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Franchise Tax Board of California v. Hyatt

On April 19, 2016, Bancroft secured a victory in the Supreme Court for its client, the Franchise Tax Board of California, in Franchise Tax Board of California v. Hyatt, 136 S. Ct. 1277 (2016).  The case involved a private Nevada citizen’s suit in Nevada state court against the Board, California’s taxing authority, for alleged torts arising out of an audit.  After a Nevada jury awarded millions of dollars in damages against the Board, the Nevada Supreme Court refused to apply the statutory cap that Nevada law provides for damages against Nevada state entities.  Bancroft petitioned for certiorari, and the Court granted review.  In a 6-2 decision, the Court vacated the Nevada Supreme Court’s decision, holding that the Constitution’s Full Faith and Credit Clause does not permit a State to apply a “special rule of law” that “evinces a policy of hostility” toward another State.  Accordingly, Nevada was constitutionally forbidden from adopting a rule awarding a private citizen greater damages than Nevada law would permit a private citizen to obtain in a similar suit against a Nevada state entity.  Paul D. Clement argued the case, and George W. Hicks, Jr., Stephen V. Potenza, and Michael D. Lieberman assisted with the briefing.

Opinion