Home > Judicial Decisions > Louisiana Due Process is No Longer in "Jeopardy!": Louisiana Supreme Court Denies LDR Writ Application in Due Process/Personal Jurisdiction Case
Louisiana Due Process is No Longer in "Jeopardy!": Louisiana Supreme Court Denies LDR Writ Application in Due Process/Personal Jurisdiction Case
By Matt Mantle on January 21, 2021 Posted in Judicial Decisions, Tax News, Tax Procedure
On January 20, 2021, the Louisiana Supreme Court denied the Louisiana Department of Revenue's writ application in the closely-followed Louisiana due process / personal jurisdiction case of Robinson v. Jeopardy Productions, Inc., 2020-C-01343 (La. 1/20/21). This case is now final.
A copy of the Louisiana Supreme Court's writ denial ruling can be found here.
The Louisiana First Circuit Court of Appeal had previously ruled in favor of the taxpayer out-of-state Jeopardy! game show production company, Jeopardy Productions ("Jeopardy"), finding that Jeopardy lacked sufficient contacts with the State of Louisiana to allow the Department to sue Jeopardy to collect Louisiana corporate income and franchise taxes on royalty income earned from the licensing and distribution of Jeopardy's intellectual property.
Jeopardy did not transact any business in Louisiana, and its sole source of revenue was in the form of royalties from licensing and distribution agreements with independent, non-Louisiana third-party entities, who subsequently distributed the Jeopardy! game show and merchandise to other separate third-party entities. Jeopardy had no control over where the distribution companies distributed the game show and merchandise, and Jeopardy was not in a partnership, joint venture, or agency relationship with the distribution companies. All of Jeopardy's business decisions concerning the licensing agreements were made in California, where Jeopardy maintains its principal place of business.
The Department asserted that it could file suit to impose tax upon Jeopardy simply because the company received some of its revenue from royalty income that was ultimately derived from third-party licenses located in Louisiana. The First Circuit, however, disagreed, affirming the district court's ruling that Jeopardy lacked the requisite personal jurisdiction to be sued by the Department in Louisiana, and confirming that Jeopardy's contacts through unrelated parties in Louisiana did not rise to the level of minimum contacts required by due process of law.
The district court found that the third-party activities constituted arms-length transactions that did not support a decision that Jeopardy purposefully directed business on its behalf in Louisiana. The trial court concluded that to maintain personal jurisdiction over Jeopardy in Louisiana would violate the notions of fair play and substantial justice.
On appeal, the First Circuit agreed with the district court, asserting that personal jurisdiction may be asserted only as long as due process is not offended. Citing relevant U.S. Supreme Court precedent, the First Circuit explained that due process requires the nonresident defendant to have certain "minimum contacts" with the forum state, such that maintaining a suit against the defendant does not offend traditional notions of fair play and substantial justice. The First Circuit further explained that the minimum contacts prong of the due process test is satisfied when the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws and allowing the defendant to reasonably anticipate being hailed into court in the forum state.
The First Circuit concluded that Jeopardy made no intentional or direct contact with Louisiana, and the random, fortuitous, and attenuated contacts with Louisiana, initiated by the independent activities of third parties, were simply not sufficient to establish personal jurisdiction over Jeopardy in Louisiana.
The First Circuit, therefore, affirmed the district court's judgment granting Jeopardy's declinatory exception of lack of personal jurisdiction and dismissing the Department's petition to collect taxes.
A copy of the First Circuit's prior opinion in the Jeopardy case can be found here.
Jay Adams and Andre Burvant of the Jones Walker SALT Team represented Jeopardy in this tax case.
Tags: Andre Burvant, Jay Adams, Louisiana, Louisiana Department of Revenue, Matt Mantle, Tax Law, Tax Litigation, Tax Procedure