Franchise Tax Bd. of Cal. v. Hyatt, 578 U.S. ___ (2016)
Docket No.
14-1175
Granted:
June 30, 2015
Argued:
December 7, 2015
Decided:
April 19, 2016
Justia Summary
Hyatt claims that he moved from California to Nevada in 1991, but the Franchise Tax Board of California claimed that he moved in 1992 and owed California millions in taxes, penalties, and interest. Hyatt sued in Nevada state court, which had jurisdiction over California under the Supreme Court’s 1979 decision, Nevada v. Hall, seeking damages for abusive audit and investigation practices. After the Supreme Court affirmed that Nevada courts, as a matter of comity, would immunize California to the same extent that Nevada law would immunize its own agencies and officials, Hyatt was awarded almost $500 million. The Nevada Supreme Court affirmed $1 million of the award and ordered a retrial on another damages issue, declining to apply a $50,000 cap that would apply in a similar suit against its own officials because California’s efforts to control its agencies were inadequate as applied to Nevada’s citizens. The Supreme Court vacated the award, while affirming Nevada’s exercise of jurisdiction. The Constitution does not permit Nevada to apply a rule of Nevada law that awards damages against California that are greater than it could award against Nevada in similar circumstances. The rule applied here is not only “opposed” to California’s law of complete immunity, it is inconsistent with general principles of Nevada immunity law. The Nevada Supreme Court’s decision lacked a “healthy regard for California’s sovereign status.” “Nevada’s hostility toward California is clearly evident in its decision to devise a special, discriminatory damages rule that applies only to a sister state.”
Annotation
Primary Holding
A state court may not apply a procedural rule that awards damages against another state that are greater than the damages that it could award in a similar situation against the forum state.
Syllabus
SUPREME COURT OF THE UNITED STATES
Syllabus
FRANCHISE TAX BOARD OF CALIFORNIA v. HYATT
certiorari to the supreme court of nevada
No. 14–1175. Argued December 7, 2015—Decided April 19, 2016
Respondent Hyatt claims that he moved from California to Nevada in 1991, but petitioner Franchise Tax Board of California, a state agency, claims that he actually moved in 1992 and thus owes California millions in taxes, penalties, and interest. Hyatt filed suit in Nevada state court, which had jurisdiction over California under Nevada v. Hall, 440 U. S. 410 , seeking damages for California’s alleged abusive audit and investigation practices. After this Court affirmed the Nevada Supreme Court’s ruling that Nevada courts, as a matter of comity, would immunize California to the same extent that Nevada law would immunize its own agencies and officials, see Franchise Tax Bd. of Cal. v. Hyatt, 538 U. S. 488 , the case went to trial, where Hyatt was awarded almost $500 million in damages and fees. On appeal, California argued that the Constitution’s Full Faith and Credit Clause, Art. IV, §1, required Nevada to limit damages to $50,000, the maximum that Nevada law would permit in a similar suit against its own officials. The Nevada Supreme Court, however, affirmed $1 million of the award and ordered a retrial on another damages issue, stating that the $50,000 maximum would not apply on remand.
Held:
1. The Court is equally divided on the question whether Nevada v. Hall should be overruled and thus affirms the Nevada courts’ exercise of jurisdiction over California’s state agency. P. 4.
2. The Constitution does not permit Nevada to apply a rule of Nevada law that awards damages against California that are greater than it could award against Nevada in similar circumstances. This conclusion is consistent with this Court’s precedents. A statute is a “public Act” within the meaning of the Full Faith and Credit Clause. While a State is not required “to substitute for its own statute . . . the statute of another State reflecting a conflicting and opposed policy,” Carroll v. Lanza, 349 U. S. 408 , a State’s decision to decline to apply another State’s statute on this ground must not embody a “policy of hostility to the public Acts” of that other State, id., at 413. Using this approach, the Court found no violation of the Clause in Carroll v. Lanza or in Franchise Tax Bd. the first time this litigation was considered. By contrast, the rule of unlimited damages applied here is not only “opposed” to California’s law of complete immunity; it is also inconsistent with the general principles of Nevada immunity law, which limit damages awards to $50,000. Nevada explained its departure from those general principles by describing California’s own system of controlling its agencies as an inadequate remedy for Nevada’s citizens. A State that disregards its own ordinary legal principles on this ground employs a constitutionally impermissible “ ‘policy of hostility to the public Acts’ of a sister State.” 538 U. S., at 499. The Nevada Supreme Court’s decision thereby lacks the “healthy regard for California’s sovereign status” that was the hallmark of its earlier decision. Ibid. This holding does not indicate a return to a complex “balancing-of-interests approach to conflicts of law under the Full Faith and Credit Clause.” Id., at 496. Rather, Nevada’s hostility toward California is clearly evident in its decision to devise a special, discriminatory damages rule that applies only to a sister State. Pp. 4–9.
