Facts
- Gilbert P. Hyatt earned substantial patent-related income and claimed he changed domicile from California to Nevada in 1991.
- The California Franchise Tax Board (FTB) concluded Hyatt remained a California resident until April 1992 and assessed over $10 million in back taxes, interest, and penalties.
- During the audit, FTB personnel conducted investigative activities in Nevada; Hyatt alleged intentional torts and bad-faith conduct, including harassment and improper disclosure of personal information.
- In 1998, Hyatt sued the FTB in Nevada state court seeking tort damages arising from the audit.
- Prior Supreme Court decisions in the same dispute addressed: (1) whether Nevada had to apply California’s statutory immunity (it did not), and (2) whether Nevada could impose greater damages liability on California than Nevada would face under similar Nevada-law limits (it could not).
- After remand from the second decision, the case returned to the Supreme Court on whether to overrule precedent permitting one state to be sued in another state’s courts without consent.
Issues
- Whether the Constitution permits a state to be sued by a private party, without the state’s consent, in the courts of another state.
- Whether precedent allowing such suits (Nevada v. Hall) should be overruled.
Decision
- The Court reversed the Nevada Supreme Court and remanded.
- The Court held that states retain sovereign immunity from private suits brought in other states’ courts absent consent.
- The Court overruled Nevada v. Hall, which had allowed such suits.
- A four-Justice dissent would have retained Hall based on stare decisis and disagreement with the majority’s historical and structural analysis.
Legal Principles
- State sovereign immunity is a constitutional principle rooted in the federal structure; states did not surrender immunity to private suits in other states’ courts in the “plan of the Convention.”
- A state may not, without the defendant state’s consent, exercise jurisdiction over that state in a private damages action in its own courts.
- Stare decisis does not require retention of a precedent deemed inconsistent with constitutional structure and history where reliance interests are limited and subsequent practice shows minimal dependence on the rule.
- Full Faith and Credit constraints on discriminatory treatment of sister states do not substitute for a categorical immunity rule where the Constitution is understood to preserve inter-state sovereign immunity.
Conclusion
The Court held that the Constitution bars private suits against a nonconsenting state in another state’s courts and overruled Nevada v. Hall, eliminating that forum for plaintiffs seeking damages from sister states.