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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE # 21 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 24th day of March, 2005 , are as follows:

BY JOHNSON, J. :

2004-C- 0814

CYNTHIA BRIDGES, SECRETARY, DEPARTMENT OF REVENUE, STATE OF LOUISIANA v. AUTOZONE PROPERTIES, INC. (Parish of E. Baton Rouge) Accordingly, the lower courts' judgments, which sustained Autozone Properties' declinatory exception of lack of personal jurisdiction, are reversed, and the case is remanded to the district court for further proceedings consistent with this opinion. REVERSED AND REMANDED.

03/24/2005

SUPREME COURT OF LOUISIANA
No. 2004 - C - 814 CYNTHIA BRIDGES, SECRETARY, DEPARTMENT OF REVENUE, STATE OF LOUISIANA vs. AUTOZONE PROPERTIES, INC. ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, PARISH OF EAST BATON ROUGE

JOHNSON, Justice Autozone, Inc. is a Nevada corporation engaged in the nationwide retail sale of automobile parts. In 1995, the corporation became a holding company which provided management services to its several subsidiaries. All retail stores, including the 68 stores in Louisiana, are now owned by Autozone Development Corporation, a corporate real estate investment trust (REIT). As a REIT, Autozone Development distributed most of its income to its beneficial owners. The majority of shares were owned by Autozone Properties, Inc., a Nevada corporation organized for the sole purpose of holding shares in Autozone Development. Following a tax audit, the Louisiana Department of Revenue filed this action against Autozone Properties to recover income taxes on rental income received from the REIT, and franchise taxes on Autozone Properties' taxable capital in Louisiana. The state takes the position that under La. R.S. 47:2897.93 the corporate owner of a REIT is required to file a tax return and to report the Louisiana income that passes through it.

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The Department argues that rent from Louisiana real estate is income derived from Louisiana sources, and trust beneficiaries, including beneficiaries of the REIT are required to file tax returns reflecting their Louisiana source income. Autozone Properties argues that it is not doing business in the state of Louisiana, and is therefore not subject to personal jurisdiction in Louisiana courts, as it does not meet the definition of "minimum contacts" with this state. For the reasons that follow, we conclude that Louisiana has personal jurisdiction over a nonresident shareholder when Louisiana has provided benefits, opportunities, and protections which helped to create the income.

FACTS and PROCEDURAL HISTORY Prior to 1995, Autozone, Inc. operated and paid corporate income taxes as one entity. After corporate restructuring, Autozone, Inc., became a holding company that provided management services to its subsidiary businesses. Three of those subsidiary entities are relevant to our discussion: (1) Autozone Stores, Inc. (hereinafter Stores), (2) Autozone Development Corp., (hereinafter Development), and (3) Autozone Properties, Inc. (hereinafter Properties). Stores and Development are registered with the Louisiana Secretary of State as non-domiciliary business corporations that are domiciled in Nevada and have their principal offices in Tennessee. Both Stores and Development filed Louisiana income tax returns. Conversely, Properties also domiciled in Nevada, with its principal place of business in the Bahamas, is not registered in Louisiana and filed no Louisiana income tax return. Stores engages in the retail sale of automobile parts. Development

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