A16-1504

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1433
A16-1504

Superior Glass, Inc.,
Relator,

vs.

Lucas Johnson,
Respondent (A16-1433),

Shawn Strang,
Respondent (A16-1504),

Department of Employment and Economic Development,
Respondent.

Filed May 1, 2017
Affirmed
Schellhas, Judge

Department of Employment and Economic Development
File Nos. 34637255-3, 34673933-3

Steven C. Overom, Christophe r S. Davis, Jr., Maki & Over om, Ltd., Duluth, Minnesota
(for relator)

Lucas Johnson, Wright, Minnesota (pro se respondent)

Shawn Strang, Cloquet, Minnesota (pro se respondent)

Lee B. Nelson, Keri A. Phillips, Department of Employment and Economic Development,
St. Paul, Minnesota (for respondent department)

Considered and decided by Kirk, Presiding Judge; Schellhas, Judge; and Bratvold,
Judge.

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S Y L L A B U S
I. When an employee perform s more than 50% of his or her total hours during
a calendar quarter in Minnesota, the employment was “performed primarily in Minnesota”
and therefore the employee’s entire employme nt during the calendar quarter is “covered
employment,” as defined in Minn. Stat. § 268.035, subd. 12(a)(1)(i) (2016).
II. A business is not subjec ted to double taxation in violation of the Dormant
Commerce Clause by application of Minn. Stat. § 268.035, subd. 12(a) (2016).
O P I N I O N
SCHELLHAS, Judge
In this consolidated certiorari appeal, relator argues that unemployment-law judges
(1) erred in determining that its employees are eligible for unemployment-insurance benefit
accounts in Minnesota, and (2) applied Minn. Stat. § 268.035, subd. 12(a), to result in
double taxation of relator in violation of the Dormant Commerce Clause. We affirm.
FACTS
Relator Superior Glass Inc. is a Wisconsin company with company headquarters in
Superior, Wisconsin. Respondent-employees Lucas Johnson and Shawn Strang performed
work for Superior Glass in both Minnesot a and Wisconsin during 2015 and 2016, but
Superior Glass laid them off for a period of time in 2016. Both employees applied for
unemployment-insurance benefits with respondent Minnesota Department of Employment
and Economic Development (DEED) because they lived in Minnesota.
The employees earned wages during 2015 and 2016, and in support of their benefits
applications, provided DEED with detailed logs of hours worked, broken down by day and

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by job. Based on that information, DEED determined how many hours each employee had
worked in Minnesota and esta blished base periods for the determination of benefits. See
Minn. Stat. § 268.035, subd. 4 (2016) (def ining “base period” a nd explaining how to
determine base period). DEED determined that both employees were eligible to receive
unemployment-insurance benefits because both worked more than 50% of their hours in
Minnesota during certain calendar quarters in the base periods and therefore performed
their employment primarily in Minnesota during those quarters. DEED further determined
that, for the quarters during which Johnson and Strang performed their employment
primarily in Minnesota, their entire empl oyment with Superior Glass was “covered
employment,” as defined in Minn. Stat. § 268.035, subd. 12(a)(1)(i).1 As to each employee,
DEED notified Superior Glass that “[u]nder Mi nnesota Statute section 268.047, subd. 1,
any unemployment benefits paid will be used in compu ting the future unemployment tax
rate of SUPERIOR GLASS.”
Superior Glass appealed DEED’s determinations of eligibility. Unemployment-law
judges (ULJs) conducted te lephone hearings, affirmed DEED’s determinations, and
affirmed their decisions after reconsideration. This consolidated certiorari appeal follows.

1 Johnson earned wages for work performed primarily in Minnesota during the first,
second, and fourth quarters of 2015 and the first quarter of 2016. Strang earned wages for
work performed primarily in Minnesota during the second, third, and fourth quarters of
2015.

