CHAPTER 10: SUBJECT MATTER JURISDICTIONchoosing between state and federal court

Assuming JX to over the party and assuming proper venue.

States have general jx: can hear any kind of case. Most restriction are imposed by states itself.
States
o Not allowed to discriminate against claims of other states and laws.
o Supremacy Clausesource of the requirement that states do not discriminate against federal laws.
o Congress puts some claims within the exclusive jx of state courts.
o Usually have concurrent jx with states courts.
Small claims courts with jx over claims up to a certain dollar amount.
i.e. divorce court, probate court
PJ over the defendant + SMJ over the claim

A. DIVERSITY OF CITZENSHIP
A 3 of Constitution authorizes federal courts to hear controversies between citizens of states + suits involving aliens. 1)
Creates SC and gives it Jx and 2) permits Congress to create lower federal courts+ give them jx so long as it doesnt exceed
the judicial power of the US. Trial level Courts, Appellate Courts.
o Section 1: judicial power of the US shall be vested in 1 SC and in inferior courts as Congress may from time to time
ordain and establish.
o Section 2: judicial power extends to all cases in law and equity arising under Constitution, laws of the states and
treaties
All cases of admiralty and maritime sjx
Cases which the US shall be a party
Controversies to two or more states
Between a State and Citizens of another state
Between citizens of different states
Between citizens of the same states claiming Lands under grants of different States
Between a State/Citizens and foreign States, Citizens or Subjects.

Strawbridge v. Curtis statute required complete diversity so that no D be the citizen of the same state as any P.

STATE LAW CLAIMS

1332: DIVERSITY OF CITZENSHIP; AMOUNT IN CONTROVERSY;COSTS
a. District courts shall have original jx of all civil actions where the matter in controversy exceeds the sum or value of
$75,000 and is between.
1. Citizens of different states
2. Citizens of a State and citizens or subjects of a foreign state (No original Jxcitizens of state and citizens or
subjects of a foreign state who are lawfully admitted for permanent residence in the US and are domiciled
in the same state)
3. Citizens of a different state in which citizens or subjects of a foreign state are additional problems.
4. A foreign state, defined in section 1603(a) of this title, as P and citizens of a state or of different states.
b. Requires complete diversity each d different than b. vs. Article 3 Requires only minimum diversity (at least 1 D
diverse from some P)

Why have this? 1) State courts might have some bias against out of state litigantsallows them to go to out of state court. 2)
Federal judges are appointed not elected, life tenure, dont have to worry about their constituency.
Some Against this: We are above biases now; want to reserve federal courts for the thing they are best decided to do i.e. federal
issues.
Why does the P Choose to be in Federal Ct: may prefer procedural of federal rules broad discovery, superior judges; quicker to try
or settle, more likely to get summary judgment. Ds have right to remove cases in state court to federal court.
If your P and choosing between Fed to get PJ over the D than state cts?: Does the federal court have a longer arm. No look at Rule
k. The federal court just uses the state long-arm. Rule 14: impleader D sues someone who they claim have an obligation to
indemnify them or if a party, would say they should be joined if feasible. Federal court is usually limited to use the states long arm
So it has no longer or greater a reach than what state courts have. Not a reason to pick federal court over state court.
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Does it give it to the P any benefit of substantive law : federal court looks to the choice of law principles to the state in which it is
sitting. Doesnt give you any different law.
Sometimes Bills in Congress to cut back on Diversity JX.: P of IL --- sue D in federal district court of IL.

Hypos:
NY + NY

NY +OHIO vs. France

Personal JX:
Personal defense that they can waive

Subject Matter Jx:

Jx that congress has or has not given to federal courts.
Citizenship is the key term in all of this.
All that A3 requires is minimal diversity.

US Citizens domiciled abroad: 1) not citizen of US state or state abroadcannot be brought under 1332.

Interpleader: someone is holding property. May not have claim to property themselves but multiple parties do and says to
court you figure out who it goes to .

