The U.S. Supreme Court case Franchise Tax Board of California v. Gilbert P. Hyatt, et al., 2002 revolved around the issue of whether a state agency can be sued in another state's courts without its consent. The dispute began when the Franchise Tax Board (FTB) of California conducted an audit on inventor Gilbert P. Hyatt’s tax returns and concluded that he owed millions in unpaid taxes for income earned while still a resident of California before moving to Nevada, which has no personal income tax. In response, Hyatt filed a lawsuit against FTB in Nevada court alleging various tort claims including invasion of privacy and intentional infliction of emotional distress. In this case, the Supreme Court ruled by 5-4 majority that states do not have sovereign immunity from private suits brought in other states' courts under Article III Section 2 Clause 1 ("Diversity Jurisdiction") or Full Faith and Credit Clause (Article IV Section I). This ruling upheld the decision made by Nevada's highest court allowing Mr.Hyatt to sue FTB despite it being an out-of-state government entity.

In the dissenting opinion for Franchise Tax Board of California v. Gilbert P. Hyatt, Justice Breyer argued that the majority's decision to allow states immunity from private lawsuits in other state courts was not supported by precedent or constitutional text and history. He emphasized that this ruling could potentially disrupt interstate relations as it would enable a state to harm individuals in another without any legal recourse available for those affected individuals within their own state court system. Furthermore, he pointed out that there are already existing mechanisms such as sovereign immunity waivers and federal laws which can address potential abuses of power by one state against another’s citizens, making this new rule unnecessary. The dissent also expressed concern about how the decision might affect future cases involving cross-border issues like pollution or water rights disputes between states.