2.5 Federal Question Jurisdiction

• Library: Federal Civil Practice in Virginia (Virginia CLE) (2023 Ed.)

2.5 FEDERAL QUESTION JURISDICTION

2.501 Governing Statute.

28 U.S.C. § 1331 provides that the district courts have original jurisdiction of "all civil actions arising under the Constitution, laws, or treaties of the United States."

2.502 The "Laws of the United States" Under 28 U.S.C. § 1331.

The kinds of federal law that can give rise to jurisdiction under 28 U.S.C. § 1331 include:

A. Constitutional Questions.

1. A challenge to the constitutionality of a federal statute. ²⁶⁴

2. A claim that the defendant's conduct violated the plaintiff's constitutional rights. ²⁶⁵

B. Federal Statutes. ²⁶⁶

1. Federal Tort Claims Act (FTCA).

The Federal Tort Claims Act (FTCA) ²⁶⁷ grants exclusive jurisdiction to the district courts. The court may consider facts outside the complaint to determine whether the claim is within, or excepted from, FTCA coverage. ²⁶⁸

2. Other Examples of Federal Claims Exclusive to Federal Court.

The following are other federal claims that can only be litigated in federal court:

A. Bankruptcy proceedings—2 8 U.S.C. § 1334;

B. Patent and copyright suits—2 8 U.S.C. § 1338(a);

C. Suits involving fines, penalties, forfeitures, or seizures under laws of the United States—2 8 U.S.C. §§ 1355, 1356;

D. Suits against the United States—2 8 U.S.C. § 1346 (by implication);

E. Suits against foreign consuls—2 8 U.S.C. § 1351;

F. Crimes against the United States—1 8 U.S.C. § 3231;

G. Admiralty suits concerning limitation of liability proceedings and actions in rem—2 8 U.S.C. § 1333;

H. Antitrust actions—1 5 U.S.C. §§ 15, 26;

I. S ecurities Exchange Act suits—1 5 U.S.C. § 78aa; and

J. Requests for judicial assistance to give testimony or to produce documents for use in a proceeding in a foreign or international tribunal—2 8 U.S.C. § 1782. ²⁶⁹

C. Presumption of Concurrent Federal and State Jurisdiction over Most Other Federal Claims.

In general, state courts may also adjudicate federal claims unless: (i) Congress has prohibited state courts from doing so; or (ii) state court jurisdiction would be incompatible with the nature of the federal claim. ²⁷⁰

State courts must hear federal claims if they have jurisdiction to hear analogous state-law claims. ²⁷¹

D. Acts and Regulations of Federal Administrative Agencies.

²⁷² For a case dismissing claims related to the federal Home Affordable Modification Program (HAMP) for lack of subject matter jurisdiction because the plaintiff only referred to HAMP in the complaint and did not rely on HAMP for its state-law claims, see Mosley v. Wells Fargo Bank, N.A. ²⁷³

E. Federal Common Law.

Although limited in scope, federal common law can provide the basis for jurisdiction under 28 U.S.C. § 1331. ²⁷⁴

Generally, federal common law falls into one of two categories: (i) areas in which a uniform federal rule promotes uniquely federal interests; or (ii) areas in which Congress has given federal courts the power to develop substantive law. ²⁷⁵

2.503 Federal Law Defenses or Counterclaims.

It is well established that the existence of a defense under federal law cannot serve as the basis for federal court jurisdiction. ²⁷⁶ Nor may a counterclaim. ²⁷⁷

2.504 State Law Claims with a Substantial Question of Federal Law.

A case may arise under federal law, for the purposes of establishing federal question jurisdiction, when the vindication of a right under state law necessarily turns on some construction of federal law. ²⁷⁸ The federal issue, however, must be "(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." ²⁷⁹ Federal jurisdiction will lie only if a case meets all four requirements. ²⁸⁰ A federal question is "necessarily raised" under this standard "only if it is a 'necessary element of one of the well-pleaded state claims.'" ²⁸¹

If a plaintiff can support his or her state law claim with even one theory that does not call for an interpretation of federal law, however, his or her claim does not "arise under" federal law for purposes of federal question jurisdiction. ²⁸² The "mere presence of a federal issue" is insufficient to create federal question jurisdiction; nor will "a defense that raises a federal question" suffice. ²⁸³

2.505 Declaratory Judgment Act.

A. In General.

Under the Declaratory Judgment Act (DJA), ²⁸⁴ a district court, in a case or controversy otherwise within its jurisdiction, "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." ²⁸⁵ "The Supreme Court has repeatedly characterized the [DJA] as 'an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant.'" ²⁸⁶

