Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U. S. 308, No. 04-603 (June 13, 2005).
The United State Supreme Court recently expanded federal question jurisdiction when it declared that federal statutory “arising under” jurisdiction would cover a state law action with a critical federal angle. While not directly implicating the Class Action Fairness Act, Justice Souter, writing for the Court, held that there was a national interest in providing a federal forum for federal tax litigation sufficiently substantial to support the exercise of federal question jurisdiction over the disputed issue on removal.
Justice Souter wrote that this state action to quiet title, solely a state law cause of action, could nevertheless be removed and remain in federal court, because the underlying dispute hinged on whether the IRS had violated federal tax law when it seized real property to satisfy a tax lien. That federal issue was enough to create “arising under” federal jurisdiction, Justice Souter declared, noting that the Court has “recognized for nearly 100 years that in certain cases federal question jurisdiction will lie over state law claims that implicate significant federal issues.”
The federal interest in the removed state law claim must be clear: “For the federal issue will ultimately qualify for a federal forum only if federal jurisdiction is consistent with congressional judgment about the sound division between state and federal courts government the application of §1331,” Justice Souter wrote.
The Supreme Court’s earlier ruling in Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804 (1986) does not create an obstacle, Justice Souter explained, noting that Merrell Dow did not create a requirement that there be a related federal private right of action for federal arising under jurisdiction to exist. “The Court [in Merrell Dow] saw the missing cause of action not as a missing federal door key, always required, but as a missing welcome mat, required in the circumstances . . . .” Given the “dispositive” nature of the federal tax law question in Grable & Sons, the high court found, there was no reason to withhold federal jurisdiction.
Click here for the Court’s syllabus of the opinion, and here for Justice Thomas’s concurring opinion.
Editor’s Note: While not directly related to the Class Action Fairness Act of 2005, the editors have chosen to post this decision on the CAFA Law Blog since it affects federal removal practice by expanding federal question jurisdiction to include purely state law causes of action which have a significant federal issue. As such, this case may be of interest to those practicing in the class action arena.