2.3 Federal Question Jurisdiction
Updated 2016 by Jeffrey S. Gutman
Title 28, Section 1331 of the United States Code confers upon federal district courts jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” Section 1331, which grants what is commonly referred to as federal question jurisdiction, is an all-purpose jurisdictional statute,1 available regardless of the defendant’s identity and, since 1980, is not limited by any requirement that a minimum dollar amount be in controversy.2 Section 1331 (and 28 U.S.C. § 1343) also confers jurisdiction in actions authorized by 42 U.S.C. § 1983 against defendants acting under color of state law.3 It is generally available in suits against the federal government and its agencies and in actions against federal officers and employees.4
2.3.A. Article III
Both Article III, Section II of the Constitution and 28 U.S.C. § 1331 use the same phrase, “arising under,” to define federal question jurisdiction, but the Supreme Court has not interpreted the constitutional and statutory language identically. In addressing the constitutional language, the Court has been expansive, broadly interpreting “arising under” to include any case in which a federal question is an “ingredient of the original cause.”5 A federal ingredient is very likely present in any case in which the plaintiff or defendant rests or may rest on a proposition of federal law as part of its claim or defense.6 In Osborn v. Bank of the United States, federal law established the Bank of the United States. That ingredient alone made constitutional a statute enabling the bank to sue and be sued on its contracts (generally state law claims) in federal courts. Because the Bank was incorporated by federal law, any case involving it arose under federal law.7 However, the Court subsequently made clear that a statute that does nothing more than to establish federal jurisdiction cannot serve as the federal law under which an action arises.8
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.10 Thus, 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.
2.3.B. Section 1331
In contrast, since Congress conferred general federal question jurisdiction in 1875, the Court has consistently held that the statutory grant is not as broad as the Constitution would allow.11 The primary test that has been developed for determining whether a civil action arises under the Constitution or laws of the United States for purposes of § 1331 requires (1) a substantial federal element and (2) such element being part of the plaintiff’s “well-pleaded complaint.”
- Chapter 1: Preparing for Litigation
- Chapter 2: Jurisdiction
- 2.1 Courts of Limited Jurisdiction
- 2.2 Pleading Requirements
- 2.3 Federal Question Jurisdiction
- 2.4 Other Jurisdictional Statutes
- 2.5 Litigation Against the Government
- 2.6 Supplemental Jurisdiction
- 2.7 Removal Jurisdiction
- 2.8 Abstention—Discretion to Decline Jurisdiction
- 2.9 State Court Jurisdiction over Federal Claims
- Chapter 3: The Case or Controversy Requirement and Other Preliminary Hurdles
- Chapter 4: Drafting and Filing the Complaint
- Chapter 5: Causes of Action
- Chapter 6: Pretrial and Trial Practice
- Chapter 7: Class Actions
- Chapter 8: Limitations on Relief
- Chapter 9: Relief
2.3.B.1. The Substantial Federal Element
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.
As Justice Stevens remarked for the Court in an opinion that canvassed § 1331 jurisprudence, “[t]he ‘vast majority’ of cases that come within this grant of jurisdiction are covered by Justice Holmes’s statement (in American Well Works v. Layne and Bowler Co.) that a ‘suit arises under the law that creates the cause of action.’”13 With rare exceptions,14 then, when a federal law creates the claim and the rules of decision governing it, federal jurisdiction exists.15
The more difficult question is the converse: when, if ever, does federal question jurisdiction exist when the claim is presented under state law? A recent and colorfully written First Circuit decision refers to these cases as potentially involving “embedded” federal questions.16 The Court interpreted § 1331 more broadly in Smith v. Kansas City Title and Trust Co.17 than it had in American Well Works. In Smith, a bank shareholder invoked state law to challenge a bank’s investment in bonds issued pursuant to an allegedly unconstitutional federal law. The plaintiff therefore sought to prevent the state bank from buying the federal bonds. Justice Holmes, in dissent, argued that the case should be regarded as arising solely under the state law defining the bank’s powers.18 Yet, the Court held that federal jurisdiction existed because the state law claim involved an inquiry into the constitutionality of a federal statute.19
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.
More recently, however, the Supreme Court appears to have confined Merrell Dow to its facts. In Grable and Sons Metal Products v. Darue Engineering,22 the Supreme Court upheld federal jurisdiction in a state law quiet title action that turned entirely on the interpretation of a federal Internal Revenue Service notice provision. As subsequently explained in Gunn,the Court held that federal jurisdiction is appropriate in state law actions if the federal issue is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.”23
The Court viewed Merrell Dow’s focus on the absence of a federal private right of action (there was no available federal quiet title claim) as a clue to, but not dispositive of, the interpretation of this federal-state balance. Rather, the Court distinguished Merrell Dow on the ground that finding jurisdiction there would have swept thousands of state negligence per se claims based on federal standards into the federal courts, thereby upsetting the division of labor between federal and state courts. Jurisdiction over quiet title actions arising from federal tax controversies would not similarly affect the “normal currents of litigation.”24 Declaring that Merrell Dow did not, as some courts believed, overrule Smith, the Court reaffirmed the notion that federal courts can hear some state law claims that turn on questions of federal law. The Court thereby adopted a functional test for “arising under” jurisdiction.25
Subsequently, in Gunn v. Minton, the Supreme Court clarified the third Grable factor: substantiality. Gunn was a state law legal malpractice claim against an attorney who allegedly failed to make a particular argument on behalf of the plaintiff in a patent infringement claim.26 To prevail, the plaintiff would have to show that he would have won his patent case had his attorney made the argument. The Court observed that resolution of the mertis of the patent law argument was “necessary” and “actually disputed.”27 While the issue was “substantial” in the sense that it was important in the plaintiff’s case, the Court held that the issue must be important in terms of “the federal system as a whole.”28 Here, a state court decision on the viability of the unstated patent law argument would neither change the result that the court previously found the patent invalid nor likely have created new law because the state court “can be expected to hew closely to the pertinent federal precendents.”29
2.3.B.2. The Well-Pleaded Complaint
Not only must the action “arise under” the Constitution or federal law, but the federal question must also appear on the face of a “well-pleaded complaint.”30 In practice, this means that plaintiffs may not invoke federal jurisdiction by raising contrived federal issues in the complaint 31 or anticipated federal defenses.32 “Nor can federal jurisdiction rest upon an actual or anticipated counterclaim.”33 Conversely, the Court has not been willing to allow a plaintiff to avoid federal jurisdiction by artfully omitting a substantial federal question essential to its case.34
Somewhat more difficult are cases in which federal preemption may be a defense to state law claims. Generally, the well pleaded complaint rule would disregard such a potential federal defense and view such claims as not invoking federal jurisdiction. However, the Supreme Court has crafted an exception when federal law completely occupies, and thereby preempts, the entire field addressed by the state law claim. In such cases, these state law complaints are recharacterized as necessarily invoking federal law, thereby permitting the defendant to remove the action to federal court.35
Updated 2016 by Jeffrey S. Gutman
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).
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).
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.
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).
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).
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.
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).
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).