What Franchise Tax Board v. Hyatt Adds to the Discussion of Stare Decisis and Reliance


Last week’s 5-4 ruling by the Supreme Court in Franchise Tax Board v. Hyatt—a closely watched case that extended so-called state sovereign immunity to protect states from being sued in the courts of other states—was noteworthy not only for its discussion of sovereign immunity (which is helpfully analyzed by my Verdict colleague Mike Dorf’s column on the decision), but also for its back-and-forth on the question of horizontal stare decisis, the notion that prior Court rulings are entitled to respect in the Court today.

To be sure, the majority opinion (authored by Justice Thomas and joined by the Chief Justice and Justices Alito, Gorsuch, and Kavanaugh) diverges from Justice Breyer’s dissent (in which Justices Ginsburg, Sotomayor, and Kagan joined) on the first principles of state sovereign immunity; the two camps interpret the constitutional text (or absence thereof), founding history and structural precepts quite differently. But the two opinions also express seemingly sharp disagreement on stare decisis. In order to reach its result, the majority had to overrule Nevada v. Hall, a 1979 ruling in which the Court had flatly rejected the notion that states enjoy constitutional immunity from suits in the courts of other states. Justice Thomas’s opinion had little trouble undoing Hall, finding that decision to be poorly reasoned and in tension with the Court’s treatment of related issues in other lines of cases. The majority also found a relative absence of meaningful real-world reliance on Hall—another factor (according to the Hyatt Court) to consider in deciding whether to fix a past constitutional mistake.

Justice Breyer’s dissent, by contrast, in addition to disputing the majority’s view of the merits, thought the majority’s approach to stare decisis asked the wrong questions. For the four dissenting justices, the question isn’t whether there is evidence of meaningful real-world reliance on Hall; it is whether there is a “special justification”—above and beyond the belief that the past case was wrongly decided—that warrants overruling. According to the dissent, even in the absence of particularized reliance, and presumably even if the past ruling was not just wrong but certainly so, something more is needed to overrule it. As Justice Breyer put it, quoting from a past majority opinion in Kimble v. Marvel Entertainment, LLC four years ago: “an argument that we got something wrong—even a good argument to that effect—cannot by itself justify scrapping settled precedent.” Kimble itself, it should be noted, did not involve constitutional stare decisis, but statutory stare decisis, and the Court has often said that its past interpretations of statutes have particularly strong precedential weight since Congress can fix any statutory construction errors in a way it cannot fix constitutional interpretation errors. But Kimble spoke expansively about stare decisis as a general matter. And for the dissenters in Hyatt, past rulings cannot be reconsidered unless they are unworkable, are based on erroneous factual assessments, or are relics that have been hollowed out by intervening cases (which itself might suggest inattentive respect paid to stare decisis at some point in that hollowing-out process)—the kinds of “special justifications” required before constitutional mistakes can be corrected.

As I’ve written before, this position as a general matter seems hard to defend:

It is one thing to say we have to live with judicial mistakes because we value other things, like ease of administration and protecting reliance interests. . . . But it is another to say we should live with mistakes as a matter of course, whether or not fixing the mistake would be unfair to those who have relied on it or would cause other collateral problems. . . . Perhaps someone could argue that a supercharged vision of stare decisis is grounded on a notion of judicial infallibility, but none of the justices appears to believe that prior volumes of the U.S. Reports (the official reporter of the Court’s decisions) are free from interpretive error. Indeed, all the justices reject the notion of judicial infallibility, and argue strenuously that some past rulings (and the rulings in which they dissent today) are wrong. In this regard, it bears noting that some of the Supreme Court’s most celebrated (and legally correct) decisions (such as Brown v. Board of Education) involve overruling past cases that were wrongly decided.

Where the Court’s attention should be focused—in particular cases and as a general matter—is on the more defensible idea that some mistakes cannot easily be corrected by the Court because of reliance. Indeed, reliance is a key—albeit underexplored—notion that should drive the Court’s approach to stare decisis.

