Franchise Tax Board of California v. Hyatt - Oral Argument - December 07, 2015

Franchise Tax Board of California v. Hyatt

Media for Franchise Tax Board of California v. Hyatt

Audio Transcription for Opinion Announcement - April 19, 2016 in Franchise Tax Board of California v. Hyatt

Audio Transcription for Oral Argument - December 07, 2015 in Franchise Tax Board of California v. Hyatt

John G. Roberts, Jr.:

We'll hear argument next in Case 14-1175, Franchise Tax Board of California v. Hyatt. Mr. Clement.

Paul D. Clement:

Mr. Chief Justice, and may it please the Court: The States entered the Union saddled with substantial war debts.

As a result, critics of the Constitution were quick to point out any possibility that the States could be haled into court by individual citizens without their consent in order to secure potentially bankrupting judgments. When this Court opened up the possibility of just such a judgment by allowing Chisholm, a South Carolina citizen, to sue the sovereign State of Georgia in this Court, the nation quickly and emphatically reacted with the Eleventh Amendment that eliminated the possibility of such a suit even in this most neutral of Federal forums. Regardless of all that, Respondent's position is that, if Chisolm has turned around and sued Georgia in South Carolina State court, and South Carolina in its unreviewable discretion decided to exercise jurisdiction over the sovereign State of Georgia --

Elena Kagan:

There is one --

Paul D. Clement:

-- there is nothing in Federal law --

Elena Kagan:

There's one -- there's one significant difference there, Mr. Clement, which is that States are on a par with each other.

So there's a kind of mutuality.

So if one State does something to you that you don't like, you can turn it around and do it to them.

And that mutuality also makes it less likely that the State will do that thing to you in the first place because they know that. So -- so I think what Mr. Farr says is the fact that there was this outrage with respect to a Federal court might not have registered in quite the same way when States were aware that they were on a par with each other and that they had many weapons that they could use against each other.

Paul D. Clement:

Well, Justice Kagan, here's why I disagree.

And because most of the weapons that independent nations would use vis-à-vis each other to ensure that sovereign immunity as a comity did not become sovereign immunity in name only are precisely the tools that the States surrendered to the national government in the plan of the convention. So if South Carolina had --

Elena Kagan:

Well, for sure, Mr. -- Mr. Clement, you know, you couldn't go to war with the neighboring State anymore, and that's a difference.

But you could say, if you're going to treat me like that, I'm going to treat you like that. And -- and you have other ways of dealing with -- with a State that you wouldn't have with the Federal government.

Paul D. Clement:

Well, Justice Kagan, two points.

First, it's not just the act of war.

It's the ability to impose trade sanctions; it's the ability to withdraw your ambassadors.

All of that is taken away from the States.

Anthony M. Kennedy:

Is there anything in our -- in -- in our jurisprudence or our constitutional tradition that say States can protect each other by retaliating against each other?

Paul D. Clement:

Well, that's the second point I was going to make, Justice Kennedy, which is it's an odd thing to think that the framers, who had just experienced the Articles of Confederation where they had unsatisfied judgments and the potential that, if the State of New York went after the State of Georgia because Georgia hadn't complied with the requisition for funds, that there would be civil war.

The idea that the way they would want sovereign immunity, which no one doubted exists, enforced was that kind of race to the bottom.

It's --

Anthony M. Kennedy:

I -- I mean, I -- I thought that -- I thought that it's illegal for a State to ban Washington apples.

Paul D. Clement:

Well, there is that.

It's something that's implicit in the Constitution.

And I think --

Ruth Bader Ginsburg:

Mr. Clement, to take you down to the practical level, and we're not getting involved with war, take Nevada against Hall.

But Justice Kagan's point is, if California says that a Nevada truck coming on its California roads, injuring a California resident, so then Nevada is liable to the courts and the law of California, Nevada can say fine.

If a California truck comes into our State and injures Nevada people, we will do the same thing. That's what I think Justice Kagan had in mind.

Paul D. Clement:

Absolutely.

And I think that's the exact opposite of what the framers were trying to do.