California Franchise Tax Board v. Hyatt No. 02-0042

Decided April 23

In Hyatt v. California Franchise Tax Board, a unanimous Supreme Court held that a citizen of one state (Nevada) may sue the government of another state (California) in his home state’s courts, under his home state’s law, and in derogation of the foreign state’s immunity statutes. While the Constitution commands states to give “full faith and credit” to a sister-state’s law, states may give zero credit and prefer their own law if they feel like it. Otherwise, the Court would have to “balance” competing state interests, and that’s a no-no. So wrote Justice O’Connor, whose abhorrence of balancing tests is a matter of record.

California argued that the zero-credit rule can’t possibly be right when one state, in preferring its own law, tramples on a sister-state’s traditional rights and core sovereign functions (here, immunity rules that protect its tax collection agents). Not so, said the Hyatt Court. Justice O’Connor, proud author of two dozen opinions extolling “traditional state’s rights,” now insists that no such rights exist. For that contention, she cites Garcia v. San Antonio Metropolitan Transit Authority (1985), a pre-Rehnquist Court decision that held (over then-Justice Rehnquist’s shrill dissent) that the Constitution contains no judicially enforceable federalism norms.

For a sophisticated analysis of the Hyatt case, along with a clearly erroneous prediction concerning its outcome, consult the March Federalist Outlook.

 

Decision (PDF)

Petition for Certiorari (PDF)

Order Granting Petition for Rehearing (PDF)

Nevada v. Hall 440 U.S. 410 (1979)

 

 

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