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SCOTUS Analysis: Franchise Tax Board of California v. Hyatt

Jonathan R. Nash |
Jonathan R. Nash

In Franchise Tax Board of California v. Hyatt, 139 S. Ct. 1485 (2019), the United States Supreme Court held that one state cannot constitutionally waive another state’s sovereign immunity with respect to suits filed against the second state in the courts of the first state. In so doing, the court overruled its decision in Nevada v. Hall, 440 U.S. 410 (1979). The majority opinion in Hyatt was authored by Justice Clarence Thomas and joined by Chief Justice Roberts and Justices Alito, Gorsuch, and Kavanaugh. Justice Breyer, joined by Justices Ginsburg, Sotomayor, and Kagan, dissented, assailing the majority both for its ruling on the merits and its willingness to overrule prior precedent.

The court rested its shift in position on the scope of constitutional state sovereign immunity. The 11th Amendment asserts that “the Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Read at face value, this constitutional provision seems only to preclude suits (unless the state otherwise consents) (1) in federal court (2) brought against a state (3) by a citizen of a different state (or by a foreign citizen). On this understanding, the court’s original ruling in Hall was correct: The Constitution has nothing to say about suits brought in the courts of one state against a sibling state.

However, the court has for many years not read the contours of constitutional state sovereign immunity so narrowly. The 11th Amendment was enacted in response to the court’s 1793 decision in Chisholm v. Georgia, 2 U.S. 419 (1793). There, the court interpreted Article III’s extension of the federal judicial power to controversies “between a state and citizens of another state” as an abrogation of state sovereign immunity in suits in federal court brought by the citizen of one state against another state. The drafting and ratification of the 11th Amendment followed closely on Chisholm’s heels. In 1890, the court in Hans v. Louisiana, 134 U.S. 1 (1890), read the 11th Amendment to bar suits in federal court brought against a state by a citizen of the same state. The court in Hans saw the 11th Amendment not just as a device to overrule Chisholm’s holding—i.e., to restore state sovereign immunity in federal court diversity cases—but rather as an affirmation of strong notions of sovereign immunity that predated the ratification of the Constitution.

Since the 1990s, the court has expanded the scope of Hans’s influence on its state sovereign immunity jurisprudence. In Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), the court held that the Constitution’s Commerce Clauses provide Congress with no authority to abrogate sovereign immunity in federal court. And, in Alden v. Maine, 527 U.S. 706 (1999), the court held that Congress lacked authority to abrogate a state’s sovereign immunity with respect to claims filed under federal law in the state’s courts.

The court’s decision in Hyatt this year is the latest in this line of cases expanding Hans’s reach. According to the court, “each State’s equal dignity and sovereignty”—which predate the Constitution and which the Constitution preserves—include “the inability of one State to hale another into its courts without the latter’s consent.”    

Even granting the validity of its decision on the merits, the majority still had to justify its decision to abandon the earlier precedent in Hall. The court explained that Hall was poorly reasoned; Hall was inconsistent with the court’s other state sovereign immunity decisions; and legal developments since Hall justified overruling it. The court conceded that Hall had engendered reliance on the part of individuals who sued states in sibling state courts—including Hyatt himself, whose litigation with California had extended over two decades, with this being Hyatt’s third visit to the U.S. Supreme Court. However, as the court put it, “case-specific costs are not among the reliance interests that would persuade us to adhere to an incorrect resolution of an important constitutional question.”  

Jonathan R. Nash
Robert Howell Hall Professor of Law