Franchise Tax Bd. of Cal. v. Hyatt
The Supreme Court ruled that states cannot be sued by private individuals in the courts of another state without their consent, overturning a 40-year-old precedent that had allowed such suits.
The decision means Gilbert Hyatt's long-running lawsuit against California's tax agency, filed in Nevada courts, must be dismissed, and it forecloses similar cross-state lawsuits nationwide.
“We hold that it does not and overrule our decision to the contrary in Nevada v. Hall, 440 U. S. 410 (1979).”
The Court's core holding that states cannot be sued without consent in another state's courts.
How it got here: This was the case's third trip to the Supreme Court; after two earlier rulings on immunity limits, California's tax agency again sought review, asking only whether Nevada v. Hall should be overruled.
The Case in Depth
What happened
Gilbert Hyatt, a Nevada resident, was audited by California's tax agency over whether he had genuinely moved from California to Nevada to avoid state income tax. Hyatt sued the agency in Nevada state court, alleging it committed torts—like sharing his personal information and misconduct—during the audit, seeking damages for the agency's aggressive investigative tactics.
The question before the Court
Can a private citizen sue one state without its consent in the courts of a different state?
The Court's answer
No — the Court ruled that a state cannot be sued by a private individual in another state's courts without its consent. It overruled Nevada v. Hall, its 1979 decision that had let states choose whether to grant sister states this kind of immunity, holding instead that such immunity is built into the Constitution's structure.
The Court reasoned that the Constitution transformed states from fully independent nations into members of a Union bound by specific mutual obligations, and that the historical record—especially the swift adoption of the Eleventh Amendment after Chisholm v. Georgia—showed the founding generation understood states to retain broad immunity from private suits, including in other states' courts. As a result, Gilbert Hyatt's lawsuit against California's tax agency, filed in Nevada, cannot proceed.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
People who believe a state agency wronged them while acting outside their home state can no longer sue that state in their own state's courts. This shields states from a category of lawsuits, potentially leaving some individuals without a forum to seek damages for harms caused by another state's officials or agencies.
What changes now
Because California's tax agency is now immune from Hyatt's suit in Nevada's courts, the Nevada Supreme Court's judgment is reversed and the case is sent back for further proceedings consistent with this ruling, meaning Hyatt's lawsuit against the agency must be dismissed. The ruling is final on the constitutional question and applies going forward to any similar interstate lawsuits against nonconsenting states.
What this does not decide
The decision does not address whether states can still voluntarily choose, as a matter of comity, to allow suits against sister states in their own courts, nor does it revisit separate questions about a state's immunity in federal court or in its own courts, which were addressed in prior cases.
Concurrences and dissents
Dissent — Justice Breyer
Justice Breyer argued that historically, sovereign immunity between states, like between foreign nations, was a matter of comity and consent that could be withdrawn, not an absolute constitutional right. He found nothing in the Constitution's text or history showing the Framers transformed this permissive practice into a mandatory rule, and he argued stare decisis required following Hall since it was a reasonable, workable decision that caused no serious problems in 40 years.
How the Court got there
The legal reasoning, step by step
- The Court examined the historical record at the time the Constitution was ratified, finding it well-settled under both common law and the law of nations that states were immune from private suits without their consent, a status the states retained except where changed by the Constitution itself.
- The Court identified specific ways the Constitution altered relationships among states compared to fully independent foreign nations: Article III created a neutral federal forum for state-versus-state disputes, and states surrendered immunity from suits by the federal government, showing that any changes to sovereign immunity were deliberate and limited.
- The swift adoption of the Eleventh Amendment after Chisholm v. Georgia, a 1793 decision allowing private suits against states in federal court, was read as strong evidence that the founding generation understood the Constitution to preserve states' traditional immunity from private suits rather than expand it.
- The Court reasoned that because the Constitution already strips states of tools independent nations would have (like the power to make treaties or wage war) and imposes duties nations don't owe each other (like the Full Faith and Credit Clause), states no longer relate to each other as fully independent sovereigns, making interstate sovereign immunity part of the constitutional structure rather than a matter of discretionary comity.
- Applying its four-factor framework for departing from precedent — quality of reasoning, consistency with other decisions, legal developments, and reliance — the Court concluded that Nevada v. Hall's reasoning was flawed and inconsistent with the broader body of sovereign immunity law, and that reliance interests specific to this lawsuit were not enough to preserve an incorrect constitutional ruling.
Doctrinal impact
Cases affected by this decision
Overrules Nevada v. Hall (440 U. S. 410)
Overturned the 1979 ruling that states could be sued without consent in another state's courts.
Distinguishes Chisholm v. Georgia (2 Dall. 419)
Described as a mistaken early ruling quickly corrected by the Eleventh Amendment, not a guide here.
Reaffirms Alden v. Maine (527 U. S. 706)
Relied on heavily as establishing that states retain broad sovereign immunity rooted in constitutional structure.