Court Office of Appellate Courts
A. Pridgeon, Pridgeon & Zoss, PLLC, Edina, Minnesota; and
Doug Sigel, Ryan Law Firm, LLP, Austin, Texas, for relator.
Ellison, Attorney General, Kristine K. Nogosek, Assistant
Attorney General, Saint Paul, Minnesota, for respondent.
the cumulation of information on the taxpayer's computer
system is not available to all of the taxpayer's
customers, the system does not qualify for the
capital-equipment exemption in Minn. Stat. § 297A.68,
subd. 5 (2018).
GILDEA, CHIEF JUSTICE.
question is this case is whether the sales tax exemption in
Minn. Stat. § 297A.68, subd. 5 (2018), for the purchase
of capital equipment, applies to items that relator Kroll
Ontrack, LLC purchased. The Commissioner of Revenue concluded
that the exemption did not apply, and the tax court affirmed.
Because we agree that Kroll does not qualify for the
exemption, we affirm the tax court.
Ontrack, LLC, is a Minnesota limited liability company that
sells technology-driven services to law firms, corporate law
departments, and government entities. At issue in this case
are Kroll's electronic-discovery and document-review
services. To provide these services, Kroll uses two
internet-based programs that allow its customers to maintain
private databases of litigation documents and to sort,
search, and produce relevant documents from those databases.
Kroll's programs are called Advanceview and Inview, and
they work together.
Advanceview, Kroll's customers upload their documents to
Kroll's servers. If any documents are in a format that
Advanceview cannot recognize-for example, an e-mail
file-Advanceview will convert the format of the documents
into something it can recognize. Using Advanceview, customers
can then cull down the number of relevant documents in their
individual databases using keyword searches. For example,
this process can narrow the number of documents that would be
responsive to a discovery request from 100, 000 to 40, 000.
documents identified in Advanceview are then transferred to
the Inview system where customers can further sort the
documents using several tools. With Inview's "Workflow
Automation" tool, customers can find documents that they
want distributed for further processing and have those
documents automatically distributed to a reviewer. For
example, foreign-language documents could be distributed to a
translator fluent in that language or technical documents
could be distributed to a person with the required technical
background. In addition, Inview allows customers to use a
form of machine learning to search and to categorize their
documents. To use this tool, the customer must set up a
number of categories-for example, responsive, nonresponsive,
and privileged- and then organize a sample of documents into
each category. Inview observes how the customer organized the
sample of documents and sorts the rest of the database in the
the customer has completed its document review, Inview allows
the customer to prepare the documents selected for production
in discovery. Customers are able to select the format for the
documents to be produced and can continue to view them
electronically through the Inview platform.
customers access Advanceview and Inview online using a set of
login credentials that are specific to each customer. Thus,
customers have access only to their own collection of
documents, and cannot access or view other customers'
litigation documents. Every customer does, however, ...