Franchise Tax Board of California v. Hyatt [SCOTUSbrief]
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Franchise Tax Board of California v. Hyatt [SCOTUSbrief]

In California Franchise Tax Board versus Hyatt,
the core issue is whether the Supreme Court should overrule a 40-year-old precedent called
Nevada versus Hall, uh, that had decided that states do not have sovereign immunity in the
courts of their sister states. It’s one of these cases that has been up and
back to the Supreme Court a lot of different times. The whole issue started in the early ’90s. Gilbert Hyatt is an inventor, and he actually
lived in California, and he made a lot of money off of technology patents. He then moved to Nevada. The California Franchise Tax Board is the
agency in California that is responsible for assessing personal income taxes, and in 1993,
they audited Mr. Hyatt and decided that he had actually moved out of the state of California
about six months after he claimed he had, which resulted in a certain amount of unpaid
income taxes. Mr. Hyatt alleges that the California Franchise
Tax Board in its auditing process committed a number of intentional, uh, and negligent
torts, including looking through his windows, rummaging through his garbage, contacting
family members and coworkers, and because of that, he not only sought an administrative
appeal of the tax determination, but sued the California Franchise Tax Board, which
is an agency of the state of California, in Nevada state court. The only issue left in the case is whether
the 1979 case Nevada versus Hall should be overruled. In Nevada versus Hall, the majority there
decided that there was no interstate sovereign immunity because it is not found in the text
of the Constitution or the text of the Eleventh Amendment. In subsequent cases, the Court has said that
sovereign immunity is something that states had before ratification, and that the question
really is whether the Constitution in its enactment changed the scope of sovereign immunity
to which states were entitled. The actual concept of interstate sovereign
immunity is not found in the text of either the Eleventh Amendment or Article III, and
that’s really not in dispute in this case. Really the question here is what are the baseline
principles of sovereign immunity that existed before ratification and did the Constitution
change that. The best argument for the California Franchise
Tax Board is that Nevada versus Hall got the analysis for how to determine whether a state
had sovereign immunity exactly backwards. The question that the Court asked in Nevada
versus Hall was “Is interstate sovereign immunity something that is identified in the
text of the Constitution or in the text of the Eleventh Amendment?” But in other cases, the question is not whether
it’s identified in the text, but whether states had that sovereign immunity before ratification
and did the Constitution abrogate it. Did it get rid of that aspect of sovereign
immunity? There are actually two, uh, good arguments
for Hyatt. Uh, the first is that Nevada versus Hall was
rightly decided because when you look at the history and the structure of the Constitution,
uh, states were more equivalent to independent nations, uh, and as explained in a very old
Supreme Court case, the Schooner Exchange, nations did not have sovereign immunity in
the courts of other nations unless the host nation chose to extend that sovereign immunity. The second argument for Mr. Hyatt is even
if a majority of the Court disagrees with him about whether Nevada versus Hall was rightly
decided, the Court is going to need to determine whether the factors that they usually consider
for overturning a precedent of the Court are satisfied here. On the one hand, what you have is a state
agency saying that it should not be subject to the courts of another state, that it has
as a sovereign entity dignity and independence, and shouldn’t be hailed into those courts
to be subject to judgment by a different state. On the other hand, the host state has its
own sovereign interests in protecting its own citizens and in being able to have
decided in its own courts the lawfulness of activity that has occurred within its borders.


  • napoleon smith

    omg. send the states to hell. if he was out of state or in state by said time is crazy. if he had a setback, he still went out of state. california is a nazi state. that is the problem. CLEAR AS MUD. really, mud is clearer. that is why i became an engineer. they cant take it away from you.

  • troy cates

    Holy Numb Nutz, that's Bat ship cra cra.

    My war against the independent sovereignties known as the Alabama municipalities, could be won without me having to do any ***k at all.

    Are those people attacking the whole concept of administrative law? The WHOLE totality of the shiznit damn well better be all up in dat wordiness of the words used .

    Wait……what? ……..

  • alphonso eiland

    this is why when state taxing agencies are allowed to violate their own LIMITED taxing laws, total chaos and confusion.

  • Ruby1978

    this SC doesn't care about precedent (even thought they lied and said they did when they were before the senate), good bye Roe and gay marriage

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