conclude that Medline was sufficiently sophisticated to know how to shift sales situs operations to satisfy section 6006's definition of a sale. It is reasonable to assume that the practice of luring retailers to change location, a practice so prevalent it was substantially restricted by the Legislature (see fn. 6, ante ), was familiar to the Board. It is equally reasonable to assume that the Board had seen a number of relocations that were motivated by concerns of reducing the amount of sales tax a given retailer would actually pay, and, following the bedrock principle of taxation that substance is more important than form (e.g., Microsoft Corp. v. Franchise Tax Bd ., supra ,
Our careful review of the administrative record establishes that there is ample evidence, *50direct, documentary, and circumstantial, to support the Board's determinations that (1) customers believed they were ordering goods *936from MedCal; (2) MedCal became the retailer when it purchased goods from Medline for shipment to MedCal's customer; and (3) when MedCal then paid MedTrans to deliver those goods to the customer, MedCal "complete[d] ... performance with reference to the physical delivery of the goods." ( Cal. U. Com. Code, § 2401, subd. (2).) And did so in Ontario.28
DISPOSITION
The judgment is reversed, and the cause is remanded to the trial court with directions to enter a judgment denying the petition. The Board, the City of Ontario, MedCal Sales, LLC, and Medline Industries, Inc., shall recover their respective costs of appeal.
We concur:
Kline, P.J.
Miller, J.
Footnotes
226 Cal. Rptr. 3d 21 (City of Fontana v. Cal. Dep't of Tax & Fee Admin.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.