No. 17-1299 IN THE Supreme Court of the United States FRANCHISE TAX BOARD OF CALIFORNIA, PETITIONER, V. GILBERT P. HYATT, RESPONDENT. On Writ of Certiorari to the Supreme Court of Nevada BRIEF AMICUS CURIAE OF ALAN B. MORRISON & DARIEN SHANSKE IN SUPPORT OF NEITHER PARTY ALAN B. MORRISON COUNSEL OF RECORD THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL 2000 H STREET NW Washington, DC 20052 (202) 994-7120 [email protected] September 18, 2018 i TABLE OF CONTENTS TABLE OF AUTHORITIES ....................................... ii INTEREST OF AMICI CURIAE............................... 1 INTRODUCTION AND SUMMARY OF ARGUMENT...........................................................1 ARGUMENT .................................................................. 6 THE JUDGMENT BELOW SHOULD BE REVERSED. .................................................................. 6 A. NEVADA V. HALL WAS CORRECTLY DECIDED. .......................................................... 6 B. HALL DOES NOT SUPPORT THE JUDGMENT IN THIS CASE. ........................... 9 1. The Nevada Courts Could Not Constitutionally Apply Nevada Law to Proceedings Before a California State Agency. .............................................................. 9 2. Properly Applying Principles of Personal Jurisdiction May Readily Resolve This and Other Similar Cases. .................. 18 CONCLUSION ............................................................ 24 ADDENDUM ............................................................... 1a ii TABLE OF AUTHORITIES Cases Bigelow v. Virginia, 421 U.S. 809, 824 (1975) ..... 13 BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) ................................................ 13 BNSF Railway Co. v. Tyrell, 137 S. Ct. 1549, (2017) ................................................................... 19, 20 Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773 (2017) ....................... 22 Calder v. Jones, 465 U.S. 783 (1984) ..................... 22 Daimler AG v. Bauman, 571 U.S. 117 (2014) 19, 20 Edgar v. MITE Corp., 457 U.S. 624 (1982) ........... 14 Franchise Tax Bd. of State of California v. Hyatt, 407 P.3d 717 (Nev. 2017)...........................................21 Franchise Tax Board of California v. Hyatt, 538 U.S. 488 (2003)....................................................12 Franchise Tax Board of California v. Hyatt, 136 S. Ct. 1277 (2016) ............................................. 8 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) ................................................ 19 Hess v. Pawloski, 274 U.S. 352 (1927) ................. 6, 7 Huntington v. Attrill, 146 U.S. 657 (1892) ............ 13 International Shoe v. Washington, 326 U.S. 310 (1945) ..................................................................... 5, 19 J. McIntyre Ltd. v. Nicastro, 564 U.S. 873 (2011) . 5 Nevada v. Hall, 440 U.S. 410 (1979) ............... passim New York Life Ins. Co. v. Head, 234 U.S. 149 (1914) ......................................................................... 13 Pennoyer v. Neff, 95 U.S. 714 (1874) ........................ 1 iii Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1984) ................................................................. 3, 9, 12 Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) .. 14 San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959) ............................... 13 South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018) ......................................................................... 16 State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) ................................................ 13 Walden v. Fiore, 571 U.S. 277 (2014) ....................... 5 Constitution Dormant Commerce Clause............................14, 16 Due Process Clause of the Fourteenth Amendment ....................................................... passim Privileges and Immunities Clause, Article IV, § 2, cl. 1 ..................................................................... 11 Statutes Westfall Act, 28 U.S.C. § 2679(b) .............................. 8 1 INTEREST OF AMICI CURIAE Amicus curiae Alan B. Morrison is an associate dean at the George Washington University Law School where he teaches civil procedure and constitutional law. Amicus curiae Darien Shanske is a professor at the University of California, Davis School of Law, and teaches state and local taxation. Neither amicus has any interest, financial or otherwise, in the outcome of this lawsuit. They are participating as amici in order to offer their views on the issues before the Court which differ from those of the parties and, they believe, those of other amici.1 INTRODUCTION AND SUMMARY OF ARGUMENT The question presented by the petition is whether this Court’s decision in Nevada v. Hall, 440 U.S. 410 (1979), should be overruled. Amicus agrees that Hall correctly held that Nevada was subject to suit in the courts of California and that the Nevada statute limiting the liability of the State in that situation to $25,000 did not preclude the judgment of $1,150,000 entered by the California courts. The principal reason why Hall was correctly decided is that the accident that injured the plaintiff in Hall occurred on California roads as a result of the negligent driving of an 1This brief is filed pursuant to blanket consents provided by all parties. No person other than an amicus has authored this brief in whole or in part or made a monetary contribution toward its preparation or submission. 2 employee of the University of Nevada (a state institution) who was driving a university vehicle on university business at that time. No principle of constitutional law allows one state to immunize itself for wrongful conduct of its agents in the territory of another state. Nor does a state’s limit on the amount of damages that it can be assessed in its own courts carry over to the courts of another state. Having chosen to send its employee into California, the State of Nevada had no constitutional basis to object to being sued in California, nor to having California applying its laws compensating victims for injuries that the Nevada employee caused there. But this case involves facts very different from those in Hall, where the events giving rise to liability all occurred in California, the same state where the suit was brought. In this case, by contrast, most if not all of the allegedly wrongful conduct giving rise to the judgments based on claims of fraud and intentional infliction of emotional harm occurred in California, not in Nevada where this case was brought. Because of this difference, this Court need not decide whether Hall should be overruled, but if it does reach that question, Hall should be re-affirmed. However, there are very troubling aspects of the rulings below that should not stand. This case is an effort by respondent to recover damages for what he considers to be highly improper treatment of him by agents of petitioner Franchise Tax Board. Petitioner is the entity responsible for deciding disputes about how much an individual such as 3 respondent must pay in California income tax for the time when that individual was a California resident. Because the focus of the appellate record in this case was not directed at the location of the conduct that respondent alleged gave rise to his claims, a remand may be necessary to make a final determination of where the alleged wrongful conduct took place. But assuming that most if not all of it occurred in California, there are two separate, but inter-related reasons why petitioner, which is an agency of the State of California, could not be sued over these claims in Nevada. First, the Nevada courts had no authority to tell petitioner – under pain of paying damages for disagreeing – how to conduct its audit proceedings regarding respondent’s California income tax liabilities for the period when respondent was a California resident. The Nevada courts properly rejected respondent’s efforts to have them determine the residence question that was at the center of the California litigation, and they also should have rejected respondent’s effort to set down the rules by which petitioner must conduct its audits. Due Process precludes Nevada from applying Nevada law to the conduct of petitioner arising out of its audit of respondent’s taxes where that conduct did not take place in Nevada. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 822 (1984). Just as Nevada could not legitimately dictate to California the rules by which Nevada residents drive their cars in California, so too Nevada cannot, under the guise of protecting its citizens, tell petitioner what it may and may not do outside Nevada in auditing respondent’s California 4 tax returns. Because the judgments below were founded on an unconstitutional extra-territorial application of Nevada law to proceedings before a California state agency, they cannot stand. 2 Second, as is required for every case, unless waived, there must be personal jurisdiction over the defendant. The question presented does not include a claim of lack of personal jurisdiction, but that does not necessarily preclude the Court from deciding the case on that basis. In any event, the Court’s personal jurisdiction jurisprudence has changed since this case began over twenty years ago, and it would be appropriate for the Court to remind state courts that the rules regarding personal jurisdiction apply to suits against government entities as well as those against corporations and individuals. Under this