Agrilink Foods, Inc. v. STATE, DEPT. OF REVENUE

Decision Date13 January 2005
Docket NumberNo. 74478-5.,74478-5.
Citation103 P.3d 1226,153 Wn.2d 392,153 Wash.2d 392
CourtWashington Supreme Court
PartiesAGRILINK FOODS, INC., Petitioner, v. STATE of Washington, DEPARTMENT OF REVENUE, Respondent.

Scott M. Edwards, Perkins Coie LLP, Seattle, for Petitioner.

David M. Hankins, Anne Elizabeth Egeler, Attorney Generals Office/Revenue Division, Olympia, for Respondent.

Kristopher Ian Tefft, Association of Washington Business, for Amicus Curiae Association of Washington Business.

OWENS, J.

Agrilink Foods, Inc. (Agrilink) filed suit against the State of Washington, Department of Revenue (DOR), claiming overtaxation on its canned chili products. Agrilink was taxed at the general manufacturing rate of .484 percent pursuant to RCW 82.04.240 but claims the appropriate rate should have been .138 percent under RCW 82.04.260(4), which relates to perishable meat products. The lower tax rate applies to "every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale." RCW 82.04.260(4). The superior court found in favor of Agrilink, concluding that RCW 82.04.260(4) does not require a taxpayer's finished product to be "perishable" and that, therefore, Agrilink should have been taxed at the lower rate. The Court of Appeals reversed, holding that RCW 82.04.260(4) should be interpreted narrowly and apply only where the finished product is perishable. We hold that the plain language of RCW 82.04.260(4) encompasses manufacturing activities that result in nonperishable finished products. Accordingly, we reverse the Court of Appeals decision and reinstate the trial court's judgment in favor of Agrilink.

FACTS

Agrilink produces "chili con carne" and "chili con carne with beans," requiring raw beef to be (1) ground, (2) mixed with vegetable protein, (3) extruded, (4) brazed at 160 degrees, (5) drained, (6) diced, (7) canned, and (8) cooked until commercially sterile. Clerk's Papers at 23-25. Once canned, the chili has an indefinite shelf life in terms of remaining fit for human consumption, although it is likely to acquire an unsavory taste after four to six years. In short, Agrilink's chili-making process converts raw meat into a nonperishable finished product. In 1991, Agrilink requested that DOR reclassify its chili production as taxable under the lower rate pursuant to RCW 82.04.260(4) and claimed a refund was due dating back to 1987. RCW 82.04.260(4) reads in full as follows:

Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.

The parties settled their first dispute in 1997 but left open the final determination of the appropriate taxation rate. In 1999, DOR advised Agrilink it would thereafter be taxed at the general manufacturing rate of .484 percent. Agrilink paid the additional $42,330.52 in taxes from June to December 1999 but filed a refund request that ultimately led to the matter before this court.

After a bench trial upon stipulated facts, Thurston County Superior Court Judge Richard A. Strophy ruled that RCW 82.04.260(4), imposing the lower tax rate on those "processing perishable meat products," applied to Agrilink's chili-making activities discussed above. The court reasoned that each of the activities listed in the statute is clearly disjunctive, indicating that any person undertaking one such activity is entitled to the lower rate. The court went on to conclude that even if the statute were ambiguous as to the question of whether the finished product must be perishable, such ambiguity must be resolved in favor of the taxpayer.

DOR appealed, and Division Two of the Court of Appeals reversed in an unpublished opinion. See Agrilink Foods, Inc. v. Dep't of Revenue, noted at 117 Wash.App. 1037, 2002 WL 32123542, at *1. The court held that the plain language of RCW 82.04.260(4) requires a perishable finished product in all cases. Id. at *3. However, early in the analysis, the court stated that "[g]iven the broad definition of `processing,' the phrase `processing perishable meat' includes subjecting perishable meat to a special process that converts it into nonperishable (canned) meat." Id. at *2 (emphasis added). The court went on to state that "[i]nterpreting the phrase `processing perishable meat products' to exclude nonperishable end products is consistent with deriving plain meaning from the statute." Id. The Court of Appeals based its holding on two lines of reasoning. First, the court concluded that because two other activities listed in RCW 82.04.260(4) result in perishable end products — that is "slaughtering" and "breaking" — then the third activity, "processing," should be interpreted narrowly to require a perishable end product as well. Id. Second, the court concluded that the term "perishable" in the phrase "processing perishable meat products" would be superfluous if the legislature intended the lower rate to apply to manufacturers of nonperishable goods. Id.

ISSUE

Does the plain language of RCW 82.04.260(4) include or exclude manufacturing activities that result in nonperishable finished products when (1) there is no language in the statute referencing the finished product, (2) other subsections in RCW 82.04.260 do require a specific finished product, and (3) each of the taxable activities is listed using "and/or"?

