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US Supreme Court Split on States' Ability to Sue Another

  • Wayne Lee

FILE - The U.S. Supreme Court building is seen in Washington, D.C., Feb. 17, 2016.

FILE - The U.S. Supreme Court building is seen in Washington, D.C., Feb. 17, 2016.

The U.S. Supreme Court is divided over whether one U.S. state is allowed to sue another.

The justices split 4-4 Tuesday over whether to overturn a 27-year-old Supreme Court precedent that allows courts in one state to sue and penalize government agencies in another state.

The case stemmed from a tax dispute involving a California resident who moved to Nevada. Gilbert Hyatt claims he moved to Nevada in 1991, shortly before receiving $40 million in patent fees for developing a computer chip.

California officials say Hyatt moved to Nevada in 1992 and owes the state millions in back taxes.

The deadlock means the precedent that was considered when the ruling was made, Nevada v. Hall, will remain in effect. California officials had asked the justices to overturn a 1979 case that said courts in one state can hear a private citizen's lawsuit in another state.

In a second case, also involving a state's authority to sue another state, the court ruled 6-2 that the Supreme Court of Nevada was in error when it awarded $1 million in damages to Hyatt, who had sued the California government.

The majority ruled the Supreme Court of Nevada ignored rules of immunity by awarding damages above the $50,000 maximum that would be acceptable in similar suits against Nevada.

Writing for the majority in the case Franchise Tax Board v. Hyatt, Justice Stephen Bryar said a state cannot treat another state in a "hostile" manner.

The 4-4 ruling is the third time the short-handed court has deadlocked since the February death of Justice Antonin Scalia.