Archives for category: taxes

This is a fascinating case from 2005 about a Federal employee accused of threatening his management after not being promoted, is then arrested, acquitted of the criminal charges, returns to work and tries to sue for discrimination, retaliation and hostile work environment. The Court here dismisses the claims.

EARL ROBERSON, JR., Plaintiff, v. JOHN W. SNOW, Defendant.
Civil Action No. 03-2135 (RWR)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
404 F. Supp. 2d 79

The opinion, decided September 12, 2005, is by Judge Richard Roberts.

The Court quotes the allegations that got Roberson (plaintiff in this action) arrested in 2001:

[Thomas Peska] alleged that plaintiff made comments that “he was going to take [Petska] out” and that he would “come in like a ninja and they would never know it.”

But Roberson (the plaintiff) was acquitted of the criminal charges related to those allegations. But despite prevailing, the Court, in this civil action, concludes:

Because the plaintiff has failed to adequately rebut the defendant’s non-discriminatory justifications for the non-promotion, investigation, and prosecution of the plaintiff, the plaintiff has not established that any material facts are left in dispute and, consequently, defendant’s motion for summary judgment will be granted on both the discrimination and retaliation claims. Because plaintiff has failed to demonstrate that the harassment he complains of was based upon his race, summary judgment will be granted on any hostile work environment claim.

So here, “ninja” is a word allegedly used as a threat in 2001 by an African American male “career federal employee who has worked for the IRS for over twenty-two years … a GS-13 level computer specialist and is employed in the Statistics of Income Division of the IRS”.

Note the connection to computers and taxes but note “Plaintiff denies making any such threatening statements or comments.” Also note that apparently the criminal judge agreed or did not think these comments reach the level of a criminal threat.

This 2005 tax case involved three movies with Ninja in the title. It is also the only federal case with both “ninja” and “zombies” in the opinion – See ZombieLaw: “Astro Zombies in Tax Law” for a prior writeup of this case: Santa Monica Films v. IRS.

SANTA MONICA PICTURES, LLC, PERRY LERNER, TAX MATTERS PARTNER, * Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent CORONA FILM FINANCE FUND, LLC, PERRY LERNER, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Nos. 6163-03, 6164-03
UNITED STATES TAX COURT
T.C. Memo 2005-104; 2005 Tax Ct. Memo LEXIS 104; 89 T.C.M. (CCH) 1157

Opinion by Judge Michael Thornton, filed May 11, 2005

The following film titles and development projects were listed in Schedule 1.6(b) of the exchange and contribution agreement as assets of SMHC:

57. Ninja Hunt

58. Ninja Showdown

59. Ninja Squad



All three are listed by the Court as 1987 movies (though IMDB suggests 1986). The Opinion also reveals that they were originally in the “EBD film library”. They were then sold. The Court notes difficulties in determining the market price of movies because of issues finding comparable films. For comparison noting the movie “Teenage Mutant Ninja Turtles”.

in 1993, New Line sold 200 features to Turner Broadcasting for $ 500 million ($ 2.5 million per title); … in 1997, Orion/Samuel Goldwyn sold 2,000 features to MGM for $ 573 million ($ 286,500 per title).

[footnote #135]:
The film library that New Line sold to Turner Broadcasting included the film titles: “Teenage Mutant Ninja Turtles“, “Misery”, and “City Slickers”. The film library that Orion/Samuel Goldwyn sold to MGM included the Academy Award-winning film titles: “Amadeus”, “Platoon”, “Dances With Wolves”, and “The Silence of the Lambs”.

The point is that these movies are not particularly comparable. The transactions involved shifted the losses from failed movies and were deemed to be a tax shelter. The Court here upholds the IRS ruling over the studio’s arguments.

This is, of course, not the first NinjaLaw Federal case to mention the Teenage Mutant Ninja Turtles, nor to mention them even though they are not necessarily relevant to the particularities of the case. Here in 2005, the Turtles movie is listed among a number of modern classics and blockbuster successes.

There are 103 case opinions in Federal Courts with the word “ninja” according to a Lexis search. The first is actually a typo (explained below). So the true first is the 1988 decision in Hasbro Indus. v. United States, Court No. 84-1-00087, UNITED STATES COURT OF INTERNATIONAL TRADE, 12 C.I.T. 983; 703 F. Supp. 941, Decided, October 25, 1988

This case involves the import taxes (harmonized tariff) on G.I. Joe action figures and determines that they should be taxed at a higher rate because they are human dolls. This distinction between human and nonhuman figures has recently been reported in a variety of blogs because of a decision regarding X-men merchandise. (See Toy Biz v. US). For similar tax reasons as will be discussed below for Hasbro, Marvel lawyers argued in 2003 that certain X-men figures were nonhuman. This created hullabaloo amongst comic fans because a major plot line of the X-men comic is that these characters are humans who are persecuted for being mutant humans. Arguing that mutants are not human is good for taxes but goes counter to what the X-men fight for.


