Walgreens Specialty Pharmacy, LLC v. Comm'r of Revenue

916 N.W.2d 529
CourtSupreme Court of Minnesota
DecidedAugust 15, 2018
DocketA17-1991
StatusPublished
Cited by3 cases

This text of 916 N.W.2d 529 (Walgreens Specialty Pharmacy, LLC v. Comm'r of Revenue) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walgreens Specialty Pharmacy, LLC v. Comm'r of Revenue, 916 N.W.2d 529 (Mich. 2018).

Opinions

LILLEHAUG, Justice.

*531Respondent Walgreens Specialty Pharmacy, LLC ("WSP") requested refunds from the Department of Revenue for taxes paid under Minnesota's Legend Drug Tax, see Minn. Stat. § 295.52, subd. 4 (2016), on transactions between WSP's non-resident pharmacies and Minnesota-based patients and doctors. Relator Commissioner of Revenue ("Commissioner") denied the requested refunds. WSP sought relief from the Minnesota Tax Court, arguing that the Legend Drug Tax did not apply to the transactions at issue. The tax court agreed with WSP and granted its motion for summary judgment. We reverse.

FACTS

The facts underlying this appeal are not in dispute. WSP is a single-member limited liability company, organized under the laws of Delaware and headquartered in Florida.1 WSP is a wholly owned subsidiary of Walgreen Company ("Walgreens"), which is incorporated in Illinois. During the tax years at issue, 2008-2013, WSP operated a retail pharmacy business, selling specialty drugs used to treat chronic, rare, and complex medical conditions. WSP owned and operated retail pharmacy locations in New Jersey (now closed), Massachusetts (now closed), Michigan, Oregon, Pennsylvania, and Texas-but not in Minnesota. The Minnesota Board of Pharmacy licensed all of those locations to dispense legend drugs2 to Minnesota residents.3 WSP did not own or rent any property in Minnesota, and did not employ anyone in Minnesota.

Walgreens employed a representative in Minnesota to promote the services of WSP to doctors, medical-practice managers, hospitals, *532and others. WSP contracted with health-plan companies and others in Minnesota to sell legend drugs prescribed by Minnesota healthcare providers to customers in Minnesota. Minnesota customers could also order refills from WSP for prescribed legend drugs, through a common website shared by Walgreens and WSP. During the tax years at issue, WSP filled for Minnesota-based customers hundreds of thousands of prescriptions worth hundreds of millions of dollars.

WSP filled these prescriptions from its inventory of legend drugs obtained from wholesalers and manufacturers, licensed and unlicensed, located outside of Minnesota. WSP delivered the prescribed drugs to a common carrier (such as UPS or FedEx), which then shipped the legend drugs to Minnesota-based customers-either to the customer's home or, if the drug was to be administered by a doctor, to a treatment facility.

WSP filed amended tax returns for the tax years at issue, requesting refunds of the 2-percent legend-drug taxes paid on its wholesale cost for the legend drugs sold to Minnesota-based customers during those years. The Commissioner denied the refund claims, and WSP appealed. The tax court concluded that the relevant transactions were not subject to the tax because WSP received the legend drugs outside of Minnesota. Walgreens Specialty Pharmacy, LLC v. Comm'r of Revenue , No. 8902-R, 2017 WL 5617609, at *8 (Minn. T.C. Oct. 16, 2017). In reaching this conclusion, the tax court acknowledged that subdivision 4(a) "provides that delivery of drugs within Minnesota can trigger liability for" the tax, but held that the statute imposes the tax "solely [on] the receipt of drugs." Id. at *10.

ANALYSIS

The first issue presented by this case is whether Minnesota's Legend Drug Tax applies to transactions between Minnesota-based customers and a non-resident pharmacy that receives drugs outside of Minnesota, fills prescriptions from Minnesota-based medical providers from those drugs, and uses a common carrier to ship the prescribed legend drugs to Minnesota-based customers. If so, we must then decide whether application of the tax comports with the Due Process and Commerce Clauses of the United States Constitution. On cross-motions for summary judgment, the tax court denied the Commissioner's motion and granted WSP's motion. We review a grant of summary judgment de novo. Montemayor v. Sebright Prods., Inc. , 898 N.W.2d 623, 628 (Minn. 2017). Here, we review de novo the tax court's application of the law to the undisputed facts. Chapman v. Comm'r of Revenue , 651 N.W.2d 825, 830 (Minn. 2002).

I.

We turn first to the question of whether the Legend Drug Tax applies to the transactions at issue here. The Legend Drug Tax is one of several MinnesotaCare provider taxes, under which a 2-percent tax is levied on the gross revenues of hospitals, surgical centers, wholesale drug distributors, and on the price paid (here, the wholesale cost) by those who receive or deliver legend drugs in Minnesota. Minn. Stat. § 295.52 (2016).4 WSP contends that the Legend Drug Tax, properly construed, applies only to the receipt of legend drugs in Minnesota. The Commissioner argues that liability for the Legend Drug Tax is imposed on in-state receipt or delivery of *533the drugs. The parties' dispute requires that we interpret the Legend Drug Tax, Minn. Stat. § 295.52, subd. 4.

"The objective of statutory interpretation is to ascertain and effectuate the Legislature's intent." State v. Struzyk , 869 N.W.2d 280, 284 (Minn. 2015) (citation omitted). "The first step in statutory interpretation is to 'determine whether the language of the statute, on its face, is ambiguous.' " 500, LLC v. City of Minneapolis , 837 N.W.2d 287, 290 (Minn. 2013) (quoting Larson v. State , 790 N.W.2d 700, 703 (Minn. 2010) ). "A statute is ambiguous if it is susceptible to more than one reasonable interpretation." Id. (citation omitted). If a statute is ambiguous, we may look to canons of construction to ascertain its meaning. Id. But when the intent of the Legislature is clear from the unambiguous language of the statute, we apply the statute according to its plain meaning.

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Bluebook (online)
916 N.W.2d 529, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walgreens-specialty-pharmacy-llc-v-commr-of-revenue-minn-2018.