Kimberly L. Robinson, Secretary of the Department of Revenue, State of Louisiana v. Jeopardy Productions, Inc.

• Court: Louisiana Court of Appeal
• Decided: October 21, 2020
• Docket: 2019CA1095
• Status: Unknown

Opinion

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

NO. 2019 CA 1095

KIMBERLY L. ROBINSON, SECRETARY OF THE DEPARTMENT OF REVENUE, STATE OF LOUISIANA

VERSUS

JEOPARDY PRODUCTIONS, INC.

Judgment Rendered: OCT 2 12020

On Appeal from the 19th Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Trial Court No. 653, 803

Honorable William A. Morvant, Judge Presiding

April L. Watson Attorneys for Plaintiff A - ppellant, Metairie, LA Kimberly L. Robinson, Secretary of the Department of Revenue, State of Antonio C. Ferachi Louisiana Baton Rouge, LA

Jesse R. Adams, III Attorneys for Defendant -Appellant, Andre B. Burvant Jeopardy Productions, Inc. New Orleans, LA

BEFORE: McCLENDON, HIGGINBOTHAM, AND LANIER, JJ.

W C( Lwt'nt . C, C' ll( t. l.' 1 S . L+., ( leiJ-- X- HIGGINBOTHAM, J.

In this appeal, Kimberly L. Robinson, in her capacity as Secretary of the

Louisiana Department of Revenue ( LDR), challenges a judgment that dismisses its

petition to collect corporate and franchise taxes from a non-resident television

production company, Jeopardy Productions, Inc. ( Jeopardy), for lack of personal

jurisdiction.

FACTUAL AND PROCEDURAL BACKGROUND

The pertinent facts are undisputed. Jeopardy is a part of the television division

of Sony Entertainment Group, which oversees game shows such as " Jeopardy!"

Jeopardy' s principal place of business is in Culver City, California, where the

licensing and day-to- day business operations for the game show occur. The

licensing and distribution agreements pertain to Jeopardy' s intellectual property

copyrighted, trademarked, or patented products). The agreements are between

Jeopardy and various third parties that negotiate the broadcasting of the " Jeopardy!"

game show at television stations across the United States, as well as agreements for

merchandise reflecting the Jeopardy trademark or logo, such as mugs, clothing,

video games, and slot machines. All of Jeopardy' s business decisions concerning

the licensing and distribution agreements are made in California, where Jeopardy' s

business and bank records are kept. Jeopardy is incorporated in Delaware and is

registered to do business in California.

Jeopardy' s sole source of revenue is in the form of royalties from licensing

and distribution agreements. The pertinent agreements at issue in this appeal are

between Jeopardy and: ( 1) CBS Television Distribution Group ( CBS)', who has the

exclusive right to sublicense and distribute the " Jeopardy!" game show across the

country; ( 2) International Gaming Tech (IGT), who has the right to place Jeopardy' s

trademark/ logo on gaming machines manufactured by IGT and placed into gaming

Jeopardy initially entered into the licensing/distribution agreement with King World Productions, Inc., which is now CBS.

2 venues across the country; and ( 3) other manufacturers and distributors who have

exclusive licenses to use the " Jeopardy!" game show trademark/ logo, designs, etc.

on various merchandise that is marketed around the country. CBS has independently

contracted with seven television stations in Louisiana to broadcast the " Jeopardy!"

game show. IGT has independently contracted to place several gaming machines

reflecting the Jeopardy trademark/ logo in some Louisiana casinos and truck stops.

During the tax years 2011- 2014, Jeopardy earned a total of $3, 622, 595 in

royalty income from licensing agreements attributed to Louisiana. LDR filed suit

against Jeopardy to collect franchise and corporate taxes on that royalty income.

Jeopardy filed a declinatory 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. Jeopardy maintains that

it merely received royalty income from the licensing of its intellectual property by

independent third parties that are not agents of Jeopardy.