130 Nev. ___, 335 P. 3d 125, vacated and remanded.
Breyer, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Sotomayor, and Kagan, JJ., joined. Alito, J., concurred in the judgment. Roberts, C. J., filed a dissenting opinion, in which Thomas, J., joined.
Opinions
NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–1175
_________________
FRANCHISE TAX BOARD OF CALIFORNIA, PETITIONER
v. GILBERT P. HYATT
on writ of certiorari to the supreme court of
nevada
[April 19, 2016]
Justice Breyer delivered the opinion of the
Court.
In Nevada v. Hall, 440 U. S.
410 (1979) , this Court held that one State (here, Nevada) can open
the doors of its courts to a private citizen’s lawsuit against
another State (here, California) without the other State’s consent.
In this case, a private citizen, a resident of Nevada, has brought
a suit in Nevada’s courts against the Franchise Tax Board of
California, an agency of the State of California. The board has
asked us to overrule Hall and hold that the Nevada courts
lack jurisdiction to hear this lawsuit. The Court is equally
divided on this question, and we consequently affirm the Nevada
courts’ exercise of jurisdiction over California. See, e.g.,
Exxon Shipping Co. v. Baker, 554 U. S. 471, 484
(2008) (citing Durant v. Essex Co., 7 Wall. 107, 112
(1869)).
California also asks us to reverse the Nevada
court’s decision insofar as it awards the private citizen greater
damages than Nevada law would permit a private citizen to obtain in
a similar suit against Nevada’s own agencies. We agree that
Nevada’s application of its damages law in this case reflects a
special, and constitutionally forbidden, “ ‘policy of
hostility to the public Acts’ of a sister State,” namely,
California. U. S. Const., Art. IV, §1 (Full Faith and
Credit Clause); Franchise Tax Bd. of Cal. v. Hyatt,
538 U. S. 488, 499 (2003) (quoting Carroll v.
Lanza, 349 U. S. 408, 413 (1955) ). We set aside the
Nevada Supreme Court’s decision accordingly.
I
Gilbert P. Hyatt, the respondent here, moved
from California to Nevada in the early 1990’s. He says that he
moved to Nevada in September 1991. California’s Franchise Tax
Board, however, after an investigation and tax audit, claimed that
Hyatt moved to Nevada later, in April 1992, and that he
consequently owed California more than $10 million in taxes,
associated penalties, and interest.
Hyatt filed this lawsuit in Nevada state court
against California’s Franchise Tax Board, a California state
agency. Hyatt sought damages for what he considered the board’s
abusive audit and investigation practices, including rifling
through his private mail, combing through his garbage, and
examining private activities at his place of worship. See App.
213–245, 267–268.
California recognized that, under Hall,
the Constitution permits Nevada’s courts to assert jurisdiction
over California despite California’s lack of consent. California
nonetheless asked the Nevada courts to dismiss the case on other
constitutional grounds. California law, it pointed out, provided
state agencies with immunity from lawsuits based upon actions taken
during the course of collecting taxes. Cal. Govt. Code Ann. §860.2
(West 1995); see also §860.2 (West 2012). It argued that the
Constitution’s Full Faith and Credit Clause required Nevada to
apply California’s sovereign immunity law to Hyatt’s case. Nevada’s
Supreme Court, however, rejected California’s claim. It held that
Nevada’s courts, as a matter of comity, would immunize California
where Nevada law would similarly immunize its own agencies and
officials (e.g., for actions taken in the performance of a
“discretionary” function), but they would not immunize California
where Nevada law permitted actions against Nevada agencies, say,
for acts taken in bad faith or for intentional torts. App. to Pet.
for Cert. in Franchise Tax Bd. of Cal. v. Hyatt,
O. T. 2002, No. 42, p. 12. We reviewed that decision, and we
affirmed. Franchise Tax Bd., supra, at 499.
