Construction & application of the Michigan Use Tax Act (UTA); Whether there was "sufficient retention of control" of the advertising materials by plaintiff to constitute “use” as defined in the UTA; Sharper Image Corp v Department of Treasury; Ameritech Publ'g, Inc v Department of Treasury; United States Postal Service (USPS)

Holding that this case was much more analogous to Sharper Image than it was to Ameritech Publ'g, the court affirmed the Court of Claims ruling that there was not “sufficient retention of control” for UTA purposes. Plaintiff entered into a contractual relationship with nonparty-Harte Hanks, “an entity that specializes in multi-channel marketing solutions, including direct mail services. Following production of the advertising materials, which occurred outside Michigan, Harte Hanks had the contractual obligation to prepare and deliver them within Michigan, which it did according to its own methodology. [It] exclusively controlled the packaging of the materials for mailing, and had sole discretion over where the materials would be handed off to the USPS. While plaintiff specified the Michigan residents to whom it wanted the advertising materials delivered by providing its customer mailing list to Harte Hanks, Harte Hanks developed a proprietary ‘audience file’ that it used in the actual distribution of the materials. [It] packaged the materials in bulk at its Pennsylvania plant and, for an agreed upon rate, transported them via freight to USPS locations in Michigan and elsewhere[.]”The court held that “an absence of control over the materials within the state’s borders makes the distribution nontaxable, while some or any control over the materials within the state’s borders makes the distribution taxable.” Here, it found that “the only markers of ‘power’ or ‘control’ of the property are that plaintiff provided Harte Hanks a list of its Michigan customers and that it directed the dates of distribution. It then required a report from Harte Hanks of the actual dates of distribution, which obviously Harte Hanks created and supplied following distribution.” The court noted that none of these activities involved “actual control over the process of delivery of the advertising materials, which was exclusively the responsibility of Harte Hanks.” It was also evident that any distribution of advertising materials by a third-party vendor, as here, “would have to involve providing the vendor a list of addresses where the materials are to be mailed, and would almost certainly involve some level of control over when the advertiser wishes the materials to be delivered. If such indicia were to be considered adequate ‘power’ or ‘control’ to render the activity subject to the imposition of use tax, then any direct mail campaign originating entirely outside the state would be subject to taxation.”