Source: https://www.povertylaw.org/clearinghouse/fpmd/chapter2/section3
Timestamp: 2019-04-25 04:08:21+00:00

Document:
The most recent Supreme Court Case confirming Osborn's broad reading of Article III is Osborn v. Haley.9 Osborn sued Haley, a non-diverse federal employee, on state law grounds in state court. Pursuant to the Westfall Act, 28 U.S.C. § 2679(d)(2), the federal government certified that Haley was acting within the scope of his employment, substituted the United States as defendant, and removed the case to federal court. After the government asserted later that the alleged conduct had not, in fact, occurred (thereby contradicting the basis for the certification), the district court rejected the certification and remanded the case to state court. The Supreme Court held that the Westfall Act prohibits remand of certified cases to state court. That result naturally led to a question of how Article III would permit the federal court to retain jurisdiction over a case involving state law claims between non-diverse parties when the court concludes that the Westfall certification was improper. Without citing Osborn v. United States, the Court held that whether the employee had Westfall Act immunity was an issue "arising under" federal law for purposes of Article III and that the court had discretion to retain jurisdiction after that issue was decided.10Thus, the court permitted the threshold certification, even an erroneous one, to satisfy Article III in a case otherwise raising only state law issues between non-diverse parties.
A case clearly arises under the Constitution for purposes of § 1331 when the plaintiff claims, for example, that a government officer or employee, acting in his or her official capacity, injures the plaintiff by taking an action that violates a provision of the Constitution or by acting pursuant to an unconstitutional statute. The federal question jurisdiction of the district courts also encompasses causes of action created by federal statutes, such as 42 U.S.C. § 1983, which explicitly authorizes a private remedy for acts that are taken under color of state law and violate rights secured by federal law.12 In such cases, federal law both creates the cause of action, supplying the underlying substantive rules that govern defendants’ conduct, and authorizes plaintiffs to enforce the rights created.
The apparent conflict between Smith and American Well Works made it difficult to determine when federal jurisdiction existed in cases where state-created actions require an interpretation of federal law. Merrell Dow Pharmaceuticals v. Thompson20 added to this complexity. One count of what was otherwise a purely state law tort action against a drug manufacturer for harm caused by one of its drugs alleged that the drug was misbranded in violation of the Federal Food, Drug, and Cosmetic Act and that the violation created a presumption of negligence. The Court joined the parties in assuming that the Act did not create a private cause of action. On that assumption, the Court held that assertion of federal jurisdiction would “flout, or at least undermine, congressional intent”21 not to create a federal remedy for violation of federal law. Thus, Merrell Dow suggested that federal jurisdiction was not available for state law claims that sought to enforce federal standards when there was no federal private right of action to enforce them. In doing so, Merrell Dow confused the existence of a federal claim or remedy with the presence of federal jurisdiction.
1. In addition to the general federal question jurisdiction conferred by Section 1331, Congress has enacted a number of more specific statutes conferring jurisdiction on the district courts in cases arising under particular federal laws. One of these, once of considerable importance, grants jurisdiction of cases arising under any congressional act regulating commerce, 28 U.S.C. § 1337(a) . Section 1337 and provisions conferring jurisdiction in admiralty, bankruptcy, and patent, trademark, and copyright cases (28 U.S.C. §§ 1333, 1334, and 1338) are in the district court jurisdiction chapter of the Judicial Code (Chapter 85 of Title 28). Others, such as the provision for district court jurisdiction of actions to review adverse social security decisions, are in other titles of the Code, typically in agency organic statutes. Besides conferring jurisdiction in the federal courts, such organic statutes may waive sovereign immunity, create causes of action, or specify relief.
2. Until 1980, § 1331 was limited by a $10,000 amount-in-controversy requirement. Before the repeal of this limitation, plaintiffs with federal statutory claims involving $10,000 or less for each plaintiff had to rely on other jurisdictional provisions not so limited. Plaintiffs often invoked 28 U.S.C. § 1337(a) since much legislation that is litigated finds its constitutional authority in the commerce clause. In this regard, § 1337 is now superfluous. See ErieNet, Incorporated v. Velocity Net, Incorporated, 156 F.3d 513, 519-20 (3d Cir. 1998). Similarly, before 1980, in § 1983 litigation involving $10,000 or less, plaintiffs relied on 28 U.S.C. § 1343(a)(3), the jurisdictional counterpart of § 1983. While this jurisdictional provision is now also superfluous, it is often still invoked along with § 1331 in civil rights cases. See, e.g., Clinton v. Jones, 520 U.S. 681, 685 n.1 (1997); Dixon v. Burke Co., Ga., 303 F.3d 1271, 1274 (11th Cir. 2002).
3. See 28 U.S.C. § 1343.
4. See, e.g., Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971).
5. Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 823 (1824); see also Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 492 (1983) (Foreign Sovereign Immunities Act is constitutional as actions against foreign sovereigns or foreign plaintiffs in U.S. courts require application of federal law).
6. Osborn, 22 U.S. (Wheat.) at 825. See The Pacific R.R. Removal Cases, 115 U.S. 1 (1885); see also Gunn v. Minton, 133 S. Ct. 1059 (2013) (no dispute that state legal malpractice claim alleging negligence in prosecuting patent infringement suit falls within Article III).
7. American National Red Cross v. S.G., 505 U.S. 247, 264 (1992) (Article III authorizes Congress to confer federal jurisdiction over claims involving federally chartered corporations).
8. Verlinden, 461 U.S. at 496.
9. Osborn v. Haley, 549 U.S. 225 (2007).
11. See generally Charles A. Wright & M. Kane, Law of Federal Courts § 17 (6th ed. 2002); see also Verlinden, 461 U.S. at 495; Louisville and N.R. Co. v. Mottley, 211 U.S.149 (1908). By employing in § 1331 the identical “arising under” phrase as is found in Article III, Congress might have been thought to be conferring federal question jurisdiction to the limit of Article III. But the Court has interpreted the statute narrowly to keep the district courts’ caseload manageable and to minimize intrusion on state courts.
12. See Grable and Sons Metal Products v. Darue Engineering and Manufacturing, 545 U.S. 308, 312 (2005).
13. Merrell Dow Pharmaceuticals Incorporated v. Thompson, 478 U.S. 804, 808 (1986) (quoting Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 8–9 (1983) (which in turn quoted American Well Works Co. v. Layne and Bowler Co., 241 U.S. 257, 260 (1916) (suit for damages to business allegedly resulting from slanderous accusations that plaintiff had infringed defendant’s patent arises under state law even though federal patent law was ingredient to claim))). A civil action based on federal common law also arises under the laws of the United States for the purpose of jurisdiction under § 1331. Illinois v. City of Milwaukee, 406 U.S. 91 (1972).
14. See Shoshone Mining v. Rutter, 177 U.S. 505 (1900).
15. Mims v. Arrow, 132 S. Ct. 740, 748-49 (2012).
16. Rhode Island Fishermen's Alliance v. Rhode Island Department of Environmental Management, 583 F.3d 42, 48 (1st Cir. 2009). The Supreme Court recently characterized this category of cases invoking federal jurisdiction as "slim." Gunn, 133 S. Ct. at 1065.
17. Smith v. Kansas City Title and Trust Co., 255 U.S. 180 (1921).
18. Id. at 213–14 (Holmes, J., dissenting).
19. Id. at 201–202; see also Sweeney v. Abramowitz, 449 F. Supp. 213 (D. Conn. 1978) (federal court has jurisdiction over suit for malicious prosecution based on filing of claim under § 1983 because essential element of plaintiffs’ complaint is that defendant had no probable cause to believe that he had valid § 1983 claim).
20. Merrell Dow Pharmaceutical, Incorporated v. Thompson, 478 U.S. 804, 804 (1986).
21. Merrell Dow, 478 U.S. at 812. Like several of the other cases that have defined the contours of “arising under” jurisdiction, Merrell Dow involved not an original action in a federal district court but an attempt to remove a case brought in state court to the federal court. The Supreme Court said that “[s]ince a defendant may remove a case only if the claim could have been brought in federal court . . . the question for removal jurisdiction must . . . be determined by reference to the ‘well-pleaded complaint’” under § 1331. Id. at 808. See also Caterpillar, Incorporated v. Williams, 482 U.S. 386, 392 (1987); Franchise Tax Board, 463 U.S. at 9-10. Removal is treated separately in this chapter in Section 2.7.
22. Grable and Sons Metal Products v. Darue Engineering, 545 U.S. 308 (2005).
23. Gunn, 139 S. Ct. at 1065; Grable, 545 U.S. at 314. See Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 136 S. Ct. 1562, 1570 (2016).
24. Grable, 545 U.S. at 319.
25. The Supreme Court subsequently held that Grable did not extend federal jurisdiction to a claim by a private health insurer that sought reimbursement of money recovered in a state court tort action by a former federal employee insured under the Federal Employees Health Insurance Benefits Act. Empire HealthChoice Assurance Co. v. McVeigh, 547 U.S. 677, 700-01 (2006).
26. Gunn, 133 S. Ct. 1059.
28. Id. at 1066. The government's interest in federal tax collection made the issue in controversy in Grable substantial in this sense. Id.
29. Id. at 1067. Had the patent issue been a novel one, the Court reasoned that if the issue were rare, it would be insubstantial, and if it were common, it would inevitably arise in a federal patent case, reviewable by the Federal Circuit and thereby promoting uniformity of federal patent law. Id.
30. Franchise Tax Board, 463 U.S. at 9–10.
31. Nor can federal jurisdiction be founded on insubstantial or frivolous federal claims. Hagans v. Lavine, 415 U.S. 528, 535, 542–43 (1974).
32. The case most often cited for this proposition, though not the first, is Mottley, 211 U.S. at 149. In Mottley the plaintiff alleged that a federal defense the plaintiff anticipated violated the Constitution. The Supreme Court denied jurisdiction because “a suit arises under the Constitution and laws of the United States only when the plaintiff’s statement of his own cause of action shows that it is based upon those laws or that Constitution.” Id. at 153. See also Merrell Dow, 478 U.S. at 808 (relying on Mottley, 211 U.S. 149).
33. Vaden v. Discover Bank, 556 U.S. 49, 60 (2009) (citing Holmes Group, Incorporated v. Vornado Air Circulation Systems, Incorporated, 535 U.S. 826 (2002)). In Vaden, the Court held that a federally preempted state law counter-claim cannot serve as the basis for federal jurisdiction. Id. at 66-67; see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 476 (1998) (defense of claim preclusion based on prior federal judgment does not justify removal).
34. Franchise Tax Board, 463 U.S. at 22.
35. For example, in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 66 (1987), a disability benefits case preempted by ERISA, the Court permitted removal to federal court where Congress “clearly manifested an intent” to preempt the field and all state causes of action; see also Aetna Health Care Incorporated v. Davila, 542 U.S. 200, 208-09 (2004); Beneficial National Bank v. Anderson, 539 U.S. 1, 8 (2003).

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