On remand, the case went to trial. A jury found
in Hyatt’s favor and awarded him close to $500 million in damages
(both compensatory and punitive) and fees (including attorney’s
fees). California appealed. It argued that the trial court had not
properly followed the Nevada Supreme Court’s earlier decision.
California explained that in a similar suit against similar Nevada
officials, Nevada statutory law would limit damages to $50,000, and
it argued that the Constitution’s Full Faith and Credit Clause
required Nevada to limit damages similarly here.
The Nevada Supreme Court accepted the premise
that Nevada statutes would impose a $50,000 limit in a similar suit
against its own officials. See 130 Nev. ___, ___, 335 P. 3d
125, 145–146 (2014); see also Nev. Rev. Stat. §41.035(1) (1995).
But the court rejected California’s conclusion. Instead, while
setting aside much of the damages award, it nonetheless affirmed $1
million of the award (earmarked as compensation for fraud), and it
remanded for a retrial on the question of damages for intentional
infliction of emotional distress. In doing so, it stated that
“damages awarded on remand . . . are not subject to any
statutory cap.” 130 Nev., at ___, 335 P. 3d, at 153. The
Nevada Supreme Court explained its holding by stating that
California’s efforts to control the actions of its own agencies
were inadequate as applied to Nevada’s own citizens. Hence,
Nevada’s “policy interest in providing adequate redress to Nevada’s
citizens [wa]s paramount to providing [California] a statutory cap
on damages under comity.” Id., at ___, 335 P. 3d, at
147.
California petitioned for certiorari. We agreed
to decide two questions. First, whether to overrule Hall.
And, second, if we did not do so, whether the Constitution permits
Nevada to award Hyatt damages against a California state agency
that are greater than those that Nevada would award in a similar
suit against its own stateagencies.
II
In light of our 4-to-4 affirmance of Nevada’s
exercise of jurisdiction over California’s state agency, we must
consider the second question: Whether the Constitution permits
Nevada to award damages against California agencies under Nevada
law that are greater than it could award against Nevada agencies in
similar circumstances. We conclude that it does not. The Nevada
Supreme Court has ignored both Nevada’s typical rules of immunity
and California’s immunity-related statutes (insofar as California’s
statutes would prohibit a monetary recovery that is greater in
amount than the maximum recovery that Nevada law would permit in
similar circumstances). Instead, it has applied a special rule of
law that evinces a “ ‘policy of hostility’ ” toward
California. Franchise Tax Bd., supra, at 499 (quoting
Carroll v. Lanza, supra, at 413). Doing so
violates the Constitution’s requirement that “Full Faith and Credit
shall be given in each State to the public Acts, Records and
judicial Proceedings of every other State.” Art. IV, §1.
The Court’s precedents strongly support this
conclusion. A statute is a “public Act” within the meaning of the
Full Faith and Credit Clause. See, e.g., Carroll v.
Lanza, supra, at 411; see also 28 U. S. C.
§1738 (referring to “[t]he Acts of the legislature” in the full
faith and credit context). We have said that the Clause “does not
require a State to substitute for its own statute, applicable to
persons and events within it, the statute of another State
reflecting a conflicting and opposed policy.” Carroll v.
Lanza, 349 U. S., at 412. But when affirming a State’s
decision to decline to apply another State’s statute on this
ground, we have consistently emphasized that the State had “not
adopt[ed] any policy of hostility to the public Acts” of that other
State. Id., at 413.
In Carroll v. Lanza, the Court
considered a negligence action brought by a Missouri worker in
Arkansas’ courts. We held that the Arkansas courts need not apply a
time limitation contained in Missouri’s (but not in Arkansas’)
workman’s compensation law. Id., at 413–414. In doing so, we
emphasized both that (1) Missouri law (compared with Arkansas law)
embodied “a conflicting and opposed policy,” and (2) Arkansas law
did not embody “any policy of hostility to the public Acts of
Missouri.” Id., at 412–413. This second requirement was well
established in earlier law. See, e.g., Broderick v.
