The Road Forward from Grable: Separation of Powers and the Limits of "Arising Under" Jurisdiction

• Author: Rachel M. Janutis
• Position: Associate Professor of Law and Director of Faculty Development, Capital University Law School
• Pages: 99-124

Page 99

One of the most challenging procedural issues for the United States Supreme Court has been defining the limits of federal question jurisdiction over state law claims that necessarily raise issues of federal law (the incorporation doctrine). In two recent decisions, the Court has tied the limits of the incorporation doctrine to the presence or absence of a parallel federal private right of action. First, in Merrell Dow v. Thompson,¹ the Supreme Court seemingly concluded that the federal courts lacked federal question jurisdiction under the incorporation doctrine if the federal law at issue did not provide the plaintiffs with a private right of action. More recently, in Grable v. Darue Engineering,² the Court held that the absence of a parallel federal right of action did not conclusively preclude federal question jurisdiction through the incorporation doctrine in all cases. However, the Court concluded that the absence of a parallel federal right of action could preclude incorporation jurisdiction in some situations.

This Article builds on the seminal works of commentators like Professors Mishkin and Merrell in the area of the Erie doctrine. It argues that the Court's current efforts to define the limits of the federal courts' jurisdiction fail to account for the separation of powers and embedded federalism issues in Article I's grant of exclusive federal lawmaking power to Congress. When federal courts exercise jurisdiction over state law claims that both replicate federal rights and provide for their private enforcement where federal law fails to do so, federal courts effectively imply a private federal remedy where Congress chose to leave private enforcement to the state courts. In so doing, courts interfere with Article I's grant of federal lawmaking power to Congress. This Article proposes to modify the unified balancing test enunciated in Grable with a two-step inquiry. Under this two-step inquiry, courts wouldPage 100 first examine the nature of the relationship between a state claim and the would-be federal claim. For those cases in which the state and federal claims touch on the same central concern, the absence of a private right of action under federal law would preclude federal jurisdiction over the state claim. For those cases in which the state and federal laws do not touch on the same central concern but merely intersect coincidentally, courts should perform the balancing of state law and federal law interests envisioned by the Court in Grable. In essence, the analysis should resemble a reverse complete preemption analysis. The more closely the state law claims mirror the would-be parallel federal claims, the more likely that the absence of a private right of action should preclude incorporation jurisdiction.

I The federal question jurisdiction of the federal courts

A The Limits on the Federal Question Jurisdiction of the Federal Courts

Article III provides that the federal judicial power shall extend "to all Cases, in Law or Equity, arising under the Constitution, the Laws of the United States, and Treaties made or which shall be made."³ The federal judicial power conferred by Article III is not self-executing. Thus, federal courts lack the power recognized under Article III unless specifically granted by an Act of Congress.⁴ However, since 1875, Congress has consistently granted the federal district courts the power to hear cases "arising under the Constitution, laws or treaties of the United States."⁵

At least since 1900, the Supreme Court has interpreted this Congressional grant of power more narrowly than the power recognized under Article III.⁶ To this end, the Court has recognizedPage 101 three limits on the federal question jurisdiction of the federal courts. First, the federal issue must arise on the face of the plaintiff's well-pleaded complaint.⁷ In other words, the federal issue must bear on an element of the plaintiff's claim rather than an anticipated or asserted defense. Second, the federal issue must be substantial or central to the plaintiff's claim.⁸ Third, the federal issue must be asserted in good faith and cannot be patently frivolous.⁹

The substantiality or centrality limitation is the focus of this Article and is the limitation that has proven the most troublesome for the Court to define. For nearly 100 years, the Court has recognized that a state law claim could give rise to federal question jurisdiction if the resolution of the claim necessarily raised an issue of federal law.¹⁰ In other words, an action to enforce state created rights could give rise to federal question jurisdiction if an issue of federal law was incorporated into the state claim. However, the Court also implicitly recognized that not all state claims raising embedded federal issues gave rise to federal questionPage 102 jurisdiction.¹¹ Defining which claims raised substantial or central enough federal issues to give rise to federal question jurisdiction (the incorporation doctrine) has provoked a vigorous scholarly debate.¹² It also has proven to be a troublesome issue for the Court.¹³

B Merrell Dow and the Introduction of the Private Right of Action

After a relatively lengthy absence, the Court returned to the incorporation doctrine in a series of recent decisions. First, in Merrell Dow v. Thompson,¹⁴ the Supreme Court refused to recognize federal question jurisdiction over the plaintiffs' state law products liability claims even though their negligence claims raised an issue under the Federal Food, Drug and Cosmetic Act ("FDCA"). In one of the counts of their complaint, the plaintiffs alleged that the defendant had violated the FDCA and that the defendants' violation of the Act gave rise to a rebuttable presumption of negligence.¹⁵

The Court re-affirmed the principle that a state law claim could give rise to federal question jurisdiction where the vindication of the state law right "necessarily turned on some construction of federal law."¹⁶ However, the Court ultimately concluded that the issues arising under the FDCA in the plaintiffs' claims were not substantial enough to give rise to jurisdiction.¹⁷ In reaching thisPage 103 conclusion, the Court first noted that the parties all conceded that the FDCA did not provide the plaintiffs a private right of action.¹⁸The Court relied heavily on the absence of a private right of action under the FDCA. The Court explained that:

The significance of the necessary assumption that there is no federal cause of action thus cannot be overstated. For the ultimate import of such a conclusion . . . is that it would flout congressional intent to provide a federal remedy for the violation of the federal statute. We think it would similarly flout, or at least undermine, congressional intent to conclude that the federal courts might nevertheless exercise federal question jurisdiction and provide remedies for violations of the federal statute solely because the violation of the federal statute is said to be a "rebuttable presumption" or a "proximate cause" under state law, rather than a federal action under federal law.¹⁹The Court continued:

Given the significance of the assumed congressional determination to preclude federal private remedies, the presence of the federal issue as an element of the state tort is not the kind of adjudication for which jurisdiction would serve the congressional purposes and the federal system . . . .

We simply conclude that the congressional determination that there should be no federal remedy for the violation is tantamount to a congressional conclusion that the presence of the claimed violation of an element of the state cause of action is insufficiently "substantial" to confer federal-question jurisdiction.²⁰Relying on this expansive language in the majority's opinion, several lower courts and commentators concluded that Merrell Dow barred federal courts from exercising federal question jurisdiction over a state law claim if the incorporated federal lawPage 104 did not grant a private right of action.²¹ However, other courts limited Merrell Dow to its facts.²²

C Grable: Private Right of Action as a Congressional Veto

The Supreme Court granted certiorari in Grable & Sons Metal Products v. Darue Engineering & Manufacturing to resolve this split among the lower courts regarding whether Merrell Dow required a federal cause of action for exercising federal question jurisdiction.²³ The Court's answer was mixed. The Court concluded that federal question jurisdiction did not require a parallel federal cause of action. However, the Court also recognized that the absence of a parallel federal cause of action would preclude federal question jurisdiction in some cases.²⁴

In Grable, the IRS seized property belonging to the plaintiff, Grable & Sons Metal Products, to satisfy a federal tax deficiency.²⁵The IRS then sold the property to a third party. Grable sued the tax sale purchaser in state court, seeking to quiet title to the property.²⁶Grable alleged that the tax sale purchaser did not acquire good title to the property under state law because the IRS violated federal law when it seized Grable's property. Specifically, Grable alleged that the Internal Revenue Code required the IRS to provide notice of a...