”If a matter is a federal question”

Cément BESOMBES Emelie LUNDBERG Alma BLAKE EMWALL

”Grable & Sons Metal Products

v.

Darue Engineering”

Plaintiff: Grable & Sons Metal Products, Inc

Defendant: Darue Engineering

Court: UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Facts

The Internal Revenue Service (IRS) seized Michigan real property owned by Grable to satisfy federal back

Grable was given notice of the sale through certified mail.

Grable claimed that Darue's title was invalid (§6337(b)(1))

Darue removed the case to Federal District  

The district court agreed and ruled for Darue. The Sixth Circuit affirmed the decision.

Procedural History

The Complaint

Proceedings In The District Court

 Proceedings In The Court of Appeals

Legal Questions:

Key Legal Question:

Whether Grable's quiet-title action, based as it is on

the faulty process in a tax seizure, “arises under”

federal law and as a result invokes federal court

jurisdiction.

Legal Questions:

Does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities?

How a claim, involving a cause of action not started by a federal statute, can be tried in federal court under federal-question jurisdiction?

Legal Rules: 

28 U.S.C.A. § 1331 Federal Question:

The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.

Definition of “arising under”:

A federal question may arise out of a state law case or controversy, if the plaintiff assets a federal right that:

1. Involves a substantial question of federal law;

2. is framed in terms of state law, and

3. requires interpretation of federal law to resolve the case

26 U.S.C. § 6335

The paragraph required the IRS to give Grable notice of the sale by personal service, not certified mail.

The breach of the rule was the reason for Grable’s quiet action in state court against Darue, and the issue of the case.

Outcome/ruling

Initial Development of federal Question

Jurisdiction

Subject matter:

Collect taxes: Article I Section 8: U.S.Constitution

Rules:

§1331 : The district courts shall have original jurisdiction of all civil actions arising under the Constitution, law, or treaties of the US

§1441 : removal of civil actions

“well-pleaded complaint rule”

Federal jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint.

Precedent of the “well-pleaded complaint rule”

“Hopkins v. Walker” (S.C.U.S.)

Federal-question jurisdiction exists under that analysis if the “well-pleaded complaint establishes either

that federal law creates the cause of action, or

that the plaintiff’s right to relief necessarily depends on resolution of a “substantial” question of federal law.”

Arising under the “Substantial” federal question test and the proper role of “Merell Dow”

Holmes "Creation" Test

Franchise Tax Board Test

Smith Test

The Elements Of ”The Gully/Franchise Tax Board Analysis” As Applied To The Instant Case

Resolution Of The Federal Question Is Outcome Determinative

The Federal Question Is In Dispute

The Federal Question Is Substantial

The Instant Case Therefore Satisfies The Gully/Franchise Tax Board Analysis

Reasoning:”Smith” held that a state-law claim could give rise

to federal-question jurisdiction so long as it appears from the complaint that the right to relief depends upon the construction or application of federal law.

The government has a strong interest in the prompt and certain collection of delinquent taxes

Merrell Dow is not to the contrary.  

Final decision

The case involved a federal question

It could be removed to federal court.

The national interest in providing a federal forum for federal tax litigation warranted moving the case to federal court.

The lower court's judgment, which affirmed the existence of federal jurisdiction over the owner's

quiet title action, was affirmed.

Rule for future cases:

The national interest in having a federal forum for federal tax litigation is sufficient to support federal question jurisdiction,

Federal question jurisdiction exists where:(1) resolving a federal issue is necessary to resolution of the state-law claim;

(2) the federal issue is actually disputed;

(3) the federal issue is substantial; and

(4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities. 

Any Dissent?

Thank you!and God bless America