Rosner, 294 U. S. 629 –643 (1935) (New Jersey may not
enforce a jurisdictional statute that would permit enforcement of
certain claims under New Jersey law but “deny the enforcement” of
similar, valid claims under New York law); Hughes v.
Fetter, 341 U. S. 609 –612 (1951) (invalidating a
Wisconsin statute that “close[d] the doors of its courts” to an
Illinois cause of action while permitting adjudication of similar
Wisconsin claims).
We followed this same approach when we
considered the litigation now before us for the first time. See
Franchise Tax Bd., 538 U. S., at 498–499. Nevada had
permitted Hyatt to sue California in Nevada courts. See id.,
at 497 (citing Hall, 440 U. S., at 414–421). Nevada’s
courts recognized that California’s law of complete immunity would
prevent any recovery in this case. The Nevada Supreme Court
consequently did not apply California law. It applied Nevada law
instead. We upheld that decision as consistent with the Full Faith
and Credit Clause. But in doing so, we emphasized both that (1) the
Clause does not require one State to apply another State’s law that
violates its “own legitimate public policy,” Franchise Tax
Bd., supra, at 497–498 (citing Hall,
supra, at 424), and (2) Nevada’s choice of law did not
“exhibi[t] a ‘policy of hostility to the public Acts’ of a sister
State.” Franchise Tax Bd., supra, at 499 (quoting
Carroll v. Lanza, supra, at 413). Rather,
Nevada had evinced “a healthy regard for California’s sovereign
status,” we said, by “relying on the contours of Nevada’s own
sovereign immunity from suit as a benchmark for its analysis.”
Franchise Tax Bd., supra, at 499.
The Nevada decision before us embodies a
critical departure from its earlier approach. Nevada has not
applied the principles of Nevada law ordinarily applicable to suits
against Nevada’s own agencies. Rather, it has applied a special
rule of law applicable only in lawsuits against its sister States,
such as California. With respect to damages awards greater than
$50,000, the ordinary principles of Nevada law do not “conflic[t]”
with California law, for both laws would grant immunity.
Carroll v. Lanza, 349 U. S., at 412. Similarly,
in respect to such amounts, the “polic[ies]” underlying California
law and Nevada’s usual approach are not “opposed”; they are
consistent. Id., at 412–413.
But that is not so in respect to Nevada’s
special rule. That rule, allowing damages awards greater than
$50,000, is not only “opposed” to California law, ibid.; it
is also inconsistent with the general principles of Nevada immunity
law, see Franchise Tax Bd., supra, at 499. The Nevada
Supreme Court explained its departure from those general principles
by describing California’s system of controlling its own agencies
as failing to provide “adequate” recourse to Nevada’s citizens. 130
Nev., at ___, 335 P. 3d, at 147. It expressed concerns about
the fact that California’s agencies “ ‘operat[e]
outside’ ” the systems of “ ‘legislative control,
administrative oversight, and public accountability’ ” that
Nevada applies to its own agencies. Ibid. (quoting
Faulkner v. University of Tenn., 627 So. 2d 362
(Ala. 1992)). Such an explanation, which amounts to little more
than a conclusory statement disparaging California’s own
legislative, judicial, and administrative controls, cannot justify
the application of a special and discriminatory rule. Rather,
viewed through a full faith and credit lens, a State that
disregards its own ordinary legal principles on this ground
is hostile to another State. A constitutional rule that
would permit this kind of discriminatory hostility is likely to
cause chaotic interference by some States into the internal,
legislative affairs of others. Imagine, for example, that many or
all States enacted such discriminatory, special laws, and justified
them on the sole basis that (in their view) a sister State’s law
provided inadequate protection to their citizens. Would each
affected sister State have to change its own laws? Entirely?
Piece-by-piece, in order to respond to the new special laws enacted
by every other State? It is difficult to reconcile such a system of
special and discriminatory rules with the Constitution’s vision of
50 individual and equally dignified States. In light of the
“constitutional equality” among the States, Coyle v.
