Briefs Recently Filed
If A state is sued in B state, do the courts of B state have to extend to A state the same immunities that they would apply to B state? And…can state A even be sued in state B?
While this may sound like a nonsensical hypothetical, these are the issues the Supreme Court has agreed to decide in Franchise Tax Board of California v. Hyatt. The State and Local Legal Center (SLLC) filed an amicus brief arguing that states must extend the same immunities that apply to them to foreign state and local governments sued in their state courts.
In 1993 the Franchise Tax Board (FTB) of California audited Gilbert Hyatt following a newspaper article reporting he made a lot of money patenting a computer chip. Hyatt’s 1991 tax return indicated he lived in California for only nine months and relocated to Nevada. FTB concluded that Hyatt moved to Nevada in 1992 and assessed him $10.5 million in taxes and interest.
Hyatt sued FTB in Nevada alleging invasion of privacy, fraud, and intentional infliction of emotional distress, among other claims. In 2003 in Franchise Tax Board of California v. Hyatt the Supreme Court held that the constitution’s Full Faith and Credit Clause does not require Nevada to offer FTB the full immunity that California law provides.
A Nevada jury ultimately awarded Hyatt nearly $400 million in damages. The Nevada Supreme Court refused to apply Nevada’s statutory cap on damages to Hyatt’s fraud claim. According to the court, Nevada has a policy interest in ensuring adequate redress for Nevada citizens that overrides providing FTB the statutory cap because California operates outside the control of Nevada.
Hyatt has also asked the Supreme Court to overrule Nevada v. Hall (1979), holding that a state may be sued in another states’ courts without consent. If the Court overrules this case, the question of whether the immunities a state enjoys must be offered to a foreign state or local government will be moot.
The SLLC amicus brief argues that Nevada purposely treating a California government agency worse than a similarly-situated Nevada government agency offends a core principle of the Constitution: that the states enjoy equal sovereignty. The SLLC brief also argues that the Nevada Supreme Court’s ruling creates a number of practical problems for state and local governments including encouraging plaintiffs to forum shop and exposing state and local governments to unpredictable litigation costs.
The SLLC brief does not take a position on whether Nevada v. Hall should be overruled. Interestingly, at the petition stage, 39 attorneys general signed onto West Virginia’s amicus brief asking the Court to overrule Nevada v. Hall, including Adam Paul Laxalt of Nevada.
Quin Sorenson and Spencer Driscoll, Sidley Austin, Washington D.C. wrote the SLLC amicus brief which was joined by the Council of State Governments, the National Association of Counties, the National League of Cities, the United States Conference of Mayors, the International City/County Management Association, and the International Municipal Lawyers Association.
Vermont and at least 16 other states collect health care claims data. In Gobeille v. Liberty Mutual Insurance Company the Supreme Court will decide whether the Employee Retirement Income Security Act (ERISA) preempts Vermont’s all-payers claims database (APCD) law. The State and Local Legal Center (SLLC) filed an amicus brief arguing against ERISA preemption.
ERISA applies to most health insurance plans and requires them to report detailed financial and actuarial information to the Department of Labor (DOL). ERISA preempts state laws if they “relate to” the core functions of an ERISA plan. Vermont’s APCD law seeks the following medical claims data: services provided, charges and payments for services, and demographic information about those covered.
The Second Circuit concluded that ERISA preempts Vermont’s law because one of the key functions of ERISA is reporting. Vermont’s law imposes “burdensome, time-consuming, and risky” reporting obligations which are multiplied by other states’ APCD laws.
One judge dissented. He opined that that the ERISA and Vermont reporting requirements are too different to warrant preemption and that Vermont’s data collection isn’t burdensome. ERISA requires data reporting focused on asset allocation to avoid the mismanagement of funds or the failure to pay employee benefits. Vermont seeks different information “to fulfill its role of providing health care to its citizens.” Vermont’s law isn’t burdensome because it seek data that health insurance companies already possess.
The SLLC amicus brief provides examples of how states, consumers, and health insurance companies are using APCD data to reduce the cost and increase the quality of health care. The brief also argues that the Second Circuit should have applied the presumption against preemption in this case because DOL doesn’t collect the same data as the states. And the brief points out that efforts towards uniformity among state APCD laws minimize the burden of reporting this already-available data.
The National Governors Association, National Conference of State Legislatures, Council of State Governments, National Association of Health Insurance Commissioner, and Association of State and Territorial Health Officials join the SLLC amicus brief which was written by Jennifer McAdams of the National Association of Insurance Commissioners.