Nevada’s Revenge

Thirty-five years ago, an employee of the University of Nevada drove into California on official business. While there, he crashed into another car, severly injuring its occupants, who were California residents. They sued Nevada.

Now, under the principle of "sovereign immunity," which says that states can't be sued without their consent, Nevada courts would have capped damages at $25,000. But the plaintiffs didn't sue in Nevada; they sued in California. California looked at the situation, decided that its rule of not capping damages made more sense, and ignored Nevada's $25,000 limit.

The Supreme Court took the case and voted 6-3 to let California get away with it.

Apparently, Nevada has been biding its time and looking for a chance to get even. And in 1998, it got its chance. California had audited a Nevada resident for underpayment of taxes from the time he'd lived in California. After an apparently unpleasant audit process, he filed suit against California for various torts, including fraud and invasion of privacy.

Now, under its version of sovereign immunity, California shields its tax agency from being sued for doing its job. But the plaintiff didn't sue in California; he sued in Nevada. And I bet you can see where this one is going.

The Supreme Court took the case and voted 9-0 to let Nevada get away with it.

(Interesting sidenote: of the three dissenters in the first case, only Justice Rehnquist is still on the Court. At the time, he thought that letting the California suit proceed "work[ed] a fundamental readjustment of interstate relationships." But he joined the majority in the second case, even though it relied principally on the holding in the first one. Put that in your stare decisis and smoke it.)