Franchise Tax Bd. of Cal. v. Hyatt, 578 U.S. ___ (2016)

Issues: ,



NOTE:?Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U.?S. 321 .



Certiorari to the Supreme Court of Nevada

No. 14?1175.?Argued December 7, 2015?Decided April 19, 2016

[qtbl style=”color:gray;”]

It is a violation of the Full Faith and Credit Clause for the forum state to refuse to extend to other states brought into the forum?state’s courts the same immunities that the forum state would receive in those courts.



Respondent Hyatt claims that he moved from California to Nevada in 1991, but petitioner Franchise Tax Board of California, a state agency, claims that he actually moved in 1992 and thus owes California millions in taxes, penalties, and interest. Hyatt filed suit in Nevada state court, which had jurisdiction over California under Nevada v. Hall, 440 U.?S. 410 , seeking damages for California?s alleged abusive audit and investigation practices. After this Court affirmed the Nevada Supreme Court?s ruling that Nevada courts, as a matter of comity, would immunize California to the same extent that Nevada law would immunize its own agencies and officials, see Franchise Tax Bd. of Cal. v. Hyatt, 538 U.?S. 488 , the case went to trial, where Hyatt was awarded almost $500 million in damages and fees. On appeal, California argued that the Constitution?s Full Faith and Credit Clause, Art.?IV, ?1, required Nevada to limit damages to $50,000, the maximum that Nevada law would permit in a similar suit against its own officials. The Nevada Supreme Court, however, affirmed $1 million of the award and ordered a retrial on another damages issue, stating that the $50,000 maximum would not apply on remand.


1.?The Court is equally divided on the question whether Nevada v. Hall should be overruled and thus affirms the Nevada courts? exercise of jurisdiction over California?s state agency. P.?4.

2.?The Constitution does not permit Nevada to apply a rule of Nevada law that awards damages against California that are greater than it could award against Nevada in similar circumstances. This conclusion is consistent with this Court?s precedents. A statute is a ?public Act? within the meaning of the Full Faith and Credit Clause. While a State is not required ?to substitute for its own statute .?.?. the statute of another State reflecting a conflicting and opposed policy,? Carroll v. Lanza, 349 U.?S. 408 , a State?s decision to decline to apply another State?s statute on this ground must not embody a ?policy of hostility to the public Acts? of that other State, id., at 413. Using this approach, the Court found no violation of the Clause in Carroll v. Lanza or in Franchise Tax Bd. the first time this litigation was considered. By contrast, the rule of unlimited damages applied here is not only ?opposed? to California?s law of complete immunity; it is also inconsistent with the general principles of Nevada immunity law, which limit damages awards to $50,000. Nevada explained its departure from those general principles by describing California?s own system of controlling its agencies as an inadequate remedy for Nevada?s citizens. A State that disregards its own ordinary legal principles on this ground employs a constitutionally impermissible ???policy of hostility to the public Acts? of a sister State.? 538 U.?S., at 499. The Nevada Supreme Court?s decision thereby lacks the ?healthy regard for California?s sovereign status? that was the hallmark of its earlier decision. Ibid. This holding does not indicate a return to a complex ?balancing-of-interests approach to conflicts of law under the Full Faith and Credit Clause.? Id., at 496. Rather, Nevada?s hostility toward California is clearly evident in its decision to devise a special, discriminatory damages rule that applies only to a sister State. Pp.?4?9.

130 Nev. ___, 335 P.?3d 125, vacated and remanded.

Breyer, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Sotomayor, and Kagan, JJ., joined. Alito, J., concurred in the judgment. Roberts, C.?J., filed a dissenting opinion, in which Thomas, J., joined.