Griffith v. ConAgra Brands, Inc.

ConAgra Foods, Inc., owned trademarks and trade names for various food products. In 1997 ConAgra Foods created ConAgra Brands (plaintiff), a Nebraska corporation, to manage its trademarks and trade names. ConAgra Brands licensed the trademarks and trade names to ConAgra Foods and other affiliates in exchange for royalty payments. The licensees manufactured food products and sold the products in grocery stores throughout the country, including West Virginia. ConAgra Brands had no physical presence in West Virginia, and the licensees manufactured products outside of West Virginia. After an audit revealed that ConAgra Brands had earned approximately $1.16 million in royalties from sales in West Virginia, the West Virginia state tax commissioner (the commissioner) (defendant) assessed an income-tax and business-franchise-tax deficiency against ConAgra Brands, reasoning that ConAgra Brands was liable for state taxes because it did business in West Virginia. ConAgra Brands challenged the deficiency, but the deficiency was upheld by the West Virginia Office of Tax Appeals. ConAgra appealed, and the state circuit court set aside the assessment after determining that ConAgra Brands did not do business in West Virginia and, therefore, could not be taxed in West Virginia consistently with the requirements of the Due Process Clause and Commerce Clause of the United States Constitution. The commissioner appealed.