Franchise Tax Board of California v. Hyatt - Oral Argument - February 24, 2003

Franchise Tax Board of California v. Hyatt

Media for Franchise Tax Board of California v. Hyatt

Audio Transcription for Opinion Announcement - April 23, 2003 in Franchise Tax Board of California v. Hyatt

Audio Transcription for Oral Argument - February 24, 2003 in Franchise Tax Board of California v. Hyatt

William H. Rehnquist:

We'll hear argument next in number 02-42, Franchise Tax Board of California versus Gilbert Hyatt.

Mr. Leatherwood.

Felix Leatherwood:

Mr. Chief Justice, may it please the Court:

Respondent has prompted the Nevada courts to extend their authority over California's tax process.

The Nevada court has said at Joint Appendix 138, the entire process, of FTB audits of Hyatt, including the FTB's assessment of taxes and the protests, is at issue in this case, end quote.

This has been said to mean, at Joint Appendix 138, that the tax process is under attack.

This lawsuit interferes with California's capacity to administer these taxes.

The administration of taxes is a core, sovereign responsibility from which all functions of State Government depend on.

It is protected by immunity laws of common-law tort lawsuits, like the kind presented by Respondent.

California has invoked the protection of its immunity laws, but the Nevada courts have allowed respondents laws to proceed, not by extending full faith and credit.

And this refusal threatens our constitutional system for cooperative federalism in violation of Article IV, Section 1 of the United States Code.

Ruth Bader Ginsburg:

Mr. Leatherwood, may I ask you a threshold question?

Some of your friends in this case have invited an overruling of Nevada against Hall.

Of course, California was favored by that decision.

Do you join in the plea to overrule Nevada v. Hall, or do you say this case is different because it involves four sovereign functions?

Felix Leatherwood:

Justice Ginsberg, we do not join in the chorus to overrule Nevada v. Hall.

This case is different.

This case goes to footnote 24 of Nevada v. Hall.

It's our feeling that Nevada v. Hall is good law in the sense it does... it does not implicate another state managing another state's core sovereign function.

It's... Nevada v. Hall was strictly an automobile accident.

Stephen G. Breyer:

But the comparison would be between the university, education, which was the... which was the defendant, and the tax authorities.

Both of those, education and tax, seem core.

Or if you're going to compare the tort itself, it would be a comparison between negligent driving, on the one hand, and going into another state and committing... you know, peering through windows, going through garbage, totally wrongly getting all the neighbors to reveal private information, et cetera.

So comparing the particular acts, what's the difference, or comparing sovereign functions, what's the difference?

Felix Leatherwood:

I mean, compared... I thank you, Your Honor... in comparing the sovereign functions--

Stephen G. Breyer:

Education versus tax.

Felix Leatherwood:

--Yeah, and driving an automobile in another state's... on another state's highway--

Stephen G. Breyer:

That's not the sovereign function.

Felix Leatherwood:

--That's not--

Stephen G. Breyer:

I'm saying that--