Today’s blog entry discusses the case that came down from the United States Supreme Court on May 13, 2019, discussing interstate sovereign immunity. The case is Franchise Tax Board of California v. Hyatt. We have blogged on sovereign immunity before, such as here. It is an incredibly complicated area of the law, but this case isn’t that difficult compared to what we have blogged on before. As usual, the blog entry is divided into categories and they are: facts; majority opinion; dissenting opinion; and takeaways. The reader is free to focus on any or all of the categories.

I

Facts

The facts are rather convoluted. Suffice to say, this was the third time this case came before the Supreme Court, but the first time the issue of interstate sovereign immunity was specifically considered. It involved an individual, Hyatt, who made a boatload of money on a microchip while residing in California. He later moved to Nevada. California thought the move was a sham and went after him for big time tax liability. The person being pursued by California for tax liability turned the tables on them by suing them in Nevada for torts he alleged the agency committed during the audit. California authorities argued throughout that they were immune from suit according to California law. After the case went up to the Supreme Court for the first time, Hyatt prevailed at trial. Eventually, the Nevada Supreme Court upheld a $1 million judgment on one of the claims and remanded for new damages trial on another. Then, it went up to the Supreme Court a second time where the Supreme Court said that the full faith and credit clause required Nevada to grant the California Board the same immunity that Nevada agencies enjoy. When the Nevada Supreme Court instructed the trial court to enter damages in accordance with the statutory Nevada provisions, it went back up to the Supreme Court for a third time for specifically considering interstate sovereign immunity. In a prior case, dating back 40 years, the Supreme Court had said that a State could or could not grant sovereign immunity to another State. That is, the grant of sovereign immunity was not mandatory regardless of what the other State’s law might say. In other words, sovereign immunity is available only if the forum State voluntarily decides to respect the dignity of the other State as a matter of comity, or respect.

II

Majority Reasoning That Sovereign Immunity Is Mandatory Where the Other State’s Law Says So

  1. At the time of the founding of the United States, States were immune under both the common law and the law of nations. The Constitution’s use of the term “States,” reflects both kinds of traditional immunity. States retain those aspects of sovereignty except as altered by the plan of the constitutional convention or certain constitutional amendments.
  2. When the States ratified the Constitution, they surrendered a portion of their immunity by consenting to suit brought against them by the United States in federal courts. While such jurisdiction of the federal courts is not conferred by the Constitution in express words, it is inherent in the constitutional plan.
  3. The whole idea behind the 11th amendment in light of its history and structure is to preserve the States traditional immunity from private suits.
  4. The Constitution affirmatively alters the relationship between the States so that they no longer relate to each other solely as foreign sovereigns. Each State’s equal dignity and sovereignty under the Constitution implies certain constitutional limitations on the sovereignty of its sister States, such as the inability of one State to bring another into its courts without the latter’s consent.
  5. The Constitution implicitly strips States of any power they once had to refuse each other sovereign immunity, just as it denies them the power to resolve order disputes by political means.
  6. There are many constitutional doctrines not spelled out in the Constitution but are nevertheless implicit in the structure and supported by historical practice, such as: judicial review; intergovernmental tax immunity; executive immunity; and the president’s removal power. Like those doctrines, the States sovereign immunity is a historically rooted principal embedded in the text and structure of the Constitution.
  7. The decision to overrule precedent means looking at: the prior decision’s quality of reasoning; the prior decision’s consistency with related decisions; legal developments since the decision; and reliance on the decision. All of those criteria are met according to the majority because the prior decision failed to account for the historical understanding of state sovereign immunity. It also failed to consider how the Constitution reordered the States relationship with one another. Further, that decision, to the majority’s eyes, was an outlier in sovereign immunity jurisprudence when compared to more recent decisions. Finally, the reliance factor is minimal as it only involves Hyatt incurring the loss of litigation expenses and a favorable decision.