Smith, 221 U. S. 559, 580 (1911) , Nevada has not
offered “sufficient policy considerations” to justify the
application of a special rule of Nevada law that discriminates
against its sister States, Carroll v. Lanza,
supra, at 413. In our view, Nevada’s rule lacks the “healthy
regard for California’s sovereign status” that was the hallmark of
its earlier decision, and it reflects a constitutionally
impermissible “ ‘policy of hostility to the public Acts’ of a
sister State.” Franchise Tax Bd., supra, at 499
(quoting Carroll v. Lanza, supra, at 413).
In so holding we need not, and do not, intend to
return to a complex “balancing-of-interests approach to conflicts
of law under the Full Faith and Credit Clause.” Franchise Tax
Bd., 538 U. S., at 496. Long ago this Court’s
efforts to apply that kind of analysis led to results that seemed
to differ depending, for example, upon whether the case involved
commercial law, a shareholders’ action, insurance claims, or
workman’s compensation statutes. See, e.g., Bradford
Elec. Light Co. v. Clapper, 286 U. S. 145 –159
(1932); Carroll v. Lanza, supra, at 414–420
(Frankfurter, J., dissenting) (listing, and trying to classify,
nearly 50 cases). We have since abandoned that approach, and we
continue to recognize that a State need not “ ‘substitute the
statutes of other states for its own statutes dealing with a
subject matter concerning which it is competent to
legislate.’ ” Franchise Tax Bd., supra, at 496
(quoting Pacific Employers Ins. Co. v. Industrial
Accident Comm’n, 306 U. S. 493, 501 (1939) ). But here, we can
safely conclude that, in devising a special—and hostile—rule for
California, Nevada has not “sensitively applied principles of
comity with a healthy regard for California’s sovereign status.”
Franchise Tax Bd., supra, at 499; see Thomas
v. Washington Gas Light Co., 448 U. S. 261, 272 (1980)
(plurality opinion) (Clause seeks to prevent “parochial
entrenchment on the interests of other States”); Allstate Ins.
Co. v. Hague, 449 U. S. 302 , and n. 10 (1981)
(Stevens, J., concurring in judgment) (Clause is properly brought
to bear when a State’s choice of law “threatens the federal
interest in national unity by unjustifiably infringing upon the
legitimate interests of another State”); cf. Supreme Court of
N. H. v. Piper, 470 U. S. 274, 288
(1985) (Privileges and Immunities Clause prevents the New Hampshire
Supreme Court from promulgating a rule that limits bar admission to
state residents, discriminating against out-of-state lawyers);
Bendix Autolite Corp. v. Midwesco Enterprises, Inc.,
486 U. S. 888, 894 (1988) (Commerce Clause invalidates a
statute of limitations that “imposes a greater burden on
out-of-state companies than it does on [in-state] companies”).
For these reasons, insofar as the Nevada Supreme
Court has declined to apply California law in favor of a special
rule of Nevada law that is hostile to its sister States, we find
its decision unconstitutional. We vacate its judgment and remand
the case for further proceedings not inconsistent with this
opinion.
It is so ordered.
Justice Alito concurs in the judgment.
SUPREME COURT OF THE UNITED STATES
_________________
No. 14–1175
_________________
FRANCHISE TAX BOARD OF CALIFORNIA, PETITIONER
v. GILBERT P. HYATT
on writ of certiorari to the supreme court of
nevada
[April 19, 2016]
Chief Justice Roberts, with whom Justice
Thomas joins, dissenting.
Petitioner Franchise Tax Board is the California
agency that collects California’s state income tax. Respondent
Gilbert Hyatt, a resident of Nevada, filed suit in Nevada state
court against the Board, alleging that it had committed numerous
torts in the course of auditing his California tax returns. The
Board is immune from such a suit in California courts. The last
time this case was before us, we held that the Nevada Supreme Court
could apply Nevada law to resolve the Board’s claim that it was
immune from suit in Nevada as well. Following our decision, the
Nevada Supreme Court upheld a $1 million jury award against the
Board after concluding that the Board did not enjoy immunity under
Nevada law.
Today the Court shifts course. It now holds that
the Full Faith and Credit Clause requires the Nevada Supreme Court
to afford the Board immunity to the extent Nevada agencies are
entitled to immunity under Nevada law. Because damages in a similar
suit against Nevada agencies are capped at $50,000 by Nevada law,
the Court concludes that damages against the Board must be capped
at that level as well.
