#12413 - Arising Under Jurisdiction - Federal Courts Author-1

• VI. Arising Under Jurisdiction

  The Constitution’s Meaning of “Arising Under Jurisdiction”

  THE “FEDERAL INGREDIENT” TEST. As a constitutional matter, Congress can confer federal jurisdiction over any case or controversy that might call for the application of federal law (Osborn; Verlinden B.V.). For example, because the Bank of the United States was a creature of federal law, Osborn held that any action involving the Bank could be subject to federal jurisdiction, given that any action might ultimately require inquiry into the meaning of the Bank’s charter. The Osborn principle has also been applied to sustain federal jurisdiction over other federally-empowered parties, including federally-chartered railroads (Pacific Railroad Removal Cases) and bankruptcy trustees (Schumacher).

  In Verlinden B.V., the Court unanimously upheld Congress’s provision of jurisdiction over “any nonjury civil action against a foreign state as to any claim with respect to which the foreign state is not entitled to immunity,” reasoning that every case arising under this statute would present a threshold question of federal substantive law: whether the foreign sovereign could invoke federal foreign-sovereign-immunity law.

  PROTECTIVE JURISDICTION. Protective jurisdiction is the theory that “in any case for which Congress has the constitutional power to prescribe federal rules of decisions and thus to confer “true” federal jurisdiction, it may, without so doing, enact a jurisdictional statute, which will provide a federal forum for the application of state law.” It thus relies on a greater-includes-the-lesser argument. On this theory, a case involving protective jurisdiction arises under a federal law: in this case, the federal jurisdictional statute. It might be objected that such an interpretation of Article III’s grant of arising jurisdiction might “destroy all limitations on federal jurisdiction,” this is true only with respect to restrictions that are internal to Article III. Clearly, there are certain jurisdictional statutes that Congress could not constitutionally enact (because not authorized by Article I), and in these cases, it would be unconstitutional for federal courts to exercise arising under jurisdiction. A rejection of this theory of protective jurisdiction might be said to conflict with Osborn’s statement that the federal judicial power must be coextensive with the federal legislative power,¹ because it would suggest that there are jurisdictional statutes that Congress can constitutionally enact (without exceeding its Article I authority) but which federal courts cannot constitutionally act upon (because no federal substantive question is presented).

  In Lincoln Mills, Justice Burton (joined by Justice Harlan) argued that the constitutionality of the Taft-Hartley Act—which authorized federal jurisdiction over actions for violation of labor-management contracts—could be sustained as an exercise of “protective jurisdiction.” Justice Frankfurter emphatically rejected the theory of protective jurisdiction. He argued that recognition of protective jurisdiction would vastly expand the permissible scope of federal jurisdiction, such that any case affecting commerce might be transferred to federal court without requiring Congress to promulgate any substantive law. Moreover, he believed that the Constitution’s provision for diversity jurisdiction “exhausted” the Framer’s intention to remedy the supposed inadequacy of state tribunals in determining state law.²

  NECESSARY AND PROPER JURISDICTION. Professor Seinfeld, and Justice Jackson in Tidewater Transfer Co., argued that Congress, acting pursuant to its constitutional authority, should be permitted to assign to federal courts cases or controversies that fall outside the nine heads of subject matter jurisdiction enumerated in Article III.

  THE FEDERAL OFFICER REMOVAL STATUTE. In current form, the Federal Officer Removal Statute provides for removal of any civil or criminal action against “any officer of the United States . . . for any act under color of such office.” Thus, an action can be removed under this provision even if it could not have been filed in federal court originally.

  In Tennessee v. Davis, the Court upheld this act as consistent with the “arising under” clause of Article III. Mesa v. California held that this statute applied only in cases where the defendant averred a federal defense. In construing the statute to require a federal defense, the Court suggested that an alternative construction might raise “grave constitutional problems,” and pointedly declined to adopt the government’s argument that protective jurisdiction would authorize a broader removal provision.

  FTCA. An analogous provision of the FTCA authorizes removal of tort actions against federal employees acting in their official capacity (and substitution of the United States as defendant).

  The Federal Question Statute

  Summary. Section 1331 does not authorize federal jurisdiction unless the plaintiff’s well-pleaded complaint contains a federal question (Mottley). Statutory arising under jurisdiction cannot be based on the anticipation of a federal law defense (Mottley).³ A federal counterclaim—even when compulsory—does not establish “arising under” jurisdiction (Holmes Group).

  In general, the well-pleaded complaint rule is satisfied if (1) the plaintiff asserts a federal cause of action (American Well Works) or (2) if the plaintiff asserts a state-law cause of action that raises a federal issue that is (a) necessarily raised, (b) actually disputed, (c) substantial (i.e., one implicating an important national interest), and (d) capable of resolution in federal court without disrupting the federal-state balance approved by Congress (Gunn v. Minton).

  Substantiality. An important national interest may exist where there is unusual need for uniformity in interpreting federal law (Grable) or a need to determine the constitutionality of a federal statute (Kansas City Title & Trust), but does not exist where a negligence per se action asserts a violation of federal law (Merrell Dow).

  State-Federal Balance. A court is more likely to find an important national interest “can be adjudicated without disturbing any congressionally approved balance of federal and state judicial responsibilities” if the case is “nearly a pure issue of law” (Empire Healthchoice). By contrast, a “fact-bound and situation specific” federal issue raised in a state-law cause of action will generally not fall within Section 1331 jurisdiction (Empire Healthchoice).

  A Federal Cause of Action is Sufficient to Establish Section 1331 Jurisdiction. If the plaintiff’s complaint contains a non-frivolous federal cause of action, jurisdiction under §1331 is proper (American Well Works).⁴ A federal common law cause of action “arises under” federal law for §1331 (and Article III) purposes.

  Bell v. Hood established that “jurisdiction is not defeated by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover.” However, Bell also recognized that “a suit may sometimes be dismissed for want of jurisdiction” where the claim “appears to be immaterial and made solely for the purpose of obtaining jurisdiction” in federal court. Thus, under Bell’s three-tiered approach, some claims are so frivolous as to deprive a federal court of jurisdiction, while other claims may be too frivolous to survive 12(b)(6) but not frivolous enough to deprive the federal court of jurisdiction.

  EXCLUSIVE JURISDICTION STATUTES. Specialized jurisdictional provisions that provide for exclusive jurisdiction (over, e.g., copyright or patent issues) have generally been interpreted in light of the well-pleaded complaint rule. Rejecting this approach, the Leahy-Smith America Invents Act provides for exclusive federal jurisdiction over federal IP counterclaims.

GENERAL REMOVAL STATUTE. Subsection A provides that “Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants . . . .”

• Section 1441 permits removal only in cases that fall within the original jurisdiction of the federal courts. This statute can be criticized as a poor fit for the purpose...