SCOTUSblog by Richard M. Re 1/3/2019
Franchise Tax Board of California v. Hyatt is the federal courts case that keeps on giving. It is a SCOTUS “threepeater,†having now reached the justices on three separate occasions. It raises a rich sovereign immunity issue — namely, whether states should enjoy immunity in one another’s courts. And it also asks the Supreme Court to overrule a precedent, Nevada v. Hall, that at least four justices were recently prepared to throw overboard. Whether new Justices Neil Gorsuch and Brett Kavanaugh follow that path will provide valuable insight into their emerging jurisprudence on federalism and stare decisis.
The case arises from allegations that Gilbert Hyatt evaded California taxes by falsely claiming to have moved to Nevada. After the Franchise Tax Board of California concluded that Hyatt owed millions in unpaid taxes, Hyatt, a citizen of Nevada, sued the board in Nevada court, alleging fraud and other torts. That litigation began in 1998. Eventually, Hyatt won a trial judgment of almost half a billion dollars — though a complex series of appeals, including two trips to the U.S. Supreme Court, have reduced the figure to about $100,000 plus the possibility of costs.
Back in 2016, when the justices last ruled in this case, there were two questions presented. One was whether to overrule Hall, which held that states generally lack sovereign immunity in one another’s courts. The court seemed prepared to overrule Hall by a 5-4 vote, but Justice Antonin Scalia passed away, leaving the court deadlocked on that issue. The remaining eight justices issued a ruling based on the other question presented. That unplanned sequence of events notified Hall’s defenders that they had one last chance to defend the rule against interstate sovereign immunity.
The board offers arguments based on history, intuition and precedent. At the founding, the board argues, states enjoyed immunity in one another’s courts, and the Constitution’s structure reinforced that principle. That result is sensible, the board continues: States already enjoy sovereign immunity in neutral federal courts, and there is all the more reason for a state to have sovereign immunity in the more partial courts of another state. True, Hall’s contrary rule is protected by stare decisis. But Hall predated the Rehnquist Court’s “federalist revolution,†which invigorated state sovereign immunity near the end of the 20th century. Indeed, then-Justice William Rehnquist authored a pointed dissent in Hall. In light of those later decisions, Hall has become a clearly erroneous outlier worthy of being overruled. Forty-four states filed in support of that basic position, with no states filing on Hyatt’s side.
Hyatt’s brief opens by arguing for a dismissal of the case on procedural grounds. In Hyatt’s view, the board has forfeited its sovereign immunity argument, and in any event the Supreme Court’s latest ruling in this case resolved the matter for purposes of these parties. The board disputes these arguments on their own terms and also levels a forfeiture allegation of its own: Hyatt did not mention these procedural points, or any similar problems, when the board sought the court’s review. And if Hyatt has been relying on a forfeiture or the law of the case, why wait to bring those points to the court’s attention?
More:
http://www.scotusblog.com/2019/01/argument-preview-immunity-precedent-and-federalism-in-franchise-tax-board-of-california-v-hyatt/#more-278173
