Medline Industries Holdings LP v. Department of Revenue, 59003-4

Medline Industries Holdings, LP constructed a 702,093 square foot warehouse in Lacey, Washington to distribute medical supplies, with construction payments made by its parent company.
Medline sought a sales tax remittance under RCW 82.08.820 for over $2.4 million paid in tax associated with the warehouse construction, based on the Warehouse Tax Incentive program.
The Department of Revenue (DOR) denied the application, reasoning Medline failed to dedicate at least 200,000 square feet of the warehouse exclusively to wholesale activity as required by statute, and that the warehouse was used for both retail and wholesale sales.
The trial court granted summary judgment to DOR, focusing initially on whether Medline itself paid the tax, but also sustaining DOR's interpretation of the statute’s requirements.
Medline appealed, contending that the statute does not require exclusive dedication of 200,000 square feet for wholesale use for the exemption.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does RCW 82.08.820 require at least 200,000 sq. ft. of warehouse dedicated exclusively to wholesale use for tax remittance?	No exclusivity requirement; total warehouse size suffices	Plain language requires exclusive dedication to wholesale activity	Yes, exclusive dedication of 200,000 sq. ft. to wholesale activity is required
Is Medline eligible for the exemption even if its parent company paid the sales tax?	Payment by parent company suffices via administrative services agreement	Only the entity that directly incurs the tax is eligible	Court did not decide; dispositive issue was lack of 200,000 exclusive sq. ft. for wholesale
Does the percentage of wholesale sales satisfy statutory requirements for exemption?	Percentage sales (68.6% wholesale) should qualify	Statutory focus is on actual square footage, not sales percentages	Percentage of sales is irrelevant; square footage must be dedicated as statute requires
Should a comingled approach (retail/wholesale space) meet statutory definition?	Commingled space should qualify if wholesale sales are significant	Statute and administrative guidance require exclusive use measurement	Commingled space is insufficient; 200,000 sq. ft. must be dedicated exclusively to wholesale

SentinelC3, Inc. v. Hunt, 181 Wn.2d 127 (Wash. 2014) (sets out standard of summary judgment review)
Lybbert v. Grant County, 141 Wn.2d 29 (Wash. 2000) (definition of summary judgment standard)
Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345 (Wash. 1979) (material fact definition)
HomeStreet, Inc. v. Dep’t of Revenue, 166 Wn.2d 444 (Wash. 2009) (standard for statutory ambiguity)
Waste Mgmt. of Seattle, Inc. v. Util. & Transp. Comm’n, 123 Wn.2d 621 (Wash. 1994) (agency interpretation weight)
First Student, Inc. v. Dep’t of Revenue, 194 Wn.2d 707 (Wash. 2019) (deference to agency interpretation over time)