That seems fair. But, for better or worse, the
word “fair” does not appear in the Full Faith and Credit Clause.
The Court’s decision is contrary to our precedent holding that the
Clause does not block a State from applying its own law to redress
an injury within its own borders. The opinion also departs from the
text of the Clause, which—when it applies—requires a State to give
full faith and credit to another State’s laws. The Court
instead permits partial credit: To comply with the Full Faith and
Credit Clause, the Nevada Supreme Court need only afford the Board
the same limited immunity that Nevada agencies enjoy.
I respectfully dissent.
I
In 1991 Gilbert Hyatt sold his house in
California and rented an apartment, registered to vote, and opened
a bank account in Nevada. When he filed his 1991 and 1992 tax
returns, he claimed Nevada as his place of residence. Unlike
California, Nevada has no state income tax, and the move saved
Hyatt millions of dollars in California taxes. California’s
Franchise Tax Board was suspicious, and it initiated an audit.
In the course of the audit, employees of the
Board traveled to Nevada and allegedly peered through Hyatt’s
windows, rummaged around in his garbage, contacted his estranged
family members, and shared his personal information not only with
newspapers but also with his business contacts and even his place
of worship. Hyatt claims that one employee in particular had it in
for him, referring to him in antisemitic terms and taking
“trophy-like pictures” in front of his home after the audit. Brief
for Respondent 3. As a result of the audit, the Board determined
that Hyatt was a resident of California for 1991 and part of 1992,
and that he accordingly owed over $10 million in unpaid state
income taxes, penalties, and interest.
Hyatt protested the audit before the Board,
which upheld the audit following an 11-year administrative
proceeding. Hyatt is still challenging the audit in California
court. In 1998, Hyatt also filed suit against the Board in Nevada
state court. In that suit, which is the subject of this case, Hyatt
claimed that the Board committed a variety of torts, including
fraud, intentional infliction of emotional distress, and invasion
of privacy. The Board is immune from suit under California law, and
it argued that Nevada was required under the Full Faith and Credit
Clause to enforce California’s immunity law.
When the case reached the Nevada Supreme Court,
that court held, applying general principles of comity under Nevada
law, that the Board was entitled to immunity for its negligent but
not intentional torts—the same immu-nity afforded Nevada state
agencies. Not satisfied, the Board pursued its claim of complete
immunity to this Court, but we affirmed. We ruled that the Full
Faith and Credit Clause did not prohibit Nevada from applying its
own immunity law to the dispute. Franchise Tax Bd. of Cal.
v. Hyatt, 538 U. S. 488 –499 (2003).
On remand, the trial court conducted a
four-month jury trial. The jury found for Hyatt, awarding him $1
million for fraud, $52 million for invasion of privacy, $85 million
for emotional distress, and $250 million in punitive damages. On
appeal, the Nevada Supreme Court significantly reduced the award,
concluding that the invasion of privacy claims failed as a matter
of law. Applying principles of comity, the Nevada Supreme Court
also held that because Nevada state agencies are not subject to
punitive dam-ages, the Board was not liable for the $250 million
punitive damages award. The court did hold the Board responsible
for the $1 million fraud judgment, however, and it remanded for a
new trial on damages for the emotional distress claim. Although
tort liability for Nevada state agencies was capped at $50,000
under Nevada law, the court held that it was against Nevada’s
public policy to apply that cap to the Board’s liability for the
fraud and emotional distress claims. The Board sought review by
this Court, and we again granted certiorari. 576 U. S. ___
(2015).
II
A
The Full Faith and Credit Clause provides that
“Full Faith and Credit shall be given in each State to the public
Acts, Records, and judicial Proceedings of every other State.”
U. S. Const., Art. IV, §1. The purpose of the Clause “was to
alter the status of the several states as independent foreign
sovereignties, each free to ignore obligations created under the
laws or by the judicial proceedings of the others, and to make them
integral parts of a single nation.” Milwaukee County v.
