Zimmer US, Inc. v. Susan Combs, Comptroller of Public Accounts of the State of Texas And Greg Abbott, Attorney General of the State of Texas
2012 Tex. App. LEXIS 1109
| Tex. App. | 2012Background
- Zimmer US, Inc. seeks a refund of use taxes paid on out-of-state purchases of specialized surgical instruments.
- Zimmer argues the instruments are orthopedic devices or supplies for orthopedic devices exempt under Texas Tax Code §151.313(a)(5) and rule 3.284(a).
- Instruments are designed specifically for Zimmer’s orthopedic procedures and aid in corrective steps for implanted prostheses.
- Zimmer paid taxes between July 2003 and February 2007 and later filed a refund claim; the Comptroller denied the claim after an administrative hearing.
- The trial court granted summary judgment for the Comptroller; the court of appeals reversed and rendered in Zimmer’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the instruments exempt as orthopedic devices under §151.313(a)(5) and rule 3.284(a)(12)? | Zimmer argues instruments are orthopedic devices designed for corrective procedures. | Comptroller argues instruments do not meet ongoing corrective/implantation criteria and rely on broad interpretations of rule 3.284. | Yes; instruments qualify as orthopedic devices under the rule and statute. |
| Should the Comptroller’s interpretation of rule 3.284 be afforded deference? | Zimmer contends the plain language should control; no deferential interpretation necessary. | Comptroller contends deference is warranted if interpretation is reasonable and consistent with statute. | Rule 3.284 is reasonably interpreted; but the court ultimately rejects the Comptroller’s broader importation and relies on the rule’s plain language. |
| Is the Comptroller’s three-part rationale for denial persuasive under the rule’s plain language? | Zimmer: the rule does not require ongoing implantation or continual body-support; error in expansion. | Comptroller: exemptions depend on implantation/ongoing use as reflected in rulings and interpretation. | The analysis rejects the Comptroller’s broadened interpretation and favors Zimmer’s reading under the plain language. |
| Was summary judgment properly granted in Zimmer’s favor? | Zimmer presented undisputed evidence that instruments are designed for correction/prevention of deformities. | Comptroller contests the design/usage evidence but does not dispute material facts. | Zimmer is entitled to summary judgment; instruments are exempt under rule 3.284(a)(12). |
Key Cases Cited
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for evidentiary sufficiency in summary judgments)
- General Motors Corp. v. Bray, 243 S.W.3d 678 (Tex. App.—Austin 2007) (statutory construction; deference where statute ambiguous)
- 7-Eleven, Inc. v. Combs, 311 S.W.3d 676 (Tex. App.—Austin 2010) (statutory construction and agency deference framework)
- Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248 (Tex. 1999) (deference to agency interpretations; plain-language rule review)
- Fiess v. State Farm Lloyds, 202 S.W.3d 744 (Tex. 2006) (agency interpretations must be reasonable)
- Myers v. State, 169 S.W.3d 731 (Tex. App.—Austin 2005) (deference to agency rule interpretations; when unreasonable, reversal)