At the trial on Jeopardy' s exception held on May 3, 2019, Senior Vice -

President of Global Marketing and Brand Management for Sony Pictures Television

Games and Game Shows, Suzanne Prete, testified on behalf of Jeopardy. Her

testimony was uncontradicted that Jeopardy had absolutely no control over where

CBS and IGT distributed the " Jeopardy!" game show and merchandise. Those

licensing decisions belonged exclusively to CBS and IGT. She indicated that each

licensing agreement clearly provided that Jeopardy was not in a partnership, joint

venture, or agency relationship with CBS or IGT. Prete testified that all business

decisions concerning the licensing agreements for Jeopardy were made in California

where Jeopardy maintains its principal place of business. Prete acknowledged that

Sony also maintains an office in New York. Prete further testified that Jeopardy had

no privity of contract with any of the third -party television stations with whom CBS

contracted or the third -party businesses where IGT negotiated contracts to place 3 merchandise and/ or gaming machines with the Jeopardy trademark/ logo. Prete

stated that Jeopardy did not have any direct activity in Louisiana and did not have

any licensing or distribution agreements with Louisiana businesses or individuals.

Conversely, LDR' s argument at the trial on the exception centered on the fact that

Jeopardy received some of its revenue from royalty income that was ultimately

derived from third -party licensees located in Louisiana. Prete testified that Jeopardy

reported its share of royalty income on tax returns filed in both California and New

York.

After the trial, the trial court immediately ruled on Jeopardy' s exception. In

oral reasons, the trial court found that Jeopardy had no physical presence in

Louisiana; Jeopardy made no business decisions in Louisiana; Jeopardy did not carry

out any direct business activity in Louisiana; Jeopardy had no employees in

Louisiana; and Jeopardy did not render any services in Louisiana. After noting that

there was no question that CBS and IGT conducted business in Louisiana with

independent third -parties, the trial court stated 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. Therefore, the trial court signed a

judgment on May 15, 2019, granting Jeopardy' s exception raising the objection of

lack of personal jurisdiction and dismissing LDR' s petition. LDR appeals.

LAW AND ANALYSIS

Appellate courts review factual findings underlying a judgment on an

exception of lack of personal jurisdiction for manifest error. Northshore Regional

Medical Center, L.L.C. v. Dill, 2011- 2271 ( La. App. 1 st Cir. 6/ 8/ 12), 94 So. 3d 155,

160, writ denied, 2012- 1494 ( La. 10/ 8/ 12), 98 So. 3d 862. However, there is no real

dispute as to the facts related to the jurisdictional issue in this case. The application

of established rules of law to the facts involves a purely legal question. Thus, we 4 will use a de novo standard of review to determine the legal issue of whether a

Louisiana court may exercise personal jurisdiction over the nonresident, Jeopardy,

in this matter. See Id., 94 So. 3d at 161.

The Louisiana long- arm statute, La. R.S. 13: 32012, controls when a Louisiana

court may assert personal jurisdiction over a nonresident defendant. Louisiana' s

long- arm statute extends personal jurisdiction to the fullest limits allowed by

constitutional due process. Southeast Wireless Network, Inc. v. U. S. Telemetry

Corp., 2006- 1736 ( La. 4/ 11/ 07), 954 So. 2d 120, 124. Personal jurisdiction may be

asserted as long as due process is not offended. Northshore Regional Medical

Center, 94 So. 3d at 162. 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.

International Shoe Co. v. State of Washington, Office of Unemployment

Compensation and Placement, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L.Ed. 95

1945). The exercise of finding minimum contacts has evolved into the first of a

two- part test. Northshore Regional Medical Center, 94 So. 3d at 162. The second

part of the due process test involves consideration of the minimum contacts in light

of other fairness factors to determine whether it would be reasonable to require the

nonresident defendant to defend the lawsuit in the forum state. Id.

2 Louisiana Revised Statutes 13: 3201 provides in pertinent part:

A. A court may exercise personal jurisdiction over a nonresident, who acts directly or by an agent, as to a cause of action arising from any one of the following activities performed by the nonresident:

1) Transacting any business in this state.

2) Contracting to supply services or things in this state.