Case Rule: Residence does not mean citizenship domicile does

Case: Mas v. Perry (1974)US Ct of Appeals
Facts:
1. 1332 for original jx in federal district courts of all civil actions that are between 1) citizens of different states or 2)
citizens of a state and foreign states.
2. Paul Mas: citizen of France + married to Mrs. Mas domiciled home in Mississippi.
a. Prior to marriage both were grad students (performed teaching duties) Louisiana State University. Baton Rouge
b. Remained in BR for 2 years then moved to Park Ridge IL. Undecided where they were going to live after Mr
finished dr.
3. Rented an apartment in Louisiana from D.
a. Bedroom and bathroom contained 2 way mirrors.
PP:
1. District Ct: Mr. Mas $5k and Mrs. Mas $15k for damages. Perry made an oral motion to dismiss for lack of jx which was
denied.
a. Perry Argues: 1) they failed to prove diversity citizenship among the parties and 2) requisite jurisdictional amount
is lacking with respect to Mr. Mas
2. US Ct of Appeals: where the case is now; affirms DC decision.

Issue:
1. Are Perrys arguments valid? No
Holding/ Rationale:
1. 1332 a 2 federal judicial power extends to the claim of Mr. Mas (citizen of France) against the Perry a citizen of LA
2. 1332 a 1 Mrs. Is a citizen of Mississippi and Perry is a citizen of LA
3. General Rules
Complete diversity of parties is required: no party on one side may be a citizen of the same state as any party on the
other side.
Federal laws, not state law.
Burden: on the party invoking federal jx and if it is challenged also bear burden of proof. Ps have the burden by a
preponderance of the evidence. Permanent residence aliens: citizen of state or states + citizens subject of a foreign
state. This case does not fit the patterndidnt exist and would not have had a role in that case. No precedent to
extending that to where husband is a citizen of foreign countryshe would be a citizen of france and not a citizen
of france. IF you take the domicle not the citizenship of her husband it would make her a US citizens domiciled in

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 France.she would be a stateless people and she would have no jx in this case.

4. 1332
Citizenship means domicile mere residence is not sufficient. JX would work under A3. You have to look at the civil
action in its entirety as a whole to see if it fits in any of the subsections. If complete diversity is lacking, the whole
suit must be dismissed.
Domicile: fixed +permanent homehave the intention of returning.

5. In this Case
Domicile of Mrs.==> MI (domicile of wife is not that of her husband then she would be a domiciliary of France)
Dont lose US citizens status soley by marriage to an alien
Although Mrs. Testified that she had no intention of returning to her parents home in MI she was still domiciled
there (until she acquired a new domicile)
6. P Arg
Mr. claims should be dismissed because he failed to establish the requisite jx amount from diversity cases of more than
$10k
Ct holds no: in their complaint they each claimed to damaged in amount of $100,000 and it was claimed in good faith.
o the fact that he only recovered 5k is not compelling.
o Ct is looking to the complaint. It is not 100% conclusive. Would have to show with legal certainity that the
claim is less than. Good faith in this context has a peculiar equivalence to not being able to say to a legal
certainty.
o Parties have gone through trial and discovery and then Perry says that u have to dismiss it for lack of jx.
(Yes it can raise objection so late in the game) Its a matter of what jx they have from Congress and the
Constitution
o When the case is on appeal or on the US SC it is not too latects have an obligation to raise it if the parties
do not. (su aspante= own their own) if none of the parties bring it up.
Affirms TC decision

Notes and Questions:

