In a 6-2 ruling, the US Supreme Court vacated Nevada’s award of $1 million in damages for fraud to Gilbert P. Hyatt in his dispute with the California Franchise Tax Board (FTB), holding that 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. Justice Stephen Breyer delivered the opinion of the Court, in which Justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan joined. Justice Samuel Alito concurred in the judgment. Justice John Roberts filed a dissenting opinion, in which Justice Clarence Thomas joined.
The Court found that the rule of unlimited damages applied by Nevada is not only opposed to California’s law of complete immunity, but is also inconsistent with the general principles of Nevada immunity law, which limited damages awards to $50,000. Further, the Court rejected Nevada’s argument that departing from its own rules was necessary because California’s own system of controlling its agencies is an inadequate remedy for Nevada’s citizens. Writing for the majority, Justice Breyer stated that Nevada failed to offer the “sufficient policy considerations” to justify the application of a special rule of Nevada law that discriminates against its sister states.