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Tax Law

Louisiana Loses Jeopardy!

A Louisiana court of appeals affirmed a trial court decision dismissing for lack of personal jurisdiction the Louisiana Department of Revenue’s (“Department”) petition to collect corporate and franchise taxes on over $3.6 million in royalties from nonresident television production company Jeopardy Productions Inc. (“Jeopardy”). Jeopardy earned royalties from Louisiana between 2011 and 2014 through agreements with CBS Television Distribution Group (“CBS”) to distribute the show to TV stations, and International Gaming Tech (“IGT”) to use its trademarks on gaming machines. During the tax years 2011-2014, Jeopardy earned a total of $3,622,595 in royalty income from licensing agreements attributed to Louisiana. The Department filed suit against Jeopardy to collect franchise and corporate taxes on that royalty income.  Jeopardy filed a declamatory exception raising the objection of lack of personal jurisdiction, arguing that it did not transact any business in Louisiana and that Jeopardy’s contacts through unrelated third parties in Louisiana do not rise to the level of minimum contacts required by due process of law.

Ultimately the court found that the nonresident Jeopardy did not have sufficient minimum contacts to satisfy the requirements for specific jurisdiction, and even less so for general jurisdiction. The appeals court affirmed that jurisdiction over Jeopardy was not justified because Jeopardy had zero contacts with Louisiana aside from the activities of unrelated third parties that contracted with CBS and IGT. Jeopardy had no control over where and with whom the licensees, CBS and IGT, choose to market and negotiate distribution of the game show and merchandise. Jeopardy made no intentional or direct contact with Louisiana. Furthermore, each licensing agreement specifically states that Jeopardy is not in a partnership, joint venture, or agency with CBS or IGT.  Relying on the Due Process clause,  the court found that 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. Moreover, because they found that there was no intentional or direct contact by Jeopardy, there is no reason for Jeopardy to have reasonably anticipated being brought into court in Louisiana.

Robinson v. Jeopardy Prods., Inc., 2020 BL 407045, 4-5 (La. App. 1st Cir. 2020)