1. Diversity +Alienage JX
a. Have it to afford a safety valve against state court prejudice against outsiders
b. Diversity does not exist if there are aliens on both sides of the case
2. Complete Diversity Rule
a. State Farm Fire & Cas. Co v. Tashire requirement of minimal diversity
b. Two Statutes in Reliance of minimal diversity
i. Multiparty-Multiform trial JX Act of 2002: seeks to sweep into fed ct al claims arising from any single
disaster that results in death to more than 75 individuals
ii. Class Action Fairness Act of 2005: empowers dc to hear many state law class actins in which the
aggregate value of the claims exceeds $5 million and diversity of citizenship exists between any member
of the class and D.
3. Domicile: 1) person must be present in a new state 2) with the intention to remain there indefinitely
a. Temporary residence to pursue studies did not affect domicile
b. Guardian can change and incompetents domicile on their behalf. Prisoner kept domicile even though was
domiciled someone else.
c. Homeless Person: ONeal v. Atwal: P was homeless but listed in address in Al in his complaint judge rq him to
answer questions 1) where he had live 2) whether and where he had any employment 3) where he was registered
to vote.
4. Mas v. Perry
a. France: old cases assign women to the citizenship/domicile of their husbands. Newman-Green Inc v. Alfonzo
Larrain stateless person exception to DJ. Although a US citizen has not domiciled in any state, stateless person
cannot sue or be sued in federal court on basis of diversity.
b. Mississippi Ms was a domiciliary of MI before she married her husband. Old domiciliary is kept until the person
changes it. Holmes v. Sopuch: person viewed as a Missouri domiciliary even though he was living in Ohio and had
no intention of returning to Missouri.

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 c. Louisiana made her home there while she and her husband completed their studies. Students who move to
state to study typically do not do so with the intent necessary to change domicile. But when person gets married
and leaves home with no intention of returning there is a stronger argument.
5. LPR (lawfully permitted residentsaliens): citizen of aliens state of domicile
a. Foy v. Schantz Schatzman & Aaronson: holding that the reference to permanent resident aliens encompasses only
those aliens who have been accorded pr status by the federal government and have received a green card.
b. A 3: no provision for disputes between aliens.
6. Diversity JX Manipulation
a. 28 USC 1359 seeks to control such manipulation DC shall not have jx of a civil action in which any party has
been improperly of collusively made or joined to invoke the jx of such court.
b. Kramer v. Caribbean Mills, Inc a Panamanian corporation assigned its claim against a Hatian corporation to a
Texas lawyer in return for one dollar and a promise that the Texan would remit 95% of any amounts he received.
Strategy would not create diversity for jx purposes (doesnt allow jx through assignments)
c. Could defeat diversity: by selecting an executory or administrator of the desired citizenship 28 USC 1332 c
provided that for purposes of diversity that the representative of an estate would be deemed as a citizen of the
state as the decedent. Parties could manipulate diversity jx Saw it in piper where ca representive was viewed as
satisfaction.
7. Saving Statute: courts an impose sanction if the hold out into it is to late for the refile.
a. Which give P a grace period to re file in state court after the dismissal
b. In state that lacks a SS d may be tempted to lull p into that jx think its proper until its too late to refile in state ct.
8. Subject Matter JX:
a. Cannot be based on consent or action of the parties or on theories of estoppel.
b. Federal Cts typically refused certain types of Cases: Exceptions: Divorce, Alimony, Probate Even if the party is
diverse we do not have jx over this suit of divorce etc.long regarded as reserved to the states.
i. DOMESTIC RELATIONS EXCEPTIONS
1. Ankenbrandt v. Richards P sued her former husband on behalf of their children for damages
for abuse of children while they were visiting their father. Ct dismissed SC reversed: domestic
relations exception: divest the federal courts of the power to issue divorce alimony and child
custody decrees inapplicable to Ps suit for torts damages.
2. Mautsow v. Trans-County Title Agency action to quiet title to real property that was the
subject of an agreement entered as part of a divorce proceeding would not interfere with state
court authority over the divorce and property settlement and did not fall within the exception.
ii. 2) PROBATES OF AN ESTATE
1. Marshall v. Marshall ct define probate exception...the probate of a will and the administration
of a decedents estate; precludes federal courts from disposing of property in the custody of state
probate court. For tortious interference for a gift by her husband. Cts limits the scope of these
exceptions. Sometimes, people make policy arguments that we need to do away with these
arguments. The exceptions to date still hold.
c. P can cure JX problems by lack of complete diversity by dismissing to non-diverse D
i. Newman-Green Inc v. Alfonzo Larrain: ct held that rule 21 permits this solution even if the case is on
appeal
ii. Grupo Datafulx v. Atlas Global Group: holding that the withdrawal of 2 non diverse partners from the P
partnership due to commercial developments before trial could not cure the lack of diversity at the
beginning of the lawsuit.

