Franchise Tax Board of the State of California v. Gilbert P. Hyatt

Whether Nevada v. Hall, 440 U.S. 410 (1979), which permits a sovereign State to be haled into another State’s courts without its consent, should be overruled.

Respondent filed suit against Petitioner in Nevada. Petitioner moved for summary judgement, arguing that under Cal. Gov’t Code § 860.2 and the Full Faith and Credit Clause, it was immune from suit in Nevada courts. Dismissing the motion, the Nevada Supreme Court cited the decision of Nevada v. Hall, 440 U.S. 410 (1979), which held that the Constitution does not immunize states from suit in other states. The decision was appealed to the U.S. Supreme Court, and the Court affirmed the decision. Petitioner and Respondent engaged in litigation which resulted in a verdict in favor of Respondent. Petitioner again appealed to the U.S. Supreme Court, which held that Nevada courts could not award damages against a sovereign state entity which would be “greater than it could award against Nevada agencies in similar circumstances.” The Court was divided on whether to overrule Nevada v. Hall. On remand, the lower court affirmed the decision in favor of Respondent with minor damages award adjustments. Petitioner urges the U.S. Supreme Court to overrule Nevada v. Hall, emphasizing that the Hall decision is in direct contrast to current understandings of the Eleventh Amendment and sovereign immunity amongst states and has resulted in several instances of bias against other states in court proceedings. Petitioner argues that the Eleventh Amendment was designed to restore full immunity to the states against private suits.