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ISSUES
I. Did the ULJs err in determining th at the employees’ entire employment
during calendar quarters in which the employe es performed work primarily in Minnesota
was “covered employment,” as defined in Minn. Stat. § 268.035, subd. 12(a)(1)(i)?
II. Does the ULJs’ application of Minn. Stat. § 268.035, su bd. 12(a), subject
Superior Glass to double taxation in violation of the Dormant Commerce Clause?
ANALYSIS
I
Superior Glass does not contest the ULJs’ findings that Johnson and Strang worked
more than 50% of their hours in Minnesot a during certain calendar quarters. Rather,
Superior Glass argues that the ULJs misinterpr eted “covered employment,” as defined in
Minn. Stat. § 268.035, subd. 12(a), and therefore erred in determining that Johnson and
Strang were eligible for unemployment-insurance benefit accounts in Minnesota.
We may affirm the ULJs’ decisions or remand the cases for further proceedings, or
we may reverse or modify the decisions if the substantial rights of a relator may have been
prejudiced because the decisions are, among other things, “in viol ation of constitutional
provisions” or “in excess of the statutory authority or jurisdiction of the department.” Minn.
Stat. § 268.105, subd. 7(d)(1), (2) (2016). We are not bound by the ULJs’ conclusions of
law but are free to exercise our independent judgment. Markel v. City of Circle Pines, 479
N.W.2d 382, 384 (Minn. 1992).
These consolidated appeals require us to interpret Minn. Stat. § 268.035, subd.
12(a). “Statutory interpretation is a question of law that [appellate courts] review de novo.”

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Engfer v. Gen. Dynamics Advanced Info. Sys., Inc. , 869 N.W.2d 295, 300 (Minn. 2015).
“[The] goal in interpreting a state statute is to ascertain and effectuate the intent of the
Legislature.” Id. (citing Minn. Stat. § 645.16 (2014)).
The supreme court has noted that “the unemployment compensation statute is
remedial in nature and must be liberally construed to effectuate the public policy set out in
Minn. Stat. § 268.03, which states that the unemployment benefits provisions are to be used
for the benefit of persons unemploye d through no fault of their own.” Jenkins v. Am.
Express Fin. Corp., 721 N.W.2d 286, 289 (Minn. 2006). “Unemployment benefits are paid
from state funds and are not considered . . . as paid by an employer.” Minn. Stat. § 268.069,
subd. 2 (2016). “Unemployment insurance taxes . . . accrue and become payable by each
employer for each calendar year on the taxable wages that the employer paid to employees
in covered employment. . . .” Minn. Stat. § 268.051, subd. 1(a) (2016) (emphasis added);
see also Minn. Stat. § 268.035, subd. 23(a) (explaining the method the commissioner must
use to “calculate the state’s av erage annual wage and the st ate’s average weekly wage”),
(b) (“For purposes of calculating the amount of taxable wage s, the state’s average annual
wage applies to the calendar year following the calculation.”) (2016).
Minnesota Statutes section 268.035, subdivision 12(a), defines “covered
employment.” The portion of the statute pertinent to this case provides that:
(a) “Covered employment” means the following unless
excluded as “noncovered employment” under subdivision 20:
(1) an employee’s entire employment during the
calendar quarter if:
(i) the employment during the quarter is performed
primarily in Minnesota;

