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AN E-BULLETIN
LEGAL INFORMATION INSTITUTE -- CORNELL LAW SCHOOL
lii\@lii.law.cornell.edu
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The following decisions have just arrived via the LII's
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GRABLE & SONS METAL PRODUCTS, INC. V. DARUEENGINEERING & MFG. (04-603)
Web-accessible at:
http://supct.law.cornell.edu/supct/html/04-603.ZS.html
Argued April 18, 2005 -- Decided June 13, 2005
Opinion author: Souter
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The Internal Revenue Service seized real
property owned by petitioner (hereinafter Grable) to satisfy a
federal tax delinquency, and gave Grable notice by certified
mail before selling the property to respondent (hereinafter
Darue). Grable subsequently brought a quiet title action in
state court, claiming that Darue's title was invalid
because 26 U.S.C.
sect. 6335 required the IRS to give Grable notice of the
sale by personal service, not certified mail. Darue removed
the case to Federal District Court as presenting a federal
question because the title claim depended on an interpretation
of federal tax law. The District Court declined to remand the
case, finding that it posed a significant federal-law question,
and it granted Darue summary judgment on the merits. The Sixth
Circuit affirmed, and this Court granted certiorari on the
jurisdictional question.
Held: The national interest in
providing a federal forum for federal tax litigation is
sufficiently substantial to support the exercise of
federal-question jurisdiction over the disputed issue on
removal. Pp. 3-11.
(a) Darue was
entitled to remove the quiet title action if Grable could have
brought it in federal court originally, as a civil action
"arising under the ... laws ... of the United
States," 28
U.S.C. sect. 1331. Federal-question jurisdiction is
usually invoked by plaintiffs pleading a cause of action
created by federal law, but this Court has also long recognized
that such jurisdiction will lie over some state-law claims that
implicate significant federal issues, see, e.g.,
Smith v. Kansas City Title & Trust Co., 255 U.S. 180. Such
federal jurisdiction demands not only a contested federal
issue, but a substantial one. And the jurisdiction must be
consistent with congressional judgment about the sound division
of labor between state and federal courts governing
sect.1331's application.These considerations have kept
the Court from adopting a single test for jurisdiction over
federal issues embedded in state-law claims between nondiverse
parties. Instead, the question is whether the state-law claim
necessarily stated a federal issue, actually disputed and
substantial, which a federal forum may entertain without
disturbing a congressionally approved balance of federal and
state judicial responsibilities. Pp. 3-6.
(b) This
case warrants federal jurisdiction. Grable premised its
superior title claim on the IRS's failure to give adequate
notice, as defined by federal law. Whether Grable received
notice is an essential element of its quiet title claim, and
the federal statute's meaning is actually disputed. The
meaning of a federal tax provision is an important federal-law
issue that belongs in federal court. The Government has a
strong interest in promptly collecting delinquent taxes, and
the IRS's ability to satisfy its claims from
delinquents' property requires clear terms of notice to
assure buyers like Darue that the IRS has good title. Finally,
because it will be the rare state title case that raises a
federal-law issue, federal jurisdiction to resolve genuine
disagreement over federal tax title provisions will portend
only a microscopic effect on the federal-state division of
labor.This conclusion puts the Court in venerable company,
quiet title actions having been the subject of some of the
earliest exercises of federal-question jurisdiction over
state-law claims. E.g., Hopkins v. Walker, 244 U.S. 486,
490-491. Pp. 6-7.
(c) Merrell Dow Pharmaceuticals
Inc. v. Thompson, 478 U.S. 804, is not
to the contrary. There, in finding federal jurisdiction
unavailable for a state tort claim resting in part on an
allegation that the defendant drug company had violated a
federal branding law, the Court noted that Congress had not
provided a private federal cause of action for such violations.
Merrell Dow cannot be read to make a federal cause of
action a necessary condition for federal-question jurisdiction.
It disclaimed the adoption of any bright-line rule and
expressly approved the exercise of jurisdiction in Smith,
where there was no federal cause of action. Accordingly,
Merrell Dow should be read in its entirety as treating
the absence of such cause as evidence relevant to, but not
dispositive of, the "sensitive judgments about
congressional intent," required by sect.1331.
Id., at 810. In Merrell Dow, the principal
significance of this absence was its bearing on the
consequences to the federal system. If the federal labeling
standard without a cause of action could get a state claim into
federal court, so could any other federal standards without
causes of action. And that would mean an enormous number of
cases.A comparable analysis yields a different jurisdictional
conclusion here, because state quiet title actions rarely
involve contested federal-law issues. Pp. 7-11.
377 F.3d 592, affirmed.
Souter, J., delivered
the opinion for a unanimous Court. Thomas, J., filed a
concurring opinion.
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Thomas, J., filed a
concurring opinion.
Thomas has made a habit of declaring in advance what precedents he is
ready to overrule if given the chance.
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