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Supreme Court Justices Emphasize States' Right to Protect Their Citizens

POSTED ON Jan. 10, 2019

Five U.S. Supreme Court justices on January 9 said they wanted to know where in the Constitution there is any indication that the states waived their ability to protect their own citizens from the actions of other states.

During oral arguments in California Franchise Tax Board v. Hyatt, Justice Sonia Sotomayor asked a question repeatedly cited by other justices during the Franchise Tax Board’s oral arguments: “What do you think in the constitutional design reflects the willingness of one state to give up its power to protect its own citizens from the actions of another state who might intrude directly?”

The question before the Court is whether to overrule Nevada v. Hall, the 1979 decision holding that a state does not have immunity from suits initiated in the courts of other states. Forty-four state attorneys general signed an amicus brief in support of the FTB’s position that the states have sovereign immunity from such suits. The brief lists five recent and pending cases in which out-of-state taxpayers have sued a state tax agency in another state’s courts, including Crutchfield Corp.’s suit in Virginia challenging Massachusetts’s “cookie nexus” regulation.

This is the third time that Hyatt has been before the Supreme Court. In April 2016 the Court split 4-4 on whether to overrule Nevada v. Hall. How each justice voted on that question is unknown, but the majority held that Nevada is limited by its own laws when awarding damages against California.

Neither Justice Clarence Thomas nor Justice Neil M. Gorsuch asked any questions January 9. Chief Justice John G. Roberts Jr. said Justice Ruth Bader Ginsburg, who was absent from the bench for the third day in a row, will participate in the decision using transcripts of the arguments and court briefs.

Constitutional Amendment?

In presenting the FTB’s case, former U.S. Solicitor General Seth Waxman, now of Wilmer Cutler Pickering Hale and Dorr LLP , argued that state sovereign immunity is implicit in the Constitution’s design, and that when the states formed a union by ratifying the Constitution, they “surrendered their powers to treat each other as legal strangers.”

Waxman said the Court has repeatedly held that what matters for the protection of sovereign immunity is the framers’ understanding of “the consequences of giving up the wild west law of nations for a more perfect union in which states won’t retaliate against each other” by allowing everybody to sue other states in their courts.

Sotomayor said that when the states disagreed with the Court’s 1793 opinion in Chisholm v. Georgia, they adopted the Eleventh Amendment to overrule the decision; the Eleventh Amendment restricts the ability of individuals to sue states in federal court.

“We have 44 states suggesting we overrule Hall,” Sotomayor said. “That’s [more than] two-thirds of the states. Why don’t they move to get the Constitution amended if we’re getting it wrong? You’re asking us to do their work.”

Sotomayor added that the states can address this directly, “but instead they’re choosing to let us decide that an individual state doesn’t have the right to protect its citizens.”

Justice Elena Kagan said everything was on the table during the constitutional debate and requested evidence — or the best textual or historical argument — that states made a trade-off or bargain at the founding like Waxman had suggested. Justices Stephen G. Breyer and Samuel A. Alito Jr. also pressed Waxman to point to a specific constitutional provision.

“Do you know how important this is?” asked Justice Brett M. Kavanaugh, who further asked why details about a trade-off so critical to the states is not in the Constitution when the document provides specifics about minute issues.

Not About Tax

When it was his turn to address the Court, the lawyer for microchip inventor Gilbert Hyatt told the justices that what’s “crucial about this case is it’s not about tax liability.” Rather, the case is about torts committed against Hyatt in Nevada by FTB agents who crossed state lines during their audit of him, said Erwin Chemerinsky of the University of California, Berkeley School of Law.

“I think a challenge of tax liability would be different,” Chemerinsky said.

During Chemerinsky’s oral arguments, Sotomayor said Waxman had made the point that it is intuitively wrong for one state to tell another how to run its government. She asked Chemerinsky what keeps states from doing that if it’s not in the Constitution.

When Chemerinsky said comity, Sotomayor said she doesn’t see that as being enough.

“Where the text of the Constitution wanted to limit state power, it did so explicitly: The full faith and credit clause, the fugitive slave clause, the privilege and immunities clause,” Chemerinsky replied. “There is no textual provision in the Constitution that limits the power of a state under the Tenth Amendment to define its own jurisdiction to provide a remedy for others when they’re injured.”

Roberts said the remedy for failure to accord comity at the international level has been recognized to be war. “What remedy do the states have under your view if a state chooses not to extend comity to a sister state?” he asked.

Chemerinsky said the Court’s judgment in the 2016 Hyatt case limiting the amount of damages Nevada could seek is one remedy, while another is for states to enter a compact with one another to prevent themselves from being sued.

Chemerinsky also argued that there is no compelling reason for overturning stare decisis, but Kavanaugh and Alito pressed him on what would constitute a compelling reason to overturn Nevada v. Hall.

“Is it enough, for example, if we think it’s egregiously wrong and the prior decision has severe practical consequences and there’s no real reliance interest at stake?” asked Kavanaugh.