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Minn. Stat. § 268.035, subd. 12(a)(1)(i) (emphasis added). In its reply brief, Superior Glass
suggests that the statute is ambiguous based on informa tion on DEED’s website. But
Superior Glass did not argue ambiguity in its principal brief. Generally, issues not raised
in an appealing party’s prin cipal brief cannot be raised in a reply brief and may be
considered forfeited. Moorhead Econ. Dev. Auth. v. Anda , 789 N.W.2d 860, 887 (Minn.
2010). In any event, we agree with DEED that the statute is not ambiguous.
“Statutory language is ambi guous only if, as applied to the facts of the particular
case, it is susceptible to more th an one reasonable interpretation.” Engfer, 869 N.W.2d at
300. “If the statutory language is unambiguou s, [appellate courts] must enforce the plain
meaning of the statute and not explor e the spirit or purpose of the law.” Id. “[Appellate
courts] give words and phrases th eir plain and ordinary meaning.” Id. Minnesota Statutes
section 268.035 does not define the word “primarily.” “To determine the plain meaning of
a word, [appellate courts] often consider dictionary definitions.” Shire v. Rosemount, Inc.,
875 N.W.2d 289, 292 (Minn. 2016). The dic tionary defines “primarily” as “[c]hiefly;
mainly” or “at first; originally.” The American Heritage Dictionary of the English
Language 1393 (4th ed. 2006 ). One definition refers to qua ntity and the other focuses on
the sequence of events.
Reading “primarily” in the context of Minn . Stat. § 268.035, subd. 12(a)(1)(i), we
conclude that the only reasonable interpreta tion of “primarily” is “[c]hiefly; mainly”
because the context of Minn. Stat. § 268.035, subd. 12(a)(1)(i), suggests a quantitative, not
sequential, meaning. See Cocchiarella v. Driggs , 884 N.W.2d 621, 625 (Minn. 2016)
(“When a word has a variety of meanings, [appellate courts] examine the context in which

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the word appears.”). We further conclude th at, as applied to the facts of this case,
“primarily” is not susceptible to more than one reasonable interpretation.
Applying the unambiguous quantitative meaning of “primarily”—chiefly or mainly,
we conclude that an employee’s entire employment during the calendar quarter is “covered
employment” under Minn. Stat . § 268.035, subd. 12(a)(1)(i), if the employment is
performed chiefly or mainly in Minnesota. Because Johnson and Strang performed more
than 50% of their employment in Minnesota during certain calendar quarters, they
performed their employment chiefly or mainly in Minnesota during those quarters. The
ULJs therefore properly determined that Johnson and Strang performed their employment
primarily in Minnesota during the subject quarters.
Superior Glass nevertheless argues that Johnson’s and Strang’s employment cannot
be “covered employment” because Minnes ota’s statutory defi nition of “covered
employment” must be read alongside “Localization of Work Provisions” that are attached
to a 2004 Unemployment Insurance Program Letter from the U.S. Department of Labor to
state workforce agencies (localization provisions). See U.S. DEPT. OF LABOR,
Unemployment Insurance Program Le tter No. 20-04 (M ay 10, 2004),
https://wdr.doleta.gov/directives/attach/UIPL20-04.cfm. Superi or Glass also argues that
information on DEED’s website should be read together w ith the localization provisions
because “the language in the statute . . . can be traced back [to] the Federal Localization of
Work Provisions.” Indeed, DEED ’s website reflects a previ ous version of Minn. Stat.
§ 268.035, subd. 12(a)(1), as follows:

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When an employee performs services in Minnesota and
at least one other state, us e the following information to
determine whether wages paid to the worker must be reported
to the Minnesota Unemployment Insurance (UI) Program.
 The employment is performed primarily in
Minnesota, and the employment performed outside
Minnesota is incidental to the employment in
Minnesota.

M
INNESOTA DEPARTMENT OF EMPLOYMENT AND ECONOMIC DEVELOPMENT,
Covered/noncovered employment: Empl oyment in more than one state ,
http://uimn.org/employers/help-and-support/emp-hbook/employment-in-more.jsp (last
visited Apr. 20, 2017).
Prior to August 1, 2014 , section 268.035, subdivision 12, defined “covered
employment” to include:
(1) an employee’s entire employment during the calendar
quarter if:
(i) the employment is performed entirely in Minnesota; [or]
(ii) the employment is performed primarily in Minnesota, and
the employment performed outsid e Minnesota is incidental to
the employment in Minnesota[.]