CORPORATE AND ASSOCIATION CITIZENSHIP

Section 1332 (c) provides that a corporation is a citizen of every state and foreign state in which it is
incorporated + the state or foreign state where it has principal place of business.
o Incorporation entails filing documents so you can always tell incorporation.
Corporations have one Principal Place of Business
o Hertz Corp v. Friend: SC defined corporation PPB. Dispute involved rental car co. had PPB in CA the state which it
derived more sales revenues that any other states. SC reversed: PPB is the place where the corporations high level
officer direct, control and coordinate the corporations activities (the nerve center) acknowledged that sometimes
that this wouldnt feel right, but they needed an administrable test.

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 Unincorporated Associations: are not treated as separate entities for diversity purposes and in determining diversity one
must consider the citizenship of all members of the association. (partnership, labor unions)
o Carden v. Arkoma Associates: the Court refused to liken a limited partnership to a corporation and therefore
chose to consider the citizenship of all the partners, full and limited. (limited ppl were still looked at for
citizenship)
o Cresswell v. Sullivan & Cromwell: law firm could not be sued in federal court on diversity grounds because it was a
partnsership including US nationals who are domiciled abroad
o Indiana gas co v homes ins. Co holding that underwriting syndicate known as Lloyds of London has the
citizenship for diversity purposes of every name or investor---and that presence of one from Indiana would defeat
diversity.
o Navarro Savings Assn v. Lee ct held that for a Mass business trust only the citizenship of the trustees need to
be considered in determining diversity because they possess certain customary powers to hold manage and
dispose of assets
o Supreme Tribe of Ben-hur v. Cauble: in class action only the citizenship of the class representatives need be
considered in determining diversity. Class Actions: 1) look to the citizenship of the named representatives
parties not to the citizenship of the un-named members. Class action Act: provides an alternative; allows for jx
over class action over federal courts where there is minimal diversity between citizens of those who count, unless
certain exceptions reply. If they dont fit the class action fairness act, you look only to the citizenship of the named
plaintiff. Must be complete diversity.
o Cote v. Wadel court held that a law firm agency organized as a professional corporation should be treated as
such its is a corporation.

LLC have been characterized as partnerships for diversity purposes with their citizenships determined by citizenships of
all their members

*******Complete is diversity when the case is filed when the case if filed; Clear Easy time point; Moment in Time.
Prior to filing, the P changed her domicile for the purpose of creating diversity: why people police motivations in changing domicile.
Cts really dont want to get into the business of probing motivations. Whether it is a bona-fida change---with the intent to remain
there indefinitely wont get into why. You can create diversity or prevent diversity by making strategic moves like that.

****At the time it is failed, what matter is the moment of filing not what happens later.

IF you absolutely assign claim it is their citizenship that will matter.

Manufacturing Devices:
Prefilling change of domicile: police by showing a bona fide change of domicile.
Diversity by assigning you claim to a person of different citizenship
Class Actionsperson who citizens ship is different than D not really policing over who is choosing as a representative---
claim must be typical of those of the class members and will represent that class.
Alluding Parties: shareholder derivative suit like in Shaffer suit people diverse from the Ps; Shareholder (IL) v. Officers
(Oregon): Corporation is in DE and Incorporation in IL iF named as P you have complete diversity if named as D you dont
have complete diversity. Derivative suit any money goes to the P brought on their behalf. The corporation does not want
this suit to go forward they are opposing it because they have a refused a demand to bring the lawsuit---so maybe they
should be aligned as a defendant.
Failure to join the party: Robinsons as citizens of NY might have only sued audi and therefore had diversity jx. They can
omit an defendant who would not be the same. Rule 19: hanson v. Denckla the indispensible party. You cant get away with
this if the person you leave out is an indispensible party.

