The United States of America includes 50 states, and yes, Louisiana is one of them. I was told in law school that the Common Law of England is the basis for the American legal system, except in Louisiana, where the basis is the Napoleonic Code. What is that? The system of law in Louisiana has its origins with a short French emperor, and to give Bonaparte his due, he was not only a brilliant general, he was a brilliant administrator. To govern his empire, he felt a uniform system of law had to be in place, so he took existing law, which was largely based on ancient Roman law, and codified it, which means he put all the law into writing, so it could be understood by everyone.
So how are the other 49 states different? They all have laws based on English common law. Common law is a system of law that is based on court precedent. Laws and statutes are interpreted, and the ruling of one judge may influence or even control the ruling of another judge. The Code Napoleon takes the civilian law approach. Civilian law is based on scholarly research and the drafting of legal code which is passed into law by the legislative branch. It is then the judge’s job to interpret that intent more than to follow judicial precedent.
How much practical difference is there? Not much, really. The differences are eroding every day. Much of Louisiana’s codes are being replaced by uniform law, to be more in step with other states. This is especially true in the area of commercial law. Louisiana has adopted the Uniform Commercial Code used in other states to keep on a competitive footing with the other states.
Direct sellers have some unique “Louisiana” stuff to deal with. Blame Napoleon? Who knows? And it does not matter anyway. Let’s look at a few:
DICTATING TYPE STYLE
Yes, Louisiana goes deep into the workings of the print shop, peers over the shoulder of the forms designer, and says: You must use a minimum of ten-point bold. Last year I had a submission rejected on this technicality, when the sentence was in 12-point, ALL CAPS, because it was not in bold. Below is this part of the law:
a. to fail to provide in the contract of participation in bold face type of a minimum size of 10 points a statement substantially indicating that such contract may be canceled for any reason at any time by a participant upon notification in writing to the company of his election to cancel.
REQUIREMENT THAT LOUISIANA LAW BE USED
Contract drafters all over the United States put in terms like “Texas law applies” or “Claims may only be brought in the State courts of California, Los Angeles County.” In almost all cases, these are valid and enforceable terms, EXCEPT against a resident of Louisiana. That is right. Louisiana law declares such terms unenforceable against their residents. This explains why you often see the following in independent contractor agreements: Louisiana residents only: In the event of a dispute for jurisdictional purposes, a Louisiana resident distributor shall be entitled to file an adjudicatory claim or lawsuit in the jurisdiction of Louisiana and the governing law shall be Louisiana law. Below is this part of the law:
A. A consumer transaction or modification of a consumer transaction is made in this state when: (1) a writing signed by the consumer and evidencing the obligation is received by the merchant in this state, or when (2) the merchant negotiates in this state personally or by mail, telephone or otherwise, for a transaction with a consumer consummated outside the state.
B. Notwithstanding any other provision of law to the contrary, this Act applies if the consumer is a resident of this state at the time of the consumer transaction and either of the conditions specified in Subsection A of this section are present.
C. The following terms of a writing executed by a consumer are invalid with respect to consumer transactions or modifications thereof: (1) that the law of another state will apply; (2) that the consumer consents to the jurisdiction of another state; or (3) any term that fixes venue.
VERY DETAILED BUYBACK
A 90 percent buyback law exists in nine states and Puerto Rico, and is a 50-state requirement of company membership in the Direct Selling Association. But note that Louisiana gets right into the product shelf life issue and speaks in detail to the seasonal and discontinued items. Below is this part of the law:
7) “Reasonable commercial terms” includes repurchase by the seller, at the participant’s request, and upon termination of the business relationship or contract with the seller, of all unencumbered products purchased by the participant from the seller within the previous twelve months which are unused and in commercially resalable condition, provided that repurchase by the seller shall be for not less than ninety percent of the actual amount paid by the participant to the seller of the products, less any consideration received by the participant for purchase of the products which are being returned. A product shall not be deemed nonresalable solely because the product is no longer marketed by the seller, unless it is clearly disclosed to the participant at the time of the sale that the product is a seasonal, discontinued, or special promotional product, and not subject to the repurchase obligation.
REGISTRATION AND CONTINUING UPDATE REQUIREMENT
Louisiana, and only Louisiana, requires multilevel direct sellers, as a condition of doing business in their state, to provide, and continually update, their distributor list. Line item 6 and line item 8 of the Multi-Level Distribution Scheme Registration Form, provided by the Office of the Attorney General (I hate that use of the word “scheme” and have told them so), is shown below:
6. List the name, mailing address, and permanent address of each of your distributors in Louisiana.
8. All of the information contained herein must be kept current. Should you plan to continue business at additional locations or obtain new distributors, the information must be supplied to this office.
Yes, it is different down there. Louisiana is part of the United States-just do not tell a Louisiana government official, “That’s not how we do it in the rest of the country.” They already know and, in my personal experience, are NOT scrambling to align themselves with the other 49.
This article is meant to inform, and is not meant to dispense legal advice. Please consult your attorney for specific guidance on the above issues.