Minn. Stat. § 268.035, subd. 12 (2012) (empha ses added). Effective August 1, 2014, the
legislature removed clause (1)(i) from the st atute and removed from clause (1)(ii) the
phrase, “and the employment performed outside Minnesota is incidental to the employment
in Minnesota.” Minn. Stat. § 268.035, subd. 12(a)(1) (2014); see also 2014 Minn. Laws ch.
251, art. 2, § 4, at 852 −53. We presume that the legi slative amendment shows the
legislature’s intent to change existing law. See Honeymead Prods. Co. v. Aetna Cas. & Sur.
Co., 270 Minn. 147, 150, 132 N.W.2d 741, 743 (1965) (“Th e adoption of an amendment
raises a presumption that the legislature intended to make some change in the existing law.”

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(quotation omitted)). Contrary to Superior Glass’s argument, the amendment to the statute
reflects the legislature’s intent that we n eed not interpret Minn. Stat. § 268.035, subd.
12(a)(1), together with the lo calization provisions. The fact that DEED’s website has not
been updated to reflect the curre nt version of the statute does not require us to disregard
the legislature’s intent.
Moreover, the localization provisions exp licitly state that “[a]mendments to state
law are not required for conformity purposes .” Unemployment Insurance Program Letter
No. 20-04, supra (emphasis added). The only action requested by this advisory document,
which does not have the force of law, is for st ate administrators to provide copies of the
letter and attachments to appropriate staff. Id. Because the localization provisions are not
binding on this court, we reject Superior Glass’s argument that we must interpret Minn.
Stat. § 268.035, subd. 12(a)(1)(i), together with those provisions.
Finally, Superior Glass argues that the pl ain language of Minn. Stat. § 268.035,
subd. 12(a), requires us to consider subpara graph (2) because subparagraphs (1), (2), (3),
and (4), are conjoined by “and.” Su perior Glass is correct that the inclusion of the word
“and” between subparagraphs (3) and (4) of subdivision 12(a) implies the inclusion of
“and” between each of the subparagraphs, (1) −(4). See J.D. Donovan, Inc. v. Minnesota
Dep’t of Transp., 878 N.W.2d 1, 13 (Minn. 2016) (“The word ‘and’ is one of inclusion, not
exclusion.”). But this implication does not support Superior Glass’s reading of the statute
because the use of “and” signifies the legisl ature’s intent that employment satisfying any
one of the criteria described in subdivision 12(a) constitutes “covered employment.”

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II
Superior Glass argues that Minn. Stat. § 268.035, subd. 12(a)(1)(i), discriminates
against interstate commerce in favor of intrastate commerce and therefore, as applied to
Superior Glass, subjects Superior Glass to double taxation in viol ation of the Dormant
Commerce Clause. We presume that a statut e is constitutional by “invok[ing] every
presumption in favor of constitutionality.” Schober v. Comm’r of Revenue , 778 N.W.2d
289, 293 (Minn. 2010). “[A] statute will not be declared unconstitutional unless the party
challenging it demonstr ates beyond a reasonable doubt th at the statute violates some
constitutional provision.” Id. (quotation omitted). “This court will exercise its power to
declare a statute unconstitutio nal only with extreme cau tion and when absolutely
necessary.” Haugen v. Superior Dev., Inc., 819 N.W.2d 715, 721 (Minn. App. 2012) (citing
Walker v. Zuehlke, 642 N.W.2d 745, 750 (Minn. 2002)).
The Commerce Clause provides that “Congress shall have [the] Power . . . [t]o
regulate Commerce with foreign [n]ations and among the several States.” U.S. Const. art.
I, § 8, cl. 3. “Although the Commerce Clause re fers to an affirmativ e grant of power to
Congress, it has long been interpreted to contain an implied negative command, called the
Dormant Commerce Clause, that states may not unduly burden or discriminate against
interstate commerce.” Matter of Griepentrog , 888 N.W.2d 478, 494 (Minn. App. 2016)
(citing Chapman v. Comm’r of Revenue , 651 N.W.2d 825, 832 (M inn. 2002)). “The
constraint of the Dormant Commerce Clau se reflects concerns over economic
protectionism: regulatory measures that are designed to benefit in-state economic interests
by burdening out-of-s tate competition.” Id. ‘“By prohibiting States from discriminating

