Legal Docket: A high court do-over

NICK EICHER, HOST: It’s Monday morning, start of a new work week for The World and Everything in It. Today is the 25th of February, 2019. Good morning to you, I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard. The Supreme Court handed down two opinions in argued cases last week. Both of them were victories for a citizen who had to tangle with the government.

First, a unanimous ruling for a retired U.S. Marshal who challenged West Virginia’s tax scheme.

That state’s retired law enforcement officers don’t have to pay income tax on their retirement benefits.

But as a retired federal marshal, James Dawson did.

The justices ruled states must give equal treatment to both state and federal workers whose jobs are similar.

That’s good for Dawson, but the state does have the option to decide to stop exempting retired state law enforcement officers altogether.

EICHER: The second ruling is a really big deal. The Court at long last clarified that the Eighth Amendment’s ban on excessive fines is binding on the states.

This case involved a man from Indiana named Tyson Timbs. He pleaded guilty to drug offenses. The court ordered him to forfeit his $42,000 Land Rover to pay a fine amounting to less than $10,000.

Timbs challenged the fine as excessive.

Justice Ruth Bader Ginsburg wrote: “Exorbitant tolls undermine other constitutional liberties.”

Again, good news for citizens’ rights, and bad news for state and local governments, who lose out on an important source of money they’ve been used to having.

REICHARD: Now on to the last of the oral arguments from January.

Just a note before I get into the details: Sometimes I have to edit the audio to make these reports flow more smoothly, but I always do it without changing the speakers’ intent.

This first case needed a bit of that editing. This one is the third time around for Gilbert Hyatt. California’s been after Hyatt for income taxes ever since he made a fortune in patent fees for a computer chip he invented.

Thirty-two years ago, Hyatt moved to Nevada from California.

Nevada has no state income tax. California, well, it’s California, a very high-tax state. A California state auditor read about his move and concluded Hyatt staged the whole thing to get out of paying his taxes.

So, the California auditors tracked down Hyatt’s home in Nevada, rifled through his trash, peered into his windows, leaked his social security number, and got estranged family to testify against him.

The lead auditor made an anti-Semitic smear about him.

Hyatt sued and won against that California tax agency for invasion of privacy, emotional distress, and punitive damages.

He accomplished this in Nevada state court, winning millions in damages.

EICHER: California of course appealed that decision. The state’s argument is it’s immune from being sued in another state.

This case landed in the Supreme Court in 2016. Remember, Justice Antonin Scalia had died, the Republicans were blocking President Obama’s nominee, and only eight justices were serving at the time.

That court handed down 4-to-4 ruling, and so because California was appealing, the tie was in effect a loss because it left the lower court ruling in place.

So California tries its case again now before a nine-justice bench. It says Nevada ought to respect California law because the Constitution’s full faith and credit clause demands that it do so.

But to win, California is going to have to convince the justices to overturn one of the high court’s own rulings from 1979. That one holds that states are immune from being sued in their own courts, but not from being sued in the court of another state.

REICHARD: So here we are again.

Much time was devoted to when and how should the Supreme Court overturn its own rulings.

Justice Breyer threw a lifeline to inventor Hyatt’s lawyer, Erwin Chemerinsky, to keep the prior ruling intact.

Listen for Justice Samuel Alito’s counter argument.

BREYER: …every time we overrule a case, it’s like a little chink in an armor, because lawyers have to use our cases to talk to clients, …And the more cases we overrule, the harder it is for the lawyer to say no. …and therefore in many areas people start to ask us to overrule cases, because from my point of view, there are many wrong cases. And that’s true of every judge… Is that true, or am I making it up out of my imagination?

CHEMERINSKY: Yes, Your Honor.

ROBERTS: I thought that would be your answer. (laughter)

BREYER: Yes, I’m making it up out of my imagination or it’s true?

CHEMERINSKY: No. Yes, it is true, Your Honor. I totally agree with what you said about the importance of stare decisis…

ALITO: Well, Mr. Chemerinsky, do you think that the public would have greater respect for an institution that says, “you know, we’re never going to admit we made a mistake, because we said it and we decided it, we’re going to stick to it even if we think it’s wrong,” or an institution that says, “well, you know, we’re generally going to stick to what we’ve done, but we’re not perfect, and when we look back and we think we made a big mistake, we’re going to go back and correct it.” Which kind of institution would they respect more?

Chemerinsky responded some cases obviously need to be overruled. For example, horrible rulings in favor of slavery or school segregation or involuntary sterilization.

Just last term, the Supreme Court overturned a 50 year old ruling and let states impose sales taxes on businesses not physically present in a state.

But that’s not this case, Chemerinsky argued. So back to the question of whether states can be sued without their consent in the courts of other states. Justice Elena Kagan grasped the larger picture in this exchange with Seth Waxman, lawyer for California:

KAGAN: Because this is a gigantic … constitutional debate. There are a thousand issues on the table. Everybody has things that they want. And this idea that there’s this “one for one” exchange that you have: we give up our power to blockade, we get a rule of sovereign immunity, I mean, that’s just not how big negotiations work.

WAXMAN: So … I don’t think there’s any disagreement that the framers intended to constitutionalize fundamental aspects of sovereignty.

Waxman argued the Founders didn’t mean for one sovereign to call another before its courts. This upsets how states manage their own tax policies.

But Justice Sonia Sotomayor wanted something more. Listen:

WAXMAN: … echoing writings and speeches given by Hamilton, Marshall, and Madison, among others …

SOTOMAYOR: It’s nice that they felt that way, but what we know is they didn’t put it in the Constitution.

Forty-six states joined California to get that old ruling overturned, to keep state A from suing state B in state A’s court.

But Justice Alito thought the way it is now levels an otherwise unfair playing field in this exchange with Chemerinsky, lawyer for inventor Hyatt:

ALITO: You know, if California were a republic, … which is something some people in California would like (laughter) — it would have a lot of leverage over Nevada that it doesn’t have now, wouldn’t it?

CHEMERINSKY: Well, yes and no, Your Honor. Certainly —

ALITO: We could have, you know, it overwhelms it in every respect. So Nevada would have to be careful about what it did to California. But the situation now is different because they’re states in the union.

CHEMERINSKY: I think Nevada might already feel that California overwhelms it too much. (laughter)  

Then, a refreshing reminder that each branch of government has its own tasks, if only they’d do it. Justice Sotomayor here, addressing Waxman for California:

SOTOMAYOR: We have states suggesting we overrule Hall. That’s two-thirds of the states. Why don’t they move to get the Constitution amended if we’re getting it wrong? You’re asking us to do their work. If this is such an important principle to them, they could express it very directly. … They’ve got a lot of–

WAXMAN: But a lot of states —

SOTOMAYOR: — representatives  in the House and in the Senate. If they’re really excised (sic), they can do something about it. Except, but, instead, they’re choosing to let us decide that an individual state doesn’t have the right to protect its citizens.

This dispute is decades old now, and for those so inclined, the case documents are, shall I admit this? An enjoyable, nerdy frolic through history. The states say it’ll cost them big time to have to continue litigating in the courts of other states.

My sympathies are with Mr. Hyatt.

But the precedent? Careful what you wish for.

This final case today is a tangled mess of plaintiffs, defendants, claims, counterclaims, crossclaims, class actions, and, well, it gets complicated from there.

Even Justice Breyer couldn’t figure out who’s on first. Instant classic here:

BREYER: What you were were the defendant. And you brought a counterclaim against a third party. Or you’re the third party. Or whatever. No, no, no, no, it’s somebody, the — I’m sorry, the other – the other — the plaintiff did.  No, it’s not the plaintiff. The plaintiff — see, that’s the hard part. It’s like an Abbott and Costello movie, you know, I mean. (laughter) But look, A sued B…

But seriously folks…

George Jackson went into a North Carolina Home Depot store. Jackson used a Citibank credit card to obtain a water treatment system. Jackson ended up not paying Citibank for the purchase.

So Citibank sued Jackson.

But Jackson sued back, in a counterclaim against Citibank.

Jackson also sued Home Depot and the manufacturer of the system, claiming deceptive practices.

Home Depot wants the case moved out of North Carolina state court to federal court.

But Jackson wants to fight it out in state court.

The question is whether federal law allows what is called a “third party counterclaim defendant” to move a case to federal court.

Home Depot says sure it does. Its lawyer had a reason having to do with what the word “defendant” means in different contexts. But Justice Neil Gorsuch wasn’t having it.

He invoked Greek mythology to tell Home Depot’s lawyer, y’know, you can’t just cut or stretch the meaning of a term to suit your needs. Which is what he means by the adjective Procrustean.

GORSUCH: Now how can it be that the word ‘defendant’ expands and contracts like that? … What I can’t abide or understand at least, is how the word ‘defendant’ could be so Procrustean as to just happen to fit you.

Home Depot says if it loses, it’ll give consumers an incentive not to pay their debts.

I just hope Justice Breyer is able to help his colleagues figure out who’s who: who’s the defendant, who’s the third party … and, with apologies to Abbott and Costello, when it should be obvious that Who’s on first.

And that’s this week’s Legal Docket.

(AP Photo/J. Scott Applewhite) Visitors wait to enter the Supreme Court as a winter snow storm hits the nation’s capital making roads perilous and closing most Federal offices and all major public school districts, on Capitol Hill in Washington, Wednesday, Feb. 20, 2019. 

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