B. In addition to the provisions of Subsection A, a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and of the Constitution of the United States. 5 The minimum contacts prong of the due process test is satisfied by a single

act or actions where the defendant " purposefully avails itself of the privilege of

conducting activities within the forum state, thus invoking the benefits and

protections of its laws." Broussard v. Diamond Aircraft Industries, Inc., 2010-

1611 ( La. App. 1st Cir. 5/ 3/ 11), 65 So. 3d 187, 190 ( quoting A & L Energy, Inc. v.

Pegasus Group, 2000- 3255 ( La. 6/ 29/ 01), 791 So. 2d 1266, 1271, cert. denied, 534

U.S. 1022, 122 S. Ct. 550, 151 L.Ed.2d 426 ( 2001) ( citations omitted)). The

purposeful availment factor must be such that the nonresident defendant should

reasonably anticipate" being haled into court in the forum state. Id. The rationale

of the purposeful availment requirement is to ensure that the nonresident defendant

will not be brought into a jurisdiction solely as a result of a " random, fortuitous, or

attenuated contact, or by the unilateral activity ofanother party or a third person."

Id. ( Emphasis added.)

There is a well- established distinction between two types of personal

jurisdiction — "general" and " specific." Broussard, 65 So. 3d at 191. Specific

jurisdiction is when the lawsuit arises out of or is related to the nonresident

defendant' s contacts with the forum state and the defendant purposefully avails itself

of the privilege of conducting activities in the forum state. Northshore Regional

Medical Center, 94 So. 3d at 162. General jurisdiction is when the defendant is

actually domiciled in the forum state or its activities there are substantial or

continuous and systematic, even though the contact with the forum state is not

related to the cause of action in the lawsuit. Id.

Our review of the evidence and pleadings reveals that the nonresident

defendant, Jeopardy, does not have sufficient minimum contacts to satisfy the

requirements for specific jurisdiction, and even less so for general jurisdiction.

Jeopardy has zero contacts with Louisiana aside from the activities of unrelated third

parties that contracted with CBS and IGT. Jeopardy' s licensing and distribution

agreements gave CBS and IGT the sole authority to decide in which states to license 6 and/ or distribute the " Jeopardy!" game show, trademark/ logo, and merchandise with

unrelated third parties. The evidence was uncontroverted that Jeopardy merely owns

the intellectual property of the " Jeopardy!" game show and trademark. Jeopardy has

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.

Therefore, we find that the random, fortuitous, and attenuated contacts with

Louisiana, that were initiated by the independent activities of third parties, were

simply not sufficient to establish personal jurisdiction over Jeopardy in Louisiana.

Moreover, because we find no intentional or direct contact by Jeopardy, there is no

reason for Jeopardy to have reasonably anticipated being brought into court in

Louisiana. See Publications International, Ltd. v. Simon & Schuster, Inc., 763

F. Supp. 309, 312 ( N.D. Ill. 1991) ( California television show producer lacked

sufficient contact with Illinois to subject it to personal jurisdiction, though producer

had sold show to network whose local affiliates broadcast show in Illinois, and the

context of the lawsuit was alleged trademark/ copyright infringement). See also

Sinclair v. StudioCanal, S. A., 709 F. Supp. 2d 496, 509 n. 8 ( E.D. La. 2010) ( Courts

routinely hold that the mere existence of a licensor -licensee relationship is

insufficient to impute the contacts of a licensee on the licensor for the purpose of

establishing personal jurisdiction when there is no evidence that the activities of

licensees were conducted at the direction of or benefit of the licensor).

CONCLUSION

For the assigned reasons, we affirm the trial court' s judgment granting the

declinatory exception raising the objection of lack of personal jurisdiction filed by

Jeopardy Productions, Inc. and dismissing the Louisiana Department of Revenue' s

petition to collect taxes. All costs of this appeal, in the amount of $2, 927. 00, are 7 assessed to plaintiff/appellant, Kimberly L. Robinson, in her capacity as secretary of

the Louisiana Department of Revenue.

AFFIRMED.