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against or imposing excessive burdens on interstate co mmerce without congressional
approval, it strikes at one of the chief evils that led to the adoption of the Constitution,
namely, state tariffs and other laws th at burdened interstate commerce.”’ Id. (quoting
Comptroller of Treasury v. Wynne, 135 S. Ct. 1787, 1794 (2015)).
“[I]n evaluating a Commerce Clause challenge, this court engages in a two-step
analysis.” Id. “First, we determine ‘whether the challenged statute implicates the
Commerce Clause.”’ Id. (quoting Chapman, 651 N.W.2d at 832). “If it does, we then
evaluate whether the statute violates the Commerce Clause.” Id. (quotation omitted). “This
involves determining whethe r the challenged law discriminates against interstate
commerce or excessively burd ens interstate commerce.” Id. (citing Swanson v. Integrity
Advance, LLC, 870 N.W.2d 90, 94 (Mi nn. 2015)). “If it discrimina tes against interstate
commerce, it is not valid unless it furthers a legitimate local purpose that cannot be
adequately served by reasonable alternatives that are nondiscriminatory.” Id.
“[A] statute may implicate interstate co mmerce if it affects out-of-state economic
interests that may wish to conduct in-state operations.” Id. at 495. Here, interstate
commerce is implicated by Mi nn. Stat. § 268.035, subd. 12(a)(1)(i), because the statute
defines “covered employment” to include em ployment performed chiefly or mainly in
Minnesota but also performed, to a lesser ex tent, outside Minnesota. The statute thereby
has the potential to affect co mpanies located outside of Mi nnesota who wish to conduct
business within Minnesota.
“Even if a [state statute] implicates interstate commerc e, however, in order to be
held invalid under the Dormant Commerce Clau se, it must also discriminate against or

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excessively burden interstate commerce.” Id. at 496. “A statute discriminates against
interstate commerce if it accord s ‘differential treatment [to] in-state and out-of-state
economic interests that benefits the former and burdens the latter.’” Id. (quoting Or. Waste
Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93, 99, 114 S. Ct . 1345, 1350 (1994). “This
discrimination may occur in one of three ways: either the statute is facially discriminatory,
it has a discriminatory intent, or it has an effect of unduly burdening interstate commerce.”
Id. at 496 (citing Mayo Collaborative Servs., Inc. v. Comm’r of Revenue, 698 N.W.2d 408,
412 (Minn. 2005)).
Superior Glass appears to argue that Minn. Stat. § 268.035, subd. 12(a)(1)(i), has
the effect of unduly burdening interstate commerce. Relying on Wynne, Superior Glass
argues that the statute violates the Dorman t Commerce Clause because “it has created
exactly the scenario in which commerce conducted in multip le states will be subject to
double taxation.” But Wynne does not support Superior Gl ass’s argument because it is
factually distinguishable. In Wynne, the Supreme Court held that a feature of Maryland’s
personal income tax scheme denying residents a full credit against in come taxes paid to
other states violated the Dormant Commerce Clause because it “create[d] an incentive for
taxpayers to opt for intrastate rather than interstate economic activity.” 135 S. Ct. at 1792.
Maryland’s income tax scheme consisted of two parts: “a ‘state’ income tax . . . and
a so-called ‘county’ income tax.” Id. Maryland residents who paid income tax to another
jurisdiction for income earned there could receive a credit against the Maryland “state” tax
on such income, but not against the “county” tax on such income. Id. Maryland also taxed

