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City of Golden v. Sodexo America, LLC

Supreme Court of Colorado, En Banc

May 20, 2019

City of Golden, Colorado and Jeff Hansen, in his official capacity as Finance Director of the City of Golden, Colorado, Petitioners
Sodexo America, LLC, Respondent

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 16CA1355

          Attorneys for Petitioners: Williamson & Hayashi, LLC David S. Williamson Mathew M. Munch Boulder, Colorado

          Attorneys for Respondent: Silverstein & Pomerantz LLP Neil I. Pomerantz Mark E. Medina Michelle Bush Denver, Colorado

          Attorneys for Amicus Curiae Colorado Department of Revenue: Philip J. Weiser, Attorney General Russell D. Johnson, Assistant Solicitor General Denver, Colorado

          Attorneys for Amici Curiae Colorado Higher Education Institutions: Philip J. Weiser, Attorney General Stephanie Scoville, Senior Assistant Attorney General Denver, Colorado Jeremy Hueth, Special Assistant Attorney General Denver, Colorado

          Attorney for Amicus Curiae Colorado Municipal League: Dianne M. Criswell Denver, Colorado


          HOOD JUSTICE

         ¶1 Imagine that two students enter a dining hall at the Colorado School of Mines in the City of Golden. One pays with cash; the other swipes a "BlasterCard" to use a meal-plan credit. Sodexo, Mines' food service provider, collects sales tax on the cash transactions and remits the tax to Golden. Not so when a student swipes a BlasterCard to use a meal-plan credit. That disparity in tax treatment culminated in this case.

         ¶2 A little background information about BlasterCards helps to flesh out the legal dispute. During the time at issue, Mines loaded each meal-plan student's BlasterCard, which is a student's identification card, with an individual meal plan choice. To use their meal plans, students swiped their BlasterCards at a dining facility. Sodexo had nothing to do with loading the students' BlasterCards with their meal plans-that was all Mines. Sodexo also had no way of knowing if a student had fully paid for his or her meal plan, and Sodexo had no way of enforcing collections against a student who hadn't fully paid. Again, that was all taken care of by Mines. But neither Mines nor Sodexo collected any sales tax on these meal-plan meals.

         ¶3 When Golden's Finance Department audited Sodexo and discovered that sales tax for these meal plans had not been collected, it issued a sales and use tax assessment. Sodexo protested and lost, so Sodexo appealed to the district court. The court granted summary judgment for Golden, finding that Sodexo had engaged in taxable retail sales directly to Mines' students, rather than tax-exempt wholesale sales to Mines.

         ¶4 Undeterred, Sodexo appealed again. This time, a unanimous division of the court of appeals reversed the judgment of the district court, concluding that there were two sales transactions at issue: one between Mines and Sodexo, and the other between Mines and its students. The division further concluded that Mines and Sodexo were engaged in tax-exempt wholesale transactions. Accordingly, the division remanded for entry of judgment in Sodexo's favor.

         ¶5 We granted Golden's request to review the division's decision. But, having done so, we agree with the division that two transactions took place: one between Sodexo and Mines, another between Mines and its students. Like the division below, we conclude that Sodexo sold the meal-plan meals to Mines at wholesale, and, accordingly, these transactions were exempt from taxation under the Code. We therefore affirm the judgment of the court of appeals.

         I. Facts and Procedural History

         ¶6 Mines is a public post-secondary education institution. At all relevant times, it required all students residing in an on-campus residence hall to purchase a meal plan.

         ¶7 Mines and its students entered into Residence Hall Contracts, which detailed the various meal plans available for purchase and the prices per plan. These contracts also outlined the number of meals included in each meal plan option, as well as the amount of "Munch Money," a declining balance of points loaded onto each student's identification card that was accepted at any on-campus dining facility, apportioned to each plan. Students with meal plans paid Mines directly for the cost of the plans.

         ¶8 In May 2011, Mines separately contracted with Sodexo to fulfill its obligations to provide meals and food options for its students. Sodexo agreed to "provide food services for [Mines'] students, faculty, staff, employees and guests." "Food services" was defined as "the preparation, service and sale of food, beverages, and select goods, merchandise and other items to be agreed upon by [Mines] and [Sodexo] . . . including catering, concessions, retail and meal plans." Mines agreed to purchase meals exclusively from Sodexo that Sodexo would then prepare and serve at Mines' dining facilities. ...

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