139 S. Ct. 1485 (2019)
In the early 1990s, Gilbert Hyatt earned substantial royalties from a technology patent.1 Although he had been a long-time resident of California, in 1991 Hyatt sold his house there and took steps to establish residency in Nevada, including renting an apartment, registering to vote, obtaining insurance, opening a bank account, and acquiring a driver's license.2 When filing his 1991 and 1992 tax returns, Hyatt claimed Nevada as his primary residence, a state that collects no personal income tax.3
The Franchise Tax Board of California suspected the move was a sham and in 1993 launched an audit.4 Board employees traveled to Nevada to interview Hyatt's estranged family members and shared his personal information with business contacts, sending more than 100 letters and demands for information to third parties.5 The Board concluded that Hyatt had not moved to Nevada until April 1992 and owed California more than $10 million in back taxes, interest, and penalties.6 After an 11-year administrative proceeding, the Board upheld the audit, with the appeal still pending.7
In 1998, Hyatt sued the Board in Nevada state court alleging torts committed during the audit.8 The Board sought dismissal on immunity grounds, arguing Nevada courts must apply California law under the Full Faith and Credit Clause.9 The Nevada Supreme Court held that comity entitled the Board only to the immunity Nevada afforded its own agencies.10 The Supreme Court granted certiorari and in 2003 affirmed that the Full Faith and Credit Clause did not prohibit Nevada from applying its own law.11
After remand, a four-month jury trial resulted in a verdict exceeding $490 million including interest and costs.12 On appeal, the Nevada Supreme Court upheld a $1 million judgment on one claim but declined to apply Nevada's $50,000 cap on tort liability for state agencies.13 The Supreme Court in 2016 reversed, requiring the cap, but was equally divided on overruling Nevada v. Hall.14 On further remand, the trial court was instructed to apply the cap.15
The Board petitioned for certiorari a third time, and the Supreme Court granted review in 2018 solely on the question whether Nevada v. Hall should be overruled.1617
Whether the Constitution permits a State to be sued by a private party without its consent in the courts of a different State?18
The Constitution preserves the sovereign immunity of the States, which they enjoyed at the founding under common law and the law of nations, except as altered by the plan of the Convention. States retain their sovereign immunity from private suits brought in the courts of other States.19
No. Gilbert Hyatt, a private party, sued the Franchise Tax Board of California in Nevada state court alleging torts committed during a tax audit.20 The Board is an agency of the State of California.21 The facts establish that the suit proceeded to trial and judgment in Nevada courts without California's consent.22 The Constitution does not permit such a suit.23
The historical record confirms that at the founding the States retained immunity from private suits in sister state courts as an integral component of their sovereignty.24 The constitutional design adjusted the States' relationships with each other but did not abrogate this immunity.25 Article III and the Eleventh Amendment reflect the preservation of traditional immunity rather than its elimination in interstate contexts.26
The Constitution does not permit a State to be sued by a private party without its consent in the courts of a different State.27
Related opinions on this issue
Joined by Ginsburg, Sotomayor, And Kagan, Jj.
Justice Breyer dissented from the majority's conclusion that the Constitution mandates interstate sovereign immunity.28 He maintained that the Constitution permits each State to decide whether to grant immunity to sister States as a matter of comity.29 Breyer found no provision of the Constitution that converted the customary practice of granting immunity into an absolute federal requirement.30
He argued that Hall correctly left the matter to state choice consistent with the Tenth Amendment's reservation of nondelegated powers to the States or the people.31 In his view, compelling immunity by inference from constitutional structure would intrude on the sovereignty of the forum State.32
Whether Nevada v. Hall should be overruled?33
Stare decisis is not an inexorable command, and we have held that it is at its weakest when we interpret the Constitution because our interpretation can be altered only by constitutional amendment.34 Relevant factors include the quality of the decision's reasoning, its consistency with related decisions, legal developments since the decision, and reliance on the decision.35 Hall misread the historical record and misapprehended the constitutional design and is therefore overruled.36
Yes. The facts of this prolonged litigation, in which a private party obtained a multi-million dollar judgment against a sister State in its courts, illustrate that Hall's holding is irreconcilable with the constitutional structure.37 The first three stare decisis factors support overruling because Hall failed to account for founding-era immunity principles and stands as an outlier in sovereign immunity jurisprudence.38 Case-specific reliance interests do not justify retaining an incorrect constitutional rule.39
Nevada v. Hall should be overruled.
Related opinions on this issue
Joined by Ginsburg, Sotomayor, And Kagan, Jj.
Justice Breyer argued that Hall was a well-reasoned decision that has caused no serious practical problems in the four decades since it was decided.40 He emphasized that the law has not changed significantly since Hall, that subsequent cases are consistent with it, and that overruling it solely because five Members now disagree with its resolution of a difficult question undermines the stability the law requires.41 Breyer noted that only a handful of cases had arisen under Hall and that States remain free to enter compacts if they desire greater protection.42
He warned that overruling precedent merely because a new majority disagrees threatens the predictability on which the legal system depends.43