The Supreme Court decided 40 years ago that one state could be sued in another state’s courts without its consent. On Wednesday, the justices pondered whether their predecessors had made a mistake.
An hour-long argument featuring two of the court’s most experienced practitioners recounted the founding of the union and the framing of the Constitution, and both claimed the notion of state sovereignty was on their side.
But the modern consequences of respecting the court’s precedents — stare decisis, it is called — or overturning them were much on the minds of the justices.
Liberals on the court are particularly leery of its strengthened conservative majority overturning past precedents. Questions about respecting stare decisis dominated the confirmation hearings of President Trump’s nominees to the court, Justices Neil M. Gorsuch and Brett M. Kavanaugh; Senate Democrats worry they will overturn liberal precedents such as Roe v. Wade, the 1973 decision that legalized abortion nationally.
At Wednesday’s hearing — the case concerned a man who sued California tax board officials in a Nevada court — liberal Justice Stephen G. Breyer promoted the idea of leaving precedents in place when there is no evidence that much has changed and the decision has not proved unworkable.
“Every time we overrule a case, it’s like a little chink in an armor” that confuses lawyers and the public about the stability of the law, Breyer said. He added that everyone has a list of Supreme Court cases believed to be wrongly decided.
“Once you start down the road, you have to be careful,” Breyer added.
Conservative Justice Samuel A. Alito Jr. was ready to argue the other side, asking somewhat rhetorically of one of the lawyers:
“Do you think that the public would have greater respect for an institution that says, you know, we’re never going to admit we made a mistake because we said it and we decided it — we’re going to stick to it even if we think it’s wrong — or an institution that says, well, you know, we’re generally going to stick to what we’ve done, but we’re not perfect, and when we look back and we think we made a big mistake, we’re going to go back and correct it.”
This is the third time the dispute between Gilbert P. Hyatt and California’s Franchise Tax Board has reached the Supreme Court. The tax board accused Hyatt of basically faking his move from the Golden State to Nevada in the early 1990s to avoid paying income tax.
But the way investigators went about their work — looking through his garbage, interrogating family members and business associates — prompted Hyatt to file suit against the auditors in Nevada court. He won and was awarded nearly $500 million, a figure that has been reduced through the years of litigation to $100,000.
The California tax board contends it never should have been hauled into Nevada court. When an earlier iteration of the case was heard two years ago, the Supreme Court split 4 to 4 on whether the 1979 decision allowing such suits was correct. At the time, the court had only eight members because of the death of Justice Antonin Scalia.
Washington lawyer Seth P. Waxman, representing the tax board, began at the beginning, saying that those involved in the ratification of the Constitution “were unanimous in their understanding that states could not be sued in the courts of other states.”
But Waxman was only part of the way through the Virginia Convention when Justice Sonia Sotomayor stopped him.
“Counsel, it’s nice that they felt that way, but what we know is, they didn’t put it in the Constitution,” she said, starting a line of justices who demanded that Waxman detail where they could find a constitutional prohibition on one state being sued in another state.
“The states, in order to form a more perfect union, surrendered all of the retaliatory means” they could use against each other, Waxman replied.
That didn’t seem to be enough for Kavanaugh, one of the justices not on the court for previous arguments. The Constitution is a document of “majestic specificity,” Kavanaugh said. “It’s got a lot of specific details on very minute things, and this issue which you say rightly is so important, but then somehow was not mentioned in the text of the Constitution.”
Hyatt was represented by Erwin Chemerinsky, dean of the law school at the University of California at Berkeley. He said it was just as much a sovereign power of states to “protect their citizens when they’re injured, including by other states.”
But even Sotomayor said that “intuitively and otherwise, we would say it would be wrong for one state to tell another state how to run its government or how to run an agency or what rules it should follow within its own state.”
Alito noted the concern of the framers about states being sued in the new federal courts. “Do you think it’s plausible” there wouldn’t be equal concern about being sued in the courts of another state, he asked.
Chemerinksy said it was plausible to think there was less worry: “The states didn’t perceive it necessary because of comity, and they didn’t want to restrict their own authority.”
The bottom line, he said, is that “nothing has changed” since the court considered the question in 1979.
The case is Franchise Tax Board of the State of California v. Hyatt.