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Judicial precedent differentiates the credit owed to laws (legislative measures and common law) and to judgments. Whereas the full faith and credit command is exacting with respect to a final judgment rendered by a court with adjudicatory authority over the subject matter and persons governed by the judgment, it is less demanding with respect to choice of laws. The Full Faith and Credit Clause does not compel a state to substitute the statutes of other states for its own statutes dealing with a subject matter concerning which it is competent to legislate.
The Federal Constitution's full faith and credit clause (Article IV, § 1) requires each state to give full faith and credit to the public acts and judicial proceedings of every other state. As a result of an audit, commenced in 1993 by California's franchise tax board, of the 1991 California state income tax return of a Nevada resident--who (1) according to the taxpayer, had changed his residence from California to Nevada on October 1, 1991; but (2) according to the board's determination from the audit, had been a California resident until April 3, 1992--the board issued notices of proposed 1991 and 1992 income tax assessments and imposed civil fraud penalties. The taxpayer protested the proposed assessments and the penalties through the board's administrative process. While the board's administrative process was ongoing, the taxpayer filed against the board, in the Clark County, Nevada, District Court, a suit (1) alleging that the board had directed numerous contacts at Nevada and, during the course of the audit, had committed torts including invasion of privacy, outrageous conduct, abuse of process, fraud, and negligent misrepresentation; and (2) seeking punitive and compensatory damages, as well as a declaratory judgment confirming the taxpayer's status as a Nevada resident as of September 26, 1991. Eventually, the board--asserting that the District Court lacked subject-matter jurisdiction, on the theory that legal principles including full faith and credit required the District Court to apply a California statute that immunized the board from suit--filed in the District Court a motion for summary judgment or, in the alternative, for dismissal for lack of jurisdiction. The District Court denied this motion. Subsequently, the board filed in the Nevada Supreme Court a petition for a writ of mandamus ordering dismissal. The Nevada Supreme Court, in eventually granting the petition in part and denying it in part, held that (1) the District Court should have declined to exercise jurisdiction over the taxpayer's negligence claim under comity principles, but (2) the taxpayer's intentional tort claims could proceed to trial.
Did Nevada Supreme Court's refusal to extend full faith and credit to California statute immunizing California's state franchise tax board from suit violate Federal Constitution's full faith and credit clause (Article IV, § 1)?
The United States Supreme Court noted that Nevada did not grant immunity to its agencies for intentional torts and held that Nevada was not required to substitute California law for its own statutes dealing with governmental liability for intentional torts concerning which Nevada was competent to legislate. Despite CFTB's assertion that its immunity was based on California's sovereign responsibility in the collection of taxes, Nevada courts were not required to consider California's interest in enforcing its tax laws and were entitled to rely instead on Nevada's interest in protecting its citizens from intentional tortious misconduct. Thus, Nevada was not required to accord full faith and credit to CFTB's immunity under California law, regardless of whether Nevada's rejection of such immunity in Nevada interfered with California's ability to fulfill its sovereign responsibilities.