All federal question jurisdiction claims arise from the Constitution and is narrowed to what is allowed in 28 USC § 1331
There are only two ways that a federal court can hear a case, if there is diversity between the parties (parties are from different states) or if there is a federal question. Federal questions are interpreted much more narrow. The following cases will outline when a federal court hear a federal question case.
Scope: Well-Pleaded Complaint Rule
Louisville & Nashville Railroad Co. v. Mottley
211 U.S. 149 (1908).
Mottley is the plaintiff. Won in trial court and Louisville appealed directly to the Supreme Court.
Question
Was there subject matter jurisdiction?
Rule
The claim must arise out of, not just be related to a federal question.
The plaintiff must make an accurate pleading in the complaint to find subject matter jurisdiction. Reference alone to federal laws will not suffice.
Holding
There is no federal jurisdiction. Reversed.
Facts
Mottley was involved in an accident on a railroad and the service offered free transportation for life if their waived their right to sue for damages. The Mottley’s took the deal but the railroad failed to renew their pass because of a law saying that railroads could not provide free transportation.
Mottley’s sued saying that the contract was not a good contract because of the law (should get damages) or if it is a good contract, then it violates due process.
Analysis
The court does not need to address the Mottley’s issue because there is no jurisdiction. This is because the Mottley’s failed to raise a proper pleading in their complaint to list out the subject matter. In other words, although there were federal issues in question, presenting them as a defense instead of an offense will not suffice to say that a claim arose out of a federal question.
Takeaway
Quite simply, the issue at hand was one for the states (contract law) not for the federal government (not based on the laws referenced to). Therefore, subject matter jurisdiction needs to arise from, not just be related to.
The Mottley test can be described as making sure the claim arises out of a federal law, not merely anticipating defenses that could bring up federal law. The reason for this is because what if the defendant fails to bring up a federal law defense? Then the case needs to be dismissed. What about if the claim is made in state law and a federal defense is brought up?
Because of this the Mottley test is an efficient way to sort out what is a federal question as defined by § 1331, even if it is restrictive. It keeps things fair for both the defendant and the plaintiff.
Additional Notes
A motion to dismiss for lack of subject matter jurisdiction is never waived. This issue be raised as late as the Supreme Court.
The accident occurred decades (over 30 years) before the case arose. This case is arising out of a contract issue, which is a state related claim. The plaintiffs were given a free pass for life by the railroad. Later, Congress passed a law saying that these free passes were no longer allowed.
Big takeaways:
- This is a state claim (Contract law).
- They are both from Kentucky so diversity jurisdiction is not an option.
- The plaintiffs filed in federal court because they said that there was a federal aspect (Affirmative defense in the complaint – meaning plaintiff’s predict the answer will relate federal claims).
The Supreme Court said that there was no SMJ because of the Well-pleaded complaint rule. What is the well-pleaded complaint rule? Even though the claim was related to federal statutes, that is not sufficient. The plaintiff’s claims itself must arise under the Constitution and other statues.
To simplify, this means that the federal question must arise out of the main claim of the complaint, not the answer.
The purpose of this rule was to reduce the number of cases getting onto federal documents. This is not supposed to happen, the Supreme Court changed the law. This rule only applies to 28 USC 1331.
This case eventually had to go back through the state system, litigating the federal issue, which they then lost when it got back to the Supreme Court.
Holmes’s Creation Rule
Holme’s follows the Mottley test but applies a rule that says that the law must create the claim. In other words, this rule exists to help us understand when and how Mottley can be applied.
Additional Notes
For a motion to dismiss for lack of subject matter jurisdiction we follow Rule 12(b)(1).
Federal courts are limited. Part of this was to keep the federal government and the state governments separate. The Constitution was approved because the State’s ratified it, which means that the delegates had to be delicate in what powers were taken away from the State.
Subject Matter Jurisdiction is:
- Diversity Jurisdiction (1/3 claims come from people in different states(State law issues but in a federal court))(State claim) (§1332)
- With general personal jurisdiction we only look at the domicile of the defendant.
- However, with diversity jurisdiction, we look at the domicile of all parties. All parties need to be from different states, including when there are three or more parties.
- Requires claims amounting in more than $75,000
- Federal Question (Federal Law claim) (§1331)
As far as the court goes, there was a federal court created, but most court actions were to be taken care of by the States. Instead, there are only a few things that the Constitution tells what federal courts can manage. Thus, the federal court can handle cases where parties are from different states, when the United States is a party, or when the case issue is about:
- Federal laws and treaties
- Cases involving ambassadors, ministers and consuls
- Maritime jurisdiction
- Land claims
We are governed by two bodies of law
- State
- State Constitution
- Statutes and Code
- State Common Law
- Federal
- U.S. Constitution
- U.S. Code
- Common Law
Each case we have will arise out of either a State right or a Federal right. These, will determine if it is a state claim, in which there needs to be diversity jurisdiction, or a federal claim, which is a federal question.
