Jennifer E. Fairbairn, Keeping Grable Slim: Federal Question Jurisdiction and the Centrality Test

• Jurisdiction: United States,Federal
• Publication year: 2009
• Citation: Vol. 58 No. 4

KEEPING GRABLE SLIM: FEDERAL QUESTION JURISDICTION AND THE CENTRALITY TEST

INTRODUCTION

"The most difficult single problem in determining whether federal question jurisdiction exists is deciding when the relationship of the federal law to a case is such that the action may be said to be one 'arising under' that law."¹

The jurisdiction of federal courts extends "to all Cases, in Law and Equity, arising under this Constitution, [or] the Laws of the United States . . . ."²

About 140,000 cases purporting to allow "arising under" jurisdiction are filed every year,³but when exactly does a case arise under the Constitution or the laws of the United States? It is well-settled that cases in which federal law provides the cause of action are considered to "arise under" the Constitution or laws of the United States.⁴Unfortunately, the standard over the last ninety years has been much less clear for cases that assert a state cause of action but have an embedded federal element central to the case.⁵The centrality test is used to address those cases in which a federal law does not create the plaintiff's cause of action but there is still a significant federal question that needs to be decided. Historically, the Supreme Court vacillated between two centrality tests: one that completely excludes all cases from a federal forum if state law provides the cause of action⁶and one that allows any case to invoke federal question jurisdiction where a federal law or the Constitution is to be interpreted or applied and the "federal claim is not merely colorable."⁷

Three years ago, the Supreme Court redefined and clarified the centrality test in a pivotal decision. The Court granted certiorari in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing⁸to resolve a split between the circuits and articulate a clear standard for determining when a case asserting a state cause of action still arises under the Constitution or laws of the United States.⁹

This Comment contends that the Supreme Court created a straightforward, commendable test that effectively promotes the purposes of federal question jurisdiction, in contrast to recent critiques of Grable.¹⁰The lower courts generally achieve the correct results when applying the Grable test,¹¹but there have been some problematic applications.¹²If history is any indication, the

Supreme Court will not revisit the centrality test anytime soon despite lower courts' problems with applying Grable.¹³The Court offered enough guidance to the lower courts through its decisions in both Grable and Empire HealthChoice Assurance, Inc. v. McVeigh,¹⁴a case decided the year following Grable. It should be the prerogative of the lower courts to utilize Grable properly, while recalling the Supreme Court's intent in fashioning the Grable test.

Part I of this Comment briefly examines the history of federal question jurisdiction and the centrality test to show how the test has changed over the last century and how those changes shaped the Court's formulation of the current centrality standard in Grable. Part II analyzes the four-factor test laid out by the Court in Grable and the Court's application of that test in Grable and Empire HealthChoice. Part III defends the merits of the Grable test, including its alignment with the purposes of federal question jurisdiction: providing litigants with judges who have greater federal law experience than state judges,¹⁵promoting uniformity of federal law,¹⁶and providing litigants with courts that are more solicitous to federal issues.¹⁷Part IV discusses a few of the problems lower federal courts are having in applying Grable and the potential ramifications of those misapplications.

I. THE HISTORY OF FEDERAL QUESTION JURISDICTION

This Part offers the background of the centrality test prior to Grable. Section A describes the constitutional and congressional grants of federal question jurisdiction and the necessity of limiting the scope of such jurisdiction. Section B discusses the first requirement for federal question jurisdiction: the well-pleaded complaint rule. Section C describes and analyzes the centrality test cases decided prior to Grable. The history of federal question jurisdiction has been tumultuous, and each test set out by the Supreme Court during that turbulent history influences the current state of federal question jurisdiction to some extent.

A. The Constitutional and Statutory Evolution of Federal Question

Jurisdiction

The Constitution of the United States grants judicial power to the federal courts over "all Cases, in Law and Equity, arising under this Constitution, [or] the Laws of the United States . . . ."¹⁸The purpose of federal courts, at least in part, is to "expound principles of federal law" and to "protect federal rights and interests."¹⁹To fulfill this purpose, the Supreme Court interpreted the constitutional grant of power broadly in Osborn v. Bank of the United States.²⁰

The Court held that the Constitution empowered Congress to grant jurisdiction to the federal courts over any case in which an "ingredient" of federal law existed.²¹This interpretation would have allowed any claim involving a federal element, no matter how slight, to be heard by a federal court. Without further limitations, such a broad interpretation would have inundated federal courts with cases that did not necessarily need a federal forum.