– Law and Multiverse – “Are the X-Men Human? A Federal Court Says No”
– RadioLab – “X-men vs Tariff Law”
– The Cardozo Jurist – “Courts Rules Marvel Action Figures Are Not Dolls”
– Escapist – “Federal Court Rules that the X-Men are Not Human”

But first the typo – In Office of Supply Govt. of the Republic of Korea v. M. V. Naftoporos, No. 81 Civ. 4507, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, 1985 U.S. Dist. LEXIS 15671, September 24, 1985, Decided – the Court cites a quotation to “M. Golodetz Export Corp. v. S/S Lake Ninja, 751 F.2d 1103, 1110 (2d Cir. 1985)” — except that is scrivener’s error – the correct party name of the defendant in that case was “S/S Lake Anja” = the name of a cargo vessel. So that is the first use of “ninja” in the Federal Court but it’s a typo. That said, even if it is complete error, it is somewhat ironic or coincidental that the first case with “ninja” has “the Republic of Korea” as the named plaintiff.

So, now back to the GI Joes case, Hasbro v US, Judge Watson for the Court writes:

This action involves the proper classification of plastic figures described as “G.I. Joe Action Figures” and imported from Hong Kong during 1982 and 1983. The merchandise was classified as “other dolls” under Item 737.24 of the Tariff Schedules of the United States (“TSUS”), at various duty rates, depending upon the date of entry. Plaintiff claims that the importations are properly classifiable as “toy figures of animate objects” under Item A737.40 of the TSUS, which, having met the requirements for duty free treatment under the Generalized System of Preferences, (“GSP”), should be free of duty pursuant to General Headnote 3(c) of the TSUS.

The Court then goes on to give thoroughly enjoyable descriptions of many action figures, particularly:

The third figure selected for description is designed “Counter Intelligence.” This is a white female with red hair, wearing what appears to be a beige, one-piece bathing suit, together with beige boots and gloves over black tights. Molded on the figure is a knife on the left thigh, what is possibly a small explosive device on the right thigh, a grenade on the left shoulder, a small pistol on the inside of the right forearm, and what appear to be two “throwing stars” (a type of weapon associated with Japanese “ninja“) on the exterior of the left glove. The figure comes with a “XK-1 Power Crossbow” accessory.

GI Joe fans will recognize this as a description of Counter Intelligence, Scarlett O’Hara.


The Court quotes the entirety of the back filecards for each character, as in the image above, quoting:

“Scarlett is confident and resilient * * * it’s remarkable that a person so deadly can still retain a sense of humor.”

The Court profiles the action figures and characters of Duke, Roadblock, Doc, Scarlett, Cobra Commander, and Baroness.

Hasbro’s arguments are GI Joe are “action figures” not “dolls” but the Court disagrees concluding:

The testimony offered at trial could not overcome the fundamental definition established by lexicographic common meaning and prior case law. Although it is clear that plaintiff does not use the word “doll” in the marketing of these figures, none of the plaintiff’s witnesses could persuade the Court that this was a matter of basic definition. On the contrary, the evidence as a whole supports the conclusion that the emphasis on the term “action figure” is a conscious avoidance of the definitionally correct term “doll” and that when these articles are described in general publications in this society such as newspapers or magazines, or in specialized publications devoted to collectors of dolls, they are frequently referred to as “dolls.”

In sum, the Court is of the opinion that these figures have been properly classified as “dolls” under Item 737.24 of the TSUS. Further, for what it is worth, the Court notes that this classification does not in any way detract from the respect which these figures deserve as representations of the human participants in the never-ending struggle between good and evil. Henceforth, each and every one of these figures must accept the fact that, for tariff purposes and by judicial decision, they must face the world as “real American dolls.” Hopefully, they will meet this decision as to their tariff classification with courage and pride.

It is my suspicion that this tariff classification for action figure toys is a major reason that Michael Bay’s TMNT will change the narrative to make the Teenage Mutant Ninja Turtle be aliens. Aliens are nonhuman and so they should be taxed at the lower rate. Bay has been quoted today by CNN saying in response to fan reaction about the alien-origin plot: “Relax .. We are just building a richer world”.

Yes, Richer because of tax savings.

Ok that’s enough for my first NinjaLaw post. There are more Teenage Mutant Ninja Turtles in other cases and we’ll get to them later – and you may also Shepardize this Hasbro case too, there is a follow-up case about other Joes in 1989 and the 1988 case is also cited in the Toy Biz opinions about X-Men in both 2001 and 2003 . This is just a first post – there will be more NinjaLaw.