III

Dissenting Opinion Reasoning

  1. At the time of the founding of the United States, nations granted other nations sovereign immunity in their courts not as a matter of legal obligation but as a matter of choice. In legal jargon, comity or grace or consent.
  2. No provision of the Constitution gives States absolute immunity in each other’s courts.
  3. Concept like “constitutional design,” and “plan of the convention;” are highly abstract and difficult to apply. Such concepts invite differing interpretations as much as the Constitution’s broad liberty protecting phrases such as “due process,” and “liberty.” They also suffer from the additional disadvantage of not actually appearing anywhere in the United States Constitution.
  4. Where the Constitution alters the authority of States with respect to other States, it tends to do so explicitly, such as what is found in the import export clause and in the full faith and credit clause.
  5. Why would the framers silently and without any evident reason transform sovereign immunity from one based upon consent into an absolute immunity that States must accord one another?
  6. Overruling a case always require special justification, which is not present in this case. That is, while reasonable judges can disagree about whether the prior decision was correct, the very fact that disagreement is possible shows that overruling the decision is obviously wrong.
  7. States normally grant sovereign immunity voluntarily. If they fear that this practice is insufficiently protective, they can enter into an interstate compact guaranteeing that the normal practice of granting immunity continues.
  8. It is dangerous to overrule decision only because five members of the later court come to agree with earlier dissenters on a difficult legal question.

IV

Takeaways

  1. So, what does this mean in terms of how sovereign immunity works. The way it works now after this decision with respect to an individual suing their own State has not changed. That is, the court is going to first look at whether the State has explicitly consented to being sued. If it is a situation where a federal law, such as the ADA, forces a State to waive their sovereign immunity, then the court will attack it this way. First, they will look to whether the State has consented to being sued. Second, if the answer is no, the court turns to federal law to determine if the federal law explicitly waives the State’s sovereign immunity. Finally, if the federal law does do that, which the ADA for example does, then the very complicated question becomes whether the waiver of sovereign immunity is consistent with the enforcement clause of the 14th amendment to the United States Constitution.
  2. With respect to a person residing in one State but then suing a different State with respect to federal law, the analysis would be the same as in ¶ IV1. With respect to a State law, the analysis turns entirely upon whether the State has waived consent to being sued. If the answer is that they have not, then the forum State now has no choice but to grant the sovereign immunity. The harder question is what if it is not clear whether consent has been waived or not. In that case, does the forum State refer the matter to the other State’s courts for a decision much in the way federal courts may ask for an opinion from a State court on a matter of State law?
  3. Justice Breyer’s statement about the danger of overruling the decision when five members of the later court come to agree with earlier dissenters comes immediately after citing to a decision dealing with abortion. That placement is undoubtedly intentional.
  4. ¶ II6 of this blog entry is emphasized intentionally. This kind of statement is not something you expect from a conservative jurist, as they typically look into the text of the document to figure out what the document means at the time it was written. If they don’t try and figure out what document means at the time it was written, they would probably try to figure it out in terms of the plain meaning of the document. Looking to what is embedded in the text and structure of the Constitution potentially blows things wide open. One can argue that that approach isn’t really any different than finding a penumbra of privacy in Griswold v. Connecticut. In fact, Justice Douglas took that very approach in reaching the conclusion that the Constitution had a penumbra of privacy emanating from several different constitutional provisions. See Griswold v. Connecticut 381 U.S. 479, 482-485 (1965). Similarly, Justice Goldberg joined by Chief Justice Warren and Justice Brennan referred to the language and history of the ninth amendment to find a right of marital privacy. Id. at 487. So, look for a huge fight at the Supreme Court when the abortion decisions come up before it with respect to whether prior decisions should be overruled or not. ¶ II6 gives the four liberal justices all kinds of ammunition to argue that considering Griswold and the many years since then, that some level of pro-choice (up to a point of viability?), is now embedded in the Constitution.
  5. You may be asking what does any of this have to do with the rights of persons with disabilities? A fair question. I’m not exactly sure. However, I think the whole area of sovereign immunity is so fascinating that I just couldn’t resist blogging on this case.
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William Goren

William D. Goren is one of the country’s foremost authorities on the American with Disabilities Act (ADA) and the Rehabilitation Act of 1973. For 28 years and continuing, he has been advising on ADA compliance as both an attorney and professor—of which during his time as a full-time academic at various institutions in Chicago, he won numerous teaching awards and achieved tenure.