AMOUNT IN CONTROVERSY
To qualify for federal jx on grounds of diversity P must establish 1) complete diversity and 2) more than $75,000 in
controversy. (fluctuates according to consumer price index)
o Want to exclude inconsequential cases from the federal courts

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Notes and Questions
1. If suing for property or damages less than the amount is there punitive damages that could make it more expensive.
a. State Farm Mut Auto Insurance v. Campbell SC suggested that punitive damages that exceed compensatory
damages by a ration of greater than 4-1 or 9 to a single digit might violate due process.
b. LM Ins. Co v. Spaulding Enterprises Inc ct determined that compensatory damages of $20k were at issue. Ct
determined that punitive damages were available but it would take $55 to meet jx min it would represent 2.75
times the amount of compensatory damages well within the single ratio.
2. Lack of precise way to value emotional distress.
a. Cts have been lenient if there was some significant personal injuries. If no personal injuries court are less likely .
b. Stewart v. Tupperware Co injuries in automobile accident included hospital bills and impairment of function;
emotional injuries were potentially significant enough to meet the minimum.
c. Rosario Ortega v. Star-Kist Foods mothers distress at childs injury was not sufficiently serious to satisfy the
amount in controversy where out of pocket costs were moderate.
3. Challenge to jx amount
a. Scherer v. Equitable Life Assur Society: D argued that the amount in controversy requirement was not satisfied
because almost all of Ps claims were barred by res judica leaving claims insufficient to support Ct held: jx had to
be determined based on the allegations of the complaints, rejected Ds arguments. Affirmative defense may not be
used in determining the jx amount
b. Affirmative defenses can be waived the court cannot at the time of filing be certain that any affirmative defenses
will be applied to the case
i. Freeland v. Liberty Mutual Fire Ins. Co. ct dismissed an action against an insureance co for exactly 75k
and fell one penny short of the min. In order for ct to have original jx the matter in controversy must
exceed the sum of $75k. in the case there no controversy over the first $25k of coverage. Controversy
was over next $75k.
ii. Esquilin-Mendoza v. Don King Productionscourt explored what it describes as confusing contested
territory in St Paul case. 1) p controls if claim is made in good faith 2) dismissal is required when it appears
to legal certainty that the claim is really for less than jx amount.
4. Actions for Non-Monetary Relief
a. Amount in controversy is to be determined by reference to the value of the relief sought (cts split if whether the
relief should be valued from value to P or cost to d.
i. Glenwood Light and Water Co v. Mutual Light & Power Co P sued to restrain D from erecting poles and
wires in a way that would injure Ps poles and wires. TC dismissed because the cost to D of changing its
method would be less than jx amount but SC REVERSED: p right to conduct business free from wrongful
interference had value far in excess of jx amount
ii. Ronzio v. Denver and Rio Grande RR the Ps sued that RR to quiet title to water rights that were worth
far less than jx amount to P but a good deal more to D.court upheld jx.
5. Rule 18:
a. Allows P to combine into one suit all claims it has against a particular d, no matter how unrelated. Aggregate total
of all the claims no matter how unrelated constitute the jx amount.
6. Rule 20:
a. Where several p join in asserting claims against a d that all derive from the same transaction or occurrence they
cannot aggregate their related claims to satisfy the jx min.
b. Class Action Fairness Act of 2005 added 133d: which authorizes jx over certain class actions in which an
aggregate of at least $5 million is sought by a class.
7. Counter-Claim by D:
a. If it is permissive it cannot be added to the amount of the claim to satisfy the amount in controversy requirement
where the Ps claim is less than the jx amount. ---must be determined from the face of the Ps Claim
b. Spectacor Management Group v. Brown holding that compulsory counterclaim is included in the substance of
the controversy.

B. FEDERAL QUESTION
1. The Well-Pleaded Compliant Rule

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 28 USC 1331: DC shall have original jx of all civil actions arising under the Constitution, laws, or treaties of the
Untied States.
Parties can bring disputes within fed jx to SC either as 1) original matter or 2) by removal.
Fed district courts as the forum of choice for disputes that implicate the interpretation of federal law.