ANALYSIS

Standard of Review. Agrilink contends that the Court of Appeals erred in its reasoning and that the trial court correctly concluded that RCW 82.04.260(4) encompasses manufacturing activities that result in nonperishable finished products. Statutory interpretation is a question of law that is reviewed de novo. W. Telepage, Inc. v. City of Tacoma Dep't of Fin., 140 Wash.2d 599, 607, 998 P.2d 884 (2000). Where statutory language is plain and unambiguous courts will not construe the statute but will glean the legislative intent from the words of the statute itself, regardless of contrary interpretation by an administrative agency. Bravo v. Dolsen Cos., 125 Wash.2d 745, 752, 888 P.2d 147 (1995); Wash. Fed'n of State Employees v. State Pers. Bd., 54 Wash.App. 305, 309, 773 P.2d 421 (1989). A statute is ambiguous if "susceptible to two or more reasonable interpretations," but "a statute is not ambiguous merely because different interpretations are conceivable." State v. Hahn, 83 Wash.App. 825, 831, 924 P.2d 392 (1996). Finally, we take note that "[i]f any doubt exists as to the meaning of a taxation statute, the statute must be construed most strongly against the taxing power and in favor of the taxpayer." Ski Acres, Inc. v. Kittitas County, 118 Wash.2d 852, 857, 827 P.2d 1000 (1992).

Interpretation of RCW 82.04.260(4). We conclude that, by its plain language, RCW 82.04.260(4) does not include a perishable finished product requirement. First, we note the complete absence of any express language establishing such a requirement. Had the legislature unequivocally intended to include a perishable finished product requirement, it might have done so by using a number of alternative constructions. Second, other subsections in RCW 82.04.260 do focus on the finished product. For example, RCW 82.04.260(1)(a) speaks of "[w]heat into flour" and "barley into pearl barley." See also RCW 82.04.260(1)(b) (setting the tax rate based on the state of seafood products at the completion of the manufacturing process). Therefore, if the legislature had intended to include a finished product requirement in RCW 82.04.260(4), it would have done so in the same manner. See United Parcel Serv., Inc. v. Dep't of Revenue, 102 Wash.2d 355, 362, 687 P.2d 186 (1984)

("where the Legislature uses certain statutory language in one instance, and different language in another, there is a difference in legislative intent"). Finally, each of the activities listed in RCW 82.04.260(4) is separated by the term "and/or," which is commonly understood to allow for a disjunctive reading. See THE UNIVERSITY OF CHICAGO, THE CHICAGO MANUAL OF STYLE 5.202 (15th ed.2003); WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE 80 (2002). Applying this ordinary understanding of "and/or," the four activities separately entitled to the lower rate are defined as (1) slaughtering, (2) breaking, (3) processing, or (4) selling at wholesale. Thus, "processing" alone qualifies Agrilink for the .138 percent rate because the second "and/or" negates any requirement that a taxpayer must also sell a "perishable meat product."

DOR's continued reliance on the strained reasoning of the Court of Appeals is unavailing. The court's suggestion that it is necessary to impose a perishable finished product requirement with regard to "processing" in order to harmonize that activity with "slaughtering" ...

To continue reading

Request your trial
66 cases
  • Pierce County v. State
    • United States
    • Washington Court of Appeals
    • May 28, 2008
    ...from the language of the statute itself, not an administrative agency's contrary interpretation. Agrilink Foods, Inc. v. Dep't of Revenue, 153 Wash.2d 392, 396, 103 P.3d 1226 (2005). Even if this statement represents the Department's interpretation of RCW 71.24.300, it is contrary to the st......
  • Alaska Airlines Inc. v. Schurke
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • August 1, 2018
    ...the statute itself, regardless of contrary interpretation by an administrative agency" (quoting Agrilink Foods, Inc. v. State, Dep't of Revenue , 153 Wash. 2d 392, 396, 103 P.3d 1226 (2005) ) ).In short, to plead a WFCA claim, employees must show they are entitled to sick leave or other pai......
  • Homestreet, Inc. v. State, Dept. of Revenue
    • United States
    • Washington Supreme Court
    • June 18, 2009
    ...the words of the statute itself, regardless of contrary interpretation by an administrative agency." Agrilink Foods, Inc. v. Dep't of Revenue, 153 Wash.2d 392, 396, 103 P.3d 1226 (2005). "A statute that is clear on its face is not subject to judicial construction." State v. J.M., 144 Wash.2......
  • Ma’ae v. Washington Department of Labor and Industries
    • United States
    • Washington Court of Appeals
    • April 1, 2019
    ...are conceivable.’ " Cerrillo v. Esparza, 158 Wash.2d 194, 201, 142 P.3d 155 (2006)6 (quoting Agrilink Foods. Inc., v. Dep’t of Revenue, 153 Wash.2d 392, 396, 103 P.3d 1226 (2005) ).¶21 Whenever possible, statutes are to be read together to achieve a " ‘harmonious total statutory scheme ... ......
  • Request a trial to view additional results
1 provisions
  • Chapter 23, SB 6143 – Excise tax law modifications
    • United States
    • Washington Session Laws
    • January 1, 2010
    ...that RCW 82.04.260(4) was interpreted by the state supreme court on January 13, 2005, in Agrilink Foods, Inc. v. Department of Revenue, 153 Wn.2d 392 (2005). The supreme court held that the preferential business and occupation tax rate on the slaughtering, breaking, and/or processing of per......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT