- Must only look at the claim being made - An action arises under federal law when plaintiff's statement of its own cause of action show sit is based on federal law or the Constitution (SCt's interpretation of Mottley) - Plaintiff's initial complaint must contain the references to the federal question and the federal issue evoked - Plaintiff cannot anticipate federal defense or counterclaim - Plaintiff cannot state a federal claim that is immaterial and made solely for the purpose of creating federal jurisdiction