Case: Louisville & Nashville R.R. v. Mottley (1908)SC of the United States
Facts:
1. Mottleys were residents + citizens of Kentucky brought suit in equity in the circuit court of the US for WD of Kentucky
against RR
They wanted specific performance of K; RR had to issue free passes on RR and their branches to EL and Annie
Mottley for the remainder of the present year and thereafter to renew such passes annually for their life.
They were injured by Ds negligence and released their respective claims for damages in consideration of
agreement for transportation

2. RR argues that Congress passed Act of June 29,1906 which forbids the giving of free passes + transportation
Ct rejects argument: act of Congress does not prohibit the giving of passes under circumstances of this case
If the law is to be construed as prohibiting such passes it is in conflict with the 5th amendment of the Constitution
because it deprives P of their property with DP
PP:
1. D demurred the bill. Circuit Ct: overruled the demurer and entered a decree for the relief prayed for
2. Defendant appealed to this court. SC of the USwhere the case is now.
Issue:
1. Whether the act of Congress which forbids the giving of free passes makes it unlawful to perform the K?
2. Whether the statute if it should be construed to render such a K unlawful is violate the 5th amendment?
***Ct doesnt have to consider any of them because the court below was without jx.

Holding/ Rationale
1. There was no diversity of citizenship + no grounds of JX
Suit was arising under a Constitutional issues but P did not assert constitutional violation in statement of cause of
action.
Boston & M. Consol. Copper & S. Min Co. v. Montana Ore Purchasing Co p brought suit is CC of the for the
conversion of copper ore and for an injunction against its continuance. P alleged for purpose showing jx that d
would set in defense certain laws. Ct held: improper in order to prove cause of action to go into defenses that
might be brought up in the course of trial.
o Complainant in the first instance shall be confined to the statement of its cause of action.

Notes and Questions:

1. Court raised SMJ on its own motion (can never be waiver or confer it to a court that does not have jx)
a. Ruhrgas AG v. Marathon Oil DC dismissed a removed action for lack of pj even though there were also
objections to SMJ. Ct held SMJ must be established before a decision on merits but DC has discretion about
whether to look at PJ or SMJ first.
b. Sinochem Intl Co. v. Malaysia Intl shippingupholding dismissal on grounds of forum non conviens even though
doubts to pj and smj.

2. Cts jx must be determined from Ps complaint court adopted the well-pleaded complaint rule which SC ambivalent
about.
a. Rule requires court to determine whether the complaint is well pleaded so it should disregard superfluous
references to federal law that the P has inserted in an effort to obtain federal jx.
b. S 1442 congress expressly permits defendants in a narrow range of cases to remove an action to federal court on
the basis of a federal defense.
i. Critic: d could too easily formulate colorable federal defenses to shift litigations over state law matters
into federal court.

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 c. Federal law counterclaim would seem to fail the well pleaded complaint test.
i. Holmes Group Inc v. Vornado Air Circulation Systems Inc.--> in context of patent litigation reliance of
counterclaim to establish arising under jx would undermines Ps role as master of the complaint.
ii. Vaden v. Discovery Bank bank sued Vaden in MD state court on a variety state based law K claim for
over $10k that was allegedly due on a counter claim.
1. Vaden responded with a cunter claim that banks finace charges, interest, and late fees violated
MD usury laws. Agreement had an arbitration clause but neither party inoveked it
2. Bank said that Federal Deposit Insurance Act preempted the state-law usury claims so filed a
new action in federal court seeking arbitration under FAA.
3. CT held: looked to underlying dispute to determine jx. Applied the well-pleaded complaint rule
and held that the federal court lacked jx.
d. At time of Mottley, litigants in state court had absolute right to appeal to the C when the state courts finally
rejecting controlling claims or defenses based on federal law.
i. Today: state court litigants have no right to appellate review of their federal claims and defenses. ---court
exercises discretion over what cases to review

3. Mottleys sued in Kentucky state court and State ordered RR to resume issuing free passes to them.
a. Appealed to SC took away Mottleys victory reaching he merit and rejection both construction and
constitutional argumetns.
b. Judgment may turn on federal law.
c. Osborn v. Bank of US court broadly defiened the power of congress to assign original jx to lower federal courts.
Statue granted federal courts jx over any action to which bank of us was a party. It was okay under Article3 ---as a
federal creation the banks capacity to sue would depend on federal law.
d. American National Red Cross v. SG
i. Ct held: federal statute chartering the red cross conferred original jx because it authorized an
organization to sue or be sued in courts of law and equity, STATE OR FEDERAL within the jx of US.
ii. Article 3s arising under jx was broad enough to authorize Congress to confer federal court jx over
actions involving federally chartered corporations.