In this regard, the opinions in Hyatt do at least begin to explore the contours of the reliance concept. For his part, Justice Thomas for the majority acknowledges that “some plaintiffs, such as [Mr.] Hyatt, have relied on Hall by suing sovereign States [in the courts of other states]. Because of our decision to overrule Hall, Hyatt unfortunately will suffer the loss of two decades of litigation expenses and a final judgment against the Board for its egregious conduct.” But, as Justice Thomas rightly goes on to observe, “in virtually every case that overrules a controlling precedent, the party relying on that precedent will incur the loss of litigation expenses and a favorable decision below.” Yet, consistent with the Court’s general focus on the big picture and not on protecting individual litigants, these “case-specific costs are not among the reliance interests that” count in deciding whether the Court should “adhere to an incorrect resolution of an important constitutional question.”

If case-specific litigation costs are not the kind of reliance interests that matter, what are? Justice Breyer has an answer:

The people of this Nation rely upon stability in the law. Legal stability allows lawyers to give clients sound advice and allows ordinary citizens to plan their lives. Each time the Court overrules a case, the Court produces increased uncertainty. To overrule a [case] is to encourage litigants to seek to overrule other cases; it is to make it more difficult for lawyers to refrain from challenging settled law; and it is to cause the public to become increasingly uncertain about which cases the Court will overrule and which cases are here to stay.

Thus, for Justice Breyer and the three other dissenters, promoting reliance at the highest level of generality is the goal, and all instances of overruling problematically undermine that objective.

While I laud Justice Breyer’s willingness to explain the “special justifications” approach to stare decisis more than other cases have tried to do, I am not entirely convinced by his emphasis on reducing legal instability generically. The explanations the Court offers in deciding to overrule past cases might matter more—in promoting the reliance we care about—than the frequency with which past cases are revisited. After all, if society knows more precisely which kinds of cases are open to reconsideration, it can plan around various contingencies. And the “special justifications” approach’s emphasis on changes in fact and unworkable doctrines doesn’t really put people on much notice of which cases are prone to reconsideration. For example, when the Court (rightly) overruled Bowers v. Hardwick in Lawrence v. Texas, not many folks would have seen that coming on account of the unworkability of the Bowers doctrine permitting discrimination against gays and lesbians, or on account of a new understanding of the underlying facts. What changed was a sense of constitutional values, and that was a change worth acting on.

If the Court, going forward, makes more clear that it is serious about protecting real reliance—by which I mean protecting people who not only expected a ruling to persist but who acted such that they would be worse off today if the mistaken ruling were fixed than they would have been if the mistaken ruling had never come down—then stare decisis doctrine will do its job.

In this regard, we need to distinguish true reliance from mere expectancy. Everyone who likes a past ruling might expect that this past triumph—whether constitutionally deserved or not—will persist, and they may build those expectations into their mindset. White supremacists probably expected Plessy v. Ferguson’s regime to continue forever. As did the proponents of the law upheld in Bowers. But that doesn’t mean they relied in a way we need to protect. As noted above, the core of reliance (in common law fields) is that it leaves you worse off than you would have been had the earlier event never occurred. Sometimes, as in contract law, expectation of the benefit of a bargain may often converge with reliance on the deal, insofar as a contracting party may, in reliance on one deal, turn down other deals that would have generated the same benefits. Indeed, in contract settings we think that happens with such overwhelming frequency that we assume it to be true—and give victims of contract breaches the benefits of their bargains—as a matter of course. But in many areas of constitutional law, it is not clear that expectations lead to forgone opportunities and thus not clear that conventional reliance principles warrant the maintenance of rulings that we now think—with the benefit of better understandings of the Constitution—were fundamentally wrong. Going forward, foregone opportunities in constitutional realms is where we need to be giving increased thought. And also to the question, explored in a column last year, of how the Court should be permitted to ease such reliance over time by sending signals of a change in interpretation on the horizon.