Opinion ID: 76694
Heading Depth: 3
Heading Rank: 1

Heading: Federal Banking Regulations

Text: 15 The federal banking regulation at issue provides: All employment contracts [with federally chartered institutions] shall be in writing and shall be approved specifically by an association's board of directors. 12 C.F.R. § 563.39(a) (2003). The district court and the Dunlap I defendants characterize proof of compliance with this regulation as a federal question substantially necessary to prove the existence of a valid employment contract. 9 Dunlap, on the other hand, asserts that this federal question is insufficiently substantial to confer removal jurisdiction. We agree with Dunlap. 16 The fact that a court must apply federal law to a plaintiff's claims or construe federal law to determine whether the plaintiff is entitled to relief will not confer federal subject matter jurisdiction—the implicated federal issue must be substantial. Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. at 2848. For example, it is now well established that federal jurisdiction is not created by the mere fact that proof of violation of a federal statute is an element of a plaintiff's state-law cause of action. See Merrell Dow, 478 U.S. at 814, 106 S.Ct. at 3235 (holding that a federal question was not raised by the mere fact that proof of violation of the federal Food, Drug and Cosmetic Act was a necessary element of the plaintiff's state-law tort claim); Jairath v. Dyer, 154 F.3d 1280, 1283 (11th Cir.1998) (concluding that removal jurisdiction was improperly exercised because proof of violation of the Americans with Disabilities Act, although a necessary element of the plaintiff's state-law discrimination claim, was an insufficiently substantial federal question); see also City of Huntsville v. City of Madison, 24 F.3d 169, 174 (11th Cir.1994) (reasoning that interpretation of the Tennessee Valley Authority Act as a necessary element of the plaintiffs' state-law cause of action was not enough to permit federal question jurisdiction). 10 17 Here, Dunlap's claims do not require proof of violation or an interpretation of federal law. Indeed, the only potential issue involving federal law is whether Dunlap's employment contract complied with the terms of 12 C.F.R. § 563.39. This issue would be raised only as a defense after Dunlap had successfully established the existence of a valid contract under state law—far removed from a situation where compliance with a federal law is an essential element of the plaintiff's claims (in itself insufficient), much less one where the claim will be supported if the federal law is given one construction or effect and defeated if it is given another. See Mobil Oil, 671 F.2d at 422. Accordingly, the district court erred in exercising subject matter jurisdiction on this ground.