The DJA confers on federal courts "unique and substantial discretion in deciding whether to declare the rights of litigants." ²⁸⁷ In a DJA proceeding, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration. ²⁸⁸

B. Independent Basis for Federal Jurisdiction.

A party must have an independent basis for federal jurisdiction apart from the DJA. ²⁸⁹

C. Case-or-Controversy Requirement.

The United States Supreme Court has noted that there is a certain vagueness in the jurisprudence drawing lines between those declaratory judgment actions that satisfy the case-or-controversy requirement and those that do not. ²⁹⁰ The Supreme Court's case law has required that the dispute be "definite and concrete," and that it be "real and substantial." ²⁹¹ The Supreme Court in MedImmune, Inc. v. Genentech, Inc., held that the petitioner was not required to refuse to make royalty payments under its license agreement in order to seek relief under the patent statutes.

[W]e do not require a plaintiff to expose himself to liability before bringing suit to challenge the basis for the threat—for example, the constitutionality of the law threatened to be enforced. The plaintiff's own action (or inaction) in failing to violate the law eliminates the imminent threat of prosecution, but nonetheless does not eliminate A rticle III jurisdiction. ²⁹²

Indeed, the dilemma imposed by putting a challenger to the choice between abandoning its rights or risking prosecution is "a dilemma that it was the very purpose of the Declaratory Judgment Act to ameliorate." ²⁹³

D. Pending Parallel State Action.

The Fourth Circuit has advised that when an ongoing proceeding in state court overlaps with a federal DJA proceeding, the federal court must consider "federalism, efficiency, and comity" in deciding whether to exercise jurisdiction. ²⁹⁴ This analysis should be guided by four factors: (i) the strength of the state's interest in having the issues decided in its courts; (ii) whether the state courts could resolve the issues more efficiently than the federal courts; (iii) whether the presence of overlapping issues of fact or law might create unnecessary entanglement between the state and federal courts; and (iv) whether the federal action is merely the product of forum shopping or procedural fencing. ²⁹⁵

The Fourth Circuit recently applied these factors in Trustgard Insurance Co. v. Collins ²⁹⁶ to find that the district court had abused its discretion in exercising jurisdiction in a DJA action. An automobile insurer brought the action for a declaratory judgment that it had no duty to indemnify a defendant in a personal injury action pending in state court. The district court issued a declaratory judgment in favor of the insurer, but the Fourth Circuit reversed. ²⁹⁷ It expressed doubts as to the court's subject matter jurisdiction, noting that suits to resolve the insurer's duty to indemnify, unlike suits to resolve the duty to defend, pose a significant risk of eliciting an advisory opinion because as long as the insured's liability is undetermined, the insurer's injury remains hypothetical. ²⁹⁸ Exercising its option to address a discretionary jurisdictional question before a nondiscretionary jurisdictional question, the court found that even if the district court had subject matter jurisdiction, it should not have exercised it. ²⁹⁹ The number of state-law issues, the likelihood of entanglement with the state-court proceedings, and the "thin and ambiguous" factual record on which the district court had decided those issues all compelled the Fourth Circuit to dismiss the federal DJA case. ³⁰⁰

E. Simultaneous DJA Proceedings in Different Federal Courts.

"Ordinarily, when multiple suits are filed in different Federal courts upon the same factual issues, the first or prior action is permitted to proceed to the exclusion of another subsequently filed." ³⁰¹ But this first-to-file rule is neither "unyielding" ³⁰² nor "absolute," and is not to be "mechanically applied." ³⁰³

Courts consider three factors in determining whether actions come within the scope of the rule: (i) the chronology of the filings, (ii) the similarity of the parties involved, and (iii) the similarity of the issues at stake. ³⁰⁴ If the two actions do fall within the scope of the first-to-file rule, the decision to apply the rule "is an equitable determination that is made on a case-by-case, discretionary basis." ³⁰⁵ Because the rule is grounded in concerns about judicial efficiency and conservation of the courts' and the parties' resources, it permits exception "when justice or expediency so requires." ³⁰⁶ Other exceptions to the rule include bad faith, anticipatory suits, and forum shopping. ³⁰⁷ A suit under the DJA, filed immediately after notice that an opposing party's own action is about to be filed, raises what has been called a "red flag" and warrants close scrutiny of the filing to ensure that the DJA proceeding is not "merely a preemptive strike rather than an appropriate suit for damages or equitable...