M. E. White Co., 296 U. S. 268 –277 (1935).
The Full Faith and Credit Clause applies in a
straightforward fashion to state court judgments: “A judgment
entered in one State must be respected in another pro-vided that
the first State had jurisdiction over the parties and the subject
matter.” Nevada v. Hall, 440 U. S. 410, 421
(1979) . The Clause is more difficult to apply to “public Acts,”
which include the laws of other States. See Carroll v.
Lanza, 349 U. S. 408, 411 (1955) . State courts must
give full faith and credit to those laws. But what does that mean
in practice?
It is clear that state courts are not always
required to apply the laws of other States. State laws frequently
conflict, and a “rigid and literal enforcement of the full faith
and credit clause, without regard to the statute of the forum,
would lead to the absurd result that, wherever the conflict arises,
the statute of each state must be enforced in the courts of the
other, but cannot be in its own.” Alaska Packers Assn. v.
Industrial Accident Comm’n of Cal., 294 U. S. 532, 547
(1935) . Accordingly, this Court has treated the Full Faith and
Credit Clause as a “conflicts of law” provision that dictates when
a State must apply the laws of another State rather than its own.
Franchise Tax Bd., 538 U. S., at 496; see also
Hall, 440 U. S., at 424 (California court is not
required to apply Nevada law).
Under the Full Faith and Credit Clause, “it is
frequently the case” that “a court can lawfully apply either the
law of one State or the contrary law of another.” Franchise Tax
Bd., 538 U. S., at 496 (internal quotation marks omitted).
As we have explained,
“the very nature of the federal union of
states, to which are reserved some of the attributes of
sovereignty, precludes resort to the full faith and credit clause
as the means for compelling a state to substitute the statutes of
other states for its own statutes dealing with a subject matter
concerning which it is competent to legislate.” Pacific
Employers Ins. Co. v. Industrial Accident Comm’n, 306
U. S. 493, 501 (1939) .
This Court has generally held that when a State
chooses “to apply its own rule of law to give affirmative relief
for an action arising within its borders,” the Full Faith and
Credit Clause is satisfied. Carroll, 349 U. S., at 413;
see Hall, 440 U. S., at 424 (California court may apply
California law consistent with the State’s interest in “providing
full protection to those who are injured on its highways” (internal
quotation marks omitted)).
A State may not apply its own law, however, if
doing so reflects a “policy of hostility to the public Acts” of
another State. Carroll, 349 U. S., at 413. A State is
considered to have adopted such a policy if it has “no sufficient
policy considerations to warrant” its refusal to apply the other
State’s laws. Ibid. For example, when a State “seeks to
exclude from its courts actions arising under a foreign statute”
but permits similar actions under its own laws, the State has
adopted a policy of hostility to the “public Acts” of another
State. Ibid.; see Hughes v. Fetter, 341
U. S. 609 –613 (1951). In such cases, this Court has held that
the forum State must open its doors and permit the plaintiff to
seek relief under another State’s laws. See, e.g.,
id., at 611 (“Wisconsin cannot escape [its] con-stitutional
obligation to enforce the rights and duties validly created under
the laws of other states by the simple device of removing
jurisdiction from courts otherwise competent”).
B
According to the Court, the Nevada Supreme
Court violated the Full Faith and Credit Clause by applying “a
special rule of law that evinces a policy of hostility toward
California.” Ante, at 4 (internal quotation marks omitted).
As long as Nevada provides immunity to its state agencies for
awards above $50,000, the majority reasons, the State has no
legitimate policy rationale for refusing to give similar immunity
to the agencies of other States. The Court concludes that the
Nevada Supreme Court is accordingly required to rewrite Nevada law
to afford the Board the same immunity to which Nevada agencies are
entitled. In the majority’s view, that result is “strongly”
supported by this Court’s precedents. Ibid. I disagree.
Carroll explains that the Full Faith and
Credit Clause prohibits a State from adopting a “policy of
hostility to the public Acts” of another State. 349 U. S., at
413. But it does not stop there. Carroll goes on to describe
what adopting a “policy of hostility” means: A State may not refuse
to apply another State’s law where there are “no sufficient
policy considerations to warrant such refusal.” Ibid.
(emphasis added). Where a State chooses a different rule from a
sister State in order “to give affirmative relief for an action
arising within its borders,” the State has a sufficient policy
reason for applying its own law, and the Full Faith and Credit
Clause is satisfied. Ibid.