4. Adoption of Declaratory Judgment Act 28 USC S 2201-2:

a. Litigants in the position of the Mottleys would include reference to the federal defense in action to declare that
the defense is not valid. Reference to federal issue will be well-pleaded.
b. Skelly Oil Co. v. Phillips Petroleum Corp Ct ruled that the references to federal defenses in a declaratory
judgment act proceeding otherwise governed by state law would not confer federal jx. Or the rule otherwise
would turn into the federal courts a vast current of litigation arising under state law.
i. Act did not broaden federal jx.
c. Franchise Tax Board v. Construction Laborers Vacation Truststate taxing authority sough a declaratory
judgment in state occur that despite the federal employment income security act, it could collect unpaid state
income taxes by levying on taxpayers funds held in trust pursuant to ERISA by D. D removed case to federal court
SC held that Skelly Oil should be extended to apply under actions brought under state declaratory judgment.

5. Federal Preemption:
a. Ordinarily preemption is said to be a defense to a state law cause of action and under motley it provides no basis
for jx.
b. Some cases ct permitted a party to invoked federal question of jx in seeking injunctive and declaratory relief
against state laws on ground pre-emption.
i. Verizon Md v. Public Srvs. Commn action to enjoy state law as preempted upheld as well established
exception
ii. Cases recognizing that federal law creates an implied right of action to enforce the federal interest in the
displacement under the Supremacy Clause of the pre-empted stated law. But ct has rejection that
conclusion in other settings.
iii. Metropolitan Life Ins. Co. v. Taylor court held that Ps state law claim regarding benefits under
employee benefit plan had been displaced by the Employee Retirement Security Act.
1. Upheld Avco rule: preemptive force of S 301 is so powerful as to displace entirely any state cause
of action for violations of K between and employer and labor org.

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 c. Ct emphasizes 2 factors: 1) statute at issue must completely preempt state law causes of action and 2) that it must
create a federal cause of action that congress regarded as the exclusive basis for seeking to remedy the conduct at
issue in the complaint.

6. Except in cases where fed law displaces state claim, P is ordinarily free to rely solely on state law grounds and defeat
federal jx.
a. Federated Department Store Inc v. Moitie artful pleading could not be used to avoid federal jx
b. Rivet v. Regions Bank court ruled that unless there is a completely preemptive federal statute that the well
pleaded complaint rule precludes considerations of claims that the P has decline to raise.

2. State Law Claims With Federal Ingredients

Case: Grable & Sons Metal Products Inc v. Darue Engineering & Manufacturing
Facts:
1. IRS seized Grable and Sons Michigans real property to satisfy Grbales federal tax delinquency.
a. Code required IRS to give notice of seizure which they did by certified mail
b. Grable Claims IRS did not exercise its right to redeem property within 180 days of the sale and after the period
has passed they gave quitclaim to Darue
i. Darues quitclaim is invalid because IRS failed to notify of its seizure in the exact manner required by
federal law.
PP:
1. Darue removed the case to Federal District Court exercised federal jx.; granted summary judgment to Darue.
2. On Appeals: affirmed decision. It was an issue of federal law.
3. Supreme Court: where the case is now, affirms

Issue:
1. Whether want of a federal cause of action to try to claims of title to land obtained at federal tax sale precludes removal to
federal court of a state action with non diverse parties raising a disputed issue of federal law title? No.

Rationale:
1.

Notes and Questions

T UP Pages 26-27:

Case:
Facts/ PP:

Holding/Rationale: