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Law School Case Brief

Franchise Tax Bd. v. Hyatt - 139 S. Ct. 1485 (2019)


Nevada v. Hall is irreconcilable with our constitutional structure and with the historical evidence showing a widespread preratification understanding that States retained immunity from private suits, both in their own courts and in other courts.


Respondent Hyatt sued petitioner Franchise Tax Board of California (Board) in Nevada state court for alleged torts committed during a tax audit. The Nevada Supreme Court rejected the Board's argument that the Full Faith and Credit Clause required Nevada courts to apply California law and immunize the Board from liability. The court held instead that general principles of comity entitled the Board only to the same immunity that Nevada law afforded Nevada agencies. In a prior case, the U.S. Supreme Court affirmed, holding that the Full Faith and Credit Clause did not prohibit Nevada from applying its own immunity law. On remand, the Nevada Supreme Court declined to apply a cap on tort liability applicable to Nevada state agencies. However, in a second appeal before the Supreme Court, the Court reversed, holding that the Full Faith and Credit Clause required Nevada courts to grant the Board the same immunity that Nevada agencies enjoy. The Court was equally divided, however, on whether to overrule Nevada v. Hall, 440 U. S. 410, 99 S. Ct. 1182, 59 L. Ed. 2d 416, which held that the Constitution does not bar suits brought by an individual against a State in the courts of another State. On remand, the Nevada Supreme Court instructed the trial court to enter damages in accordance with Nevada's statutory cap. The Board sought certiorari a third time, raising only the question whether Nevada v. Hall should be overruled.


Should the Court’s prior decision in Nevada v. Hall be abandoned?




Nevada v. Hall, wherein a taxpayer prevailed in a state court suit against a state franchise tax board for torts allegedly committed during a taxpayer audit, was overruled because States retained their sovereign immunity from private suits brought in the courts of other States. Nevada v. Hall was contrary to the country's constitutional design and the understanding of sovereign immunity shared by the States that ratified the Constitution. Stare decisis did not compel continued adherence to this precedent because Nevada v. Hall failed to account for the historical understanding of state sovereign immunity, it failed to consider how the deprivation of traditional diplomatic tools reordered the States' relationships with one another, and Nevada v. Hall stood as an outlier in U.S. Supreme Court sovereign immunity jurisprudence.

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