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the income of nonresidents earned from within Maryland, requiring them to pay both the
“state” tax and “a ‘special nonresident tax’ in lieu of the ‘county’ tax.” Id.
The Wynnes claimed an income tax credit for income taxes paid to other states. Id.
at 1793. In accordance with Maryland law, “the Comptroller allowed the Wynnes a credit
against their Maryland ‘state ’ income tax but not against their ‘county’ income tax.” Id.
The Circuit Court for Howard County reversed , concluding that “Maryland’s tax system
violated the Commerce Clause.” Id. The Maryland Court of Appeals affirmed, evaluating
the tax under a four-part test, which required the court to determine “whether a tax is
applied to an activity with a substantial nexus w ith the taxing State, is fairly apportioned,
does not discriminate against in terstate commerce, and is fair ly related to the services
provided by the State.” Id. (quotation omitted). According to the court of appeals, the
Maryland “tax failed both the fair apportionment and nondiscrimination parts of the [four-
part] test.” Id.
The Supreme Court affirmed, holding that Maryland’s personal income tax scheme
violated the Dormant Commerce Clause. Id. at 1805, 1807. The Cour t explained that the
internal consistency test “helps courts id entify tax schemes that discriminate against
interstate commerce” by “look[ing] to the structure of the tax at issue to see whether its
identical application by every State in th e Union would place inte rstate commerce at a
disadvantage as compared with commerce intrastate.” Id. at 1802 (quotation omitted). “By
hypothetically assuming that every State has the same tax structure, the internal consistency
test allows courts to isolate the effect of a defendant State’s tax scheme.” Id. The test

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allows courts to distinguish between (1) tax schemes that
inherently discriminate agains t interstate co mmerce without
regard to the tax policies of ot her States, and (2) tax schemes
that create disparate incentives to engage in interstate
commerce (and sometimes result in double taxation) only as a
result of the interaction of two different but nondiscriminatory
and internally consistent scheme s. The first category of taxes
is typically unconstitutional; the second is not.

Id. (footnote and citations omitted). “Tax schemes that fail the internal consistency test will
fall into the first category, not the second. . . .” Id. “Any cross-border tax disadvantage that
remains after application of the test cannot be due to tax disparities but is instead
attributable to the taxing State’s discriminatory policies alone.” Id. (footnote and quotation
omitted).
Superior Glass’s Dormant Commerce Cl ause argument fails because Minn.
Stat. § 268.035, subd. 12(a)(1)(i), passes the internal consistency test articulated in Wynne.
If every state had Minnesota’s unemplo yment tax scheme—defining “covered
employment” as in Minn. Stat. § 268.0 35, subd. 12(a)(1)(i)—employment that is
performed partly in state and partly out of state would be “covered employment” subject
to unemployment tax only in the state in which the employment is primarily performed
during that calendar quarter. Employment theref ore would not be taxed in more than one
state during any calendar quarter because it is only possible for employment to be
performed “primarily” in one state during any calendar quarter. Unlike the statute at issue
in Wynne, the Minnesota statute does not inherent ly discriminate against interstate
commerce without regard to the tax schemes of other states.

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Even if Superior Glass is subject to double taxation in this case due to the application
of unemployment-insurance laws in both Minnesota and Wisconsin, double taxation is not
per se unconstitutional because the supreme cour t has held that “neith er state nor federal
constitutional law forbids double taxation.” Comm’r of Revenue v. Richardson , 302
N.W.2d 23, 27 (Minn. 1981) (stating that even if relator were subject to double taxation,
double taxation does not necessarily violate the constitution); see also Estate of Renick v.
United States, 687 F.2d 371, 374 (Ct. Cl. 1982) ( “It is well established that double taxation
is not unconstitutional per se.”); cf. Hellmich v. Hellman, 276 U.S. 233, 238, 48 S. Ct. 244,
246 (1928) (“When, as here, Congress has clearly expressed its intention, the statute must
be sustained even though double taxation results.”).
D E C I S I O N
The ULJs did not err in determining that Johnson and Strang are eligible for benefit
accounts in Minnesota because their employm ent with Superior Glass included “covered
employment” within the meaning of Minn. Stat . § 268.035, subd. 12(a)(1)(i), which does
not subject Superior Glass to double taxa tion in violation of the Dormant Commerce
Clause.
Affirmed.