Franchise Tax Board of California v Hyatt Hyatt

Franchise Tax Board of California v. Hyatt (Hyatt III: Revenge of the Hyatt) Argued January 9, 2019

Outline • • • Basic Legal Question Background (Legal and Procedural) Parties and their Arguments Analysis Prediction Advocates

Do states enjoy immunity in one another’s courts? (Interstate sovereignty) Here, can Nevada sue California in Nevada state court?

Background

Legal Background • 11 th Amendment: The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State. • Nevada v. Hall (1979): There is no constitutional command (grant of immunity) that one state’s immunity from suit must be enforced in the courts of another state. Instead, states have implemented a type of reciprocity known as comity, a principle that courts should not act in a way that demeans the laws or judicial decisions of another state.

Procedural Background (The Hyatts) Hyatt I (2003) • Holding: Full Faith and Credit Clause does not require Nevada to give full faith and credit to California's statutes providing its tax agency with immunity from suit. Hyatt II (2016) • Holding: 1) Other states sued in Nevada are entitled to the same immunities Nevada would receive. 2) Court split 4 -4 on overturning Hall, so affirmed the lower court’s exercise of jurisdiction over California. Hyatt III • Issue: Wait, can we even be doing this? Can Hyatt sue California in Nevada?

Parties and their arguments

Franchise Tax Board of California: California state tax auditors, very well-paid legal division Petitioner “Look at the lengths we’ll go to get back taxes. ”* *Not a real quote from FTB

Petitioner Argument History, Logic, and Precedent • History: Prior to ratification, states enjoyed immunity in one another’s courts, and the Constitution never took that away. • Logic: 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. • Precedent: Nevada v. Hall is a poorly reasoned outlier and is inconsistent with the important Constitutional values protected by sovereign immunity.

Gilbert Hyatt: Inventor, millionaire, hater of California Respondent “California, you can have my taxes over my (very likely) dead body. ”* *Not a real quote from Gilbert Hyatt

Respondent Argument Comity, Textualism, and (different) State Sovereignty • Comity: States relied on comity in dealing with disputes since before the ratification, and it has worked fine. • Textualism: Constitution grants immunity; no grant of interstate immunity in the text. • 10 th Amendment State Sovereignty: States have an important interest in protecting the rights of their citizens, and citizens have an important right to sue for damages incurred in their home state courts.

Amici Curiae 44 State AGs Baude and Sachs • Supports FTBs argument that the Constitution does not give state’s their sovereignty, it merely limits it. • Middle Ground: States can bring suit against other states, but the common law of judgments and laws of nations provide legal limits beyond comity.

Analysis

Textualism makes strange bedfellows • On the importance of pre-ratification sovereign immunity Justice Sotomayor: “Counsel, it’s nice that they felt that way, but what we know is they didn’t put it in the Constitution. ” Justice Kavanaugh: “Given how important this is, as you describe, why is it not in the text of the Constitution in your view, given that the Constitution is a document, in my view, of majestic specificity.

The Importance of Precedent: The Breyer. Alito Showdown Justice Breyer: “Is this imaginary or not, what I'm about to say, that every time we overrule a case, it's like a little chink in an armor? ” Justice Alito: “Well, Mr. Chemerinsky, do you think that the public would have greater respect for an institution that says, you know, we're never going to admit we made a mistake. . . [or] we're not perfect, and when we look back and we think we made a big mistake, we're going to go back and correct it? ” Justice Kavanaugh shows his hand: “But then the question is how we figure out what the compelling reason is, and that's very difficult. And you say nothing has changed. That's true in a lot of cases where the Court has nonetheless overruled a prior decision. And so how are we supposed to think about it?

Standup Comity: Principal of courteous and considerate behavior between sovereigns Justice Breyer: “I didn’t find language like raw power. But what I found was it’s a matter of comity. It’s a matter of consent. ” Waxman: Complete state sovereignty is an implied constitutional principal, and is consistent with the sovereignty principals from pre-ratification days. Chemerinksy: Comity and consent was the historical principal that guided state and foreign sovereign relationships, not legal principals of absolute sovereignty.

Gorsuch, Kavanaugh, can you hear me? Hyatt II arguments: Full bench • Scalia prepared to be fifth vote to overturn Nevada v. Hall Hyatt II decision: 4 -4 split • Kennedy sided with the conservatives mainly on fears that comity alone could threaten to disrupt state relations. Hyatt III: No Scalia, no Kennedy • 4 -3 split in favor of affirming Nevada v. Hall • All eyes on Gorsuch and Kavanaugh

Prediction

Thanks for Nothing Justice Gorsuch… Affirm (Hyatt) Overrule (FTB) ?

Gorsuch • Very pro-stare decisis in theory (wrote a book called “Law of Judicial Precedent, ” but in his short time on the bench he has not hesitated to overrule longstanding precedent. (Janus, Wayfair, Abbot v. Perez to name a few) • On sovereignty: “I had thought in this country that the people were the sovereign, and that sovereignty was divided, exercise of sovereignty was divided, not multiplied. … It is awkward, isn’t it, to say that there are two sovereigns who get to multiply offenses against you? Gamble v. United States