Subject Matter Jurisdiction is only an issue with federal related cases.
The following cases illustrate the exception to this rule:
Merrell Dow Pharmaceuticals v. Thompson
478 U.S. 804 (1986).
Holding
Could not be removed.
Facts
There were plaintiffs who took medication to relieve morning sickness. Afterwards, their children had birth defects. The plaintiffs sued the pharmaceutical company in state court saying that they had neglected properly labeling the product warning of the potential effects. This was a routine tort case, a state law claim.
The defendants attempted to remove this case to a federal court because it relied on federal law.
Analysis
The defendant argued that this arose under federal law because the warnings were required by federal law. The reason why the Supreme Court denied this claim was because a violation resulted in being liable to the federal government, not the plaintiff. The plaintiff had a right to sue under state law for the injury but did not have the right to sue for the federal law.
Additional Notes
Tried to argue a federal claim under state law and failed.
Tort claims are state claims.
Grable & Sons Metal Prods. v. Dare Eng’g & Mfg.
Holding
Could be removed.
Facts
Grable wasn’t paying their taxes and the IRS seized their property. However, they did not provide Grable notice of the ensuing auction. Grable showed up later and applied for a quiet title. They sued in state court because a dispute over property is a state law issue.
The defendant wanted to remove this a federal court.
Analysis
This case qualifies for 1331 jurisdiction because his action depends on the “notice” requirement. This is a federal issue where the plaintiff’s claim actually depends on a federal issue. The plaintiff can only win his property claim if he can properly show that he did not have notice, which is a federal issue.
Additional Notes
Remember this fact pattern. The rare case where a state law issue can be tried in federal court.
Read to Carden.
Gunn v. Minton
568 U.S. 251 (2013).
Question
Whether a state law claim of legal malpractice on a patent falls under the jurisdiction of a federal court.
Rule
Federal jurisdiction applies in a state law issue if:
- Necessarily raised
- Actually disputed
- Substantial
- Capable of resolution in federal courts without disrupting the balance between state and federal.
Holding
Not substantial. Texas Supreme Court is reversed.
Facts
Mottley had hired Gunn to bring a patent lawsuit against the NASD and NASDAQ. He lost and felt that a certain argument should have been made. So, he sued Gunn in state court with this claim. He lost there too then appealed saying that the state court actually didn’t have jurisdiction (patent requires only federal jurisdiction). This would have allowed him to have the case dismissed and start over in federal courts.
Analysis
This case would not arise under the federal law because of the Mottley rule. This is because we have a state based issue here that has a federal element. Thus, we need to see if this case meets the exception to the rule as outlined in the rule section above. The court addresses each of these elements:
- Necessarily raised
- This is met because the claim is necessary to address the patent question (case-within-a-case analysis for legal malpractice).
- Actually disputed
- Met
- Substantial
- This is not met because the court looks at the overall impact the federal question may have, not just on the current case. For instance, resolving this issue in federal court would not have brought back his patent. Instead, it would only find his attorney’s liable for not making a certain argument. Thus, patent law would not change, and his patent would not change. Therefore, there is no substantial effect on federal law.
- Balance
- This requirement is not met for similar reasons that the substantial element is not met.
Additional Notes
Intellectual property is under the exclusive federal jurisdiction.
Here we have a state law claim being brought (legal malpractice). However, in order for the plaintiff to win, he depends on a favorable determination on federal law.
The reason why the Supreme Court heard this case was to outline how difficult it is to meet the exception that a state law claim can make it through a federal question jurisdiction (§ 1331). To outline whether a claim can meet the exception, there are four factors the court considers.
- Necessarily raised (Does winning depend on federal law? Here, it’s met)
- Actually disputed (… Here, it’s met)
- Substantial (What is the consequences of a positive outcome? In Grable, it would change the whole law. Here, it would only change his outcome, not the law. Thus, not met)
- Balance (Does winning affect the balance between federal and state governments? If so, not met)
In other words, the federal courts are concerned about the significant impact claims have on the federal law.
Very rarely, a state law claim may arise under federal law applying §1331. This is called supplemental jurisdiction applying 28 USC § 1367
Smith v. Kansas City Title & Trust Co. His claim itself depended on the federal law.
Additional Notes
§ 1331 – “The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”
Terms to note:
- District court = Trial courts
- Original jurisdiction = First place where the court hears a case (trial level jurisdiction).
- Arising Under = Not every federal question arises under the Constitution. The Supreme Court interpreted this to mean the “well-pleaded complaint rule”. See Mottley.
A counterclaim is a claim brought by the defendant (in the answer) against the plaintiff. This acts like a complaint. So, even though a counterclaim can bring a federal question and is not an affirmative defense, because it is in the answer, it cannot go to federal court through the §1331.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