In this case, the Nevada Supreme Court applied
Nevada rather than California immunity law in order to uphold the
“state’s policy interest in providing adequate redress to Nevada
citizens.” 130 Nev. ___, ___, 335 P. 3d 125, 147 (2014). This
Court has long recognized that “[f]ew matters could be deemed more
appropriately the concern of the state in which the injury occurs
or more completely within its power” than “the bodily safety and
economic protection” of people injured within its borders.
Pacific Employers Ins. Co., 306 U. S., at 503;
see Hall, 440 U. S., at 424. Hyatt alleges that the
Board committed multiple torts, including fraud and intentional
infliction of emotional distress. See 130 Nev., at ___, 335
P. 3d, at 130. Under Pacific Employers Insurance and
Carroll, there is no doubt that Nevada has a “sufficient”
policy interest in protecting Nevada residents from such
injuries.
The majority, however, does not regard that
policy interest as sufficient justification for denying the Board
immunity. Despite this Court’s decision to get out of the business
of “appraising and balancing state interests under the Full Faith
and Credit Clause,” Franchise Tax Bd., 538 U. S., at
498, the majority concludes that Nevada cannot really have a
state policy to protect its citizens from the kinds of torts
alleged here, because the State capped its own liability at $50,000
in similar situations. See ante, at 6–7. But that fails to
credit the Nevada Supreme Court’s explanation for why a damages cap
for Nevada state agencies is fully consistent with the State’s
policy of protecting its citizens.
According to the Nevada Supreme Court, Nevada
law treats its own agencies differently from the agencies of other
States because Nevada agencies are “subject to legislative control,
administrative oversight, and public accountability” in Nevada. 130
Nev., at ___, 335 P. 3d, at 147 (internal quotation marks
omitted). The same is not true of other litigants, such as the
Board, who operate “outside such controls.” Ibid. (internal
quotation marks omitted). The majority may think that Nevada is
being unfair, but it cannot be said that the State failed to
articulate a sufficient policy explanation for its decision to
apply a damages cap to Nevada state agencies, but not to the
agencies of other States.
As the Court points out, the Constitution
certainly has a “vision of 50 individual and equally dignified
States,” ante, at 7, which is why California remains free to
adopt a policy similar to that of Nevada, should it wish to do so.
See Coyle v. Smith, 221 U. S. 559, 567 (1911)
(The Union “was and is a union of States, equal in power, dignity
and authority, each competent to exert that residuum of sovereignty
not delegated to the United States by the Constitution itself”).
Nevada is not, however, required to treat its sister State as
equally committed to the protection of Nevada citizens.
It is true that this Court in the prior
iteration of this case found no Full Faith and Credit Clause
violation in part because the “Nevada Supreme Court sensitively
applied principles of comity with a healthy regard for California’s
sovereign status, relying on the contours of Nevada’s own sovereign
immunity from suit as a benchmark for its analysis.” Franchise
Tax Bd., 538 U. S., at 499. But the Nevada court adhered
to its policy of sensitivity to comity concerns this time around as
well. In deference to the Board’s sovereignty, the court threw out
a $250 million punitive damages award, on top of its previous
decision that the Board was not liable at all for its negligent
acts. That is more than a “healthy regard” for California’s
sovereign status.
Even if the Court is correct that Nevada
violated the Full Faith and Credit Clause, however, it is wrong
about the remedy. The majority concludes that in the sovereign
immunity context, the Full Faith and Credit Clause is not a choice
of law provision, but a create-your-own-law provision: The Court
does not require the Nevada Supreme Court to apply either Nevada
law (no immunity for the Board) or California law (complete
immunity for the Board), but instead requires a new hybrid rule,
under which the Board enjoys partial immunity.
The majority’s approach is nowhere to be found
in the Full Faith and Credit Clause. Where the Clause applies, it
expressly requires a State to give full faith and credit to
another State’s laws. If the majority is correct that Nevada has no
sufficient policy justification for applying Nevada immunity law,
then California law applies. And under California law, the Board is
entitled to full immunity. Or, if Nevada has a sufficient
policy reason to apply its own law, then Nevada law applies, and
the Board is subject to full liability.
I respectfully dissent.
Search This Case