When Congress codified federal question jurisdiction in 28 U.S.C.

Sec. 1331,²²it did little to limit the Court's broad interpretation of the grant of power derived from the Constitution. Instead, Congress mimicked the language in the Constitution: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."²³Congress's use of the same language the Supreme Court interpreted expansively in Osborn left the balance between state and federal courts in a precarious position.

Despite the statutory and constitutional language being essentially the same, the Supreme Court and lower federal courts interpreted Sec. 1331 as bestowing a narrower grant of power than the Constitution.²⁴Realizing the danger of interpreting the congressional language in the same broad fashion as the constitutional language,²⁵the Supreme Court created the well-pleaded complaint rule²⁶and the centrality test²⁷to limit Sec. 1331. Although it is clear that federal question jurisdiction requires litigants to satisfy the well-pleaded complaint rule²⁸and allege either a federal cause of action or fulfill the centrality test,²⁹federal question jurisdiction under Sec. 1331 has "eluded precise definition and consistent application, causing well-documented chagrin to courts and commentators alike."³⁰This confusion is due to the Court's repeatedly unclear decisions regarding the centrality test.³¹

B. The Well-Pleaded Complaint Rule

"The 'well-pleaded complaint rule' is the basic principle marking the boundaries of the federal question jurisdiction of the federal district courts"³²and is much less flexible than the current centrality test.³³The well-pleaded complaint rule requires that the plaintiff plead the issue of federal law in his complaint for the case to arise under the Constitution or laws of the United States.³⁴Additionally, the plaintiff cannot insert the federal element into his or her claim in anticipation of the defendant raising a federal defense.³⁵In other words, the possibility of a federal defense or even the defendant's assertion of a counterclaim actually involving a federal issue is irrelevant.³⁶It must be the plaintiff's statement of his or her cause of action that presents the suit as one arising under the Constitution or laws of the United States.³⁷

The well-pleaded complaint rule is the first and most important filter used to determine whether federal question jurisdiction exists.³⁸If the plaintiff cannot satisfy the well-pleaded complaint rule, the plaintiff's case cannot be adjudicated in federal court,³⁹and the centrality test should never be applied.⁴⁰

Unlike the centrality test, which has changed multiple times over the past century,⁴¹the Court remains faithful to the well-pleaded complaint rule.⁴²

C. Pre-Grable Judicial Interpretations Shaping the "Arising Under" Test

The centrality test determines whether certain cases belong in federal court. If federal law creates the cause of action, federal question jurisdiction is appropriate.⁴³The centrality test, however, addresses cases in which there is no federal cause of action but there is some embedded federal element.⁴⁴

Unfortunately, Supreme Court decisions regarding the centrality test have been less than uniform.⁴⁵

In one of the first important "arising under" cases, American Well Works Co. v. Layne & Bowler Co., the plaintiff sued the defendants for libel and slander, alleging that the defendants made statements to others that the plaintiff had infringed the defendants' patent.⁴⁶The defendants removed to federal court under the proposition that the plaintiff's threat to sue for patent infringement, an area governed by federal law, allowed federal question jurisdiction.⁴⁷

In American Well Works, Justice Holmes wrote for the majority and established an inflexible rule: "A suit arises under the law that creates the cause of action."⁴⁸Under the "Holmes rule" if state law provided the cause of action there was no federal question jurisdiction despite the substantiality of the disputed federal issue.⁴⁹Justice Holmes emphatically stated that a suit for damage caused by a threat to sue under patent law or damage caused by a mere factual statement that a patent had been infringed certainly did not constitute a suit under patent law.⁵⁰

The Court considered Smith v. Kansas City Title & Trust Co.⁵¹only a few years later and failed to follow the Holmes rule from American Well Works.⁵²

Like American Well Works, state law created the cause of action in Smith.⁵³

The plaintiff alleged that the defendant's plan to invest...