Federal question jurisdiction: how plaintiffs can avoid
inadvertently alleging it and how defendants
can spot it where it may not be obvious
By Lynn C. Tyler
Introduction
In many cases, a plaintiff may perceive
a strategic advantage to proceeding
through the state court system, while the
defendant may perceive advantages to
proceeding in federal court. These perceived advantages might include speed
or delay, the likely judge or judges, or a
difference in the area from which the
jury will be selected, among others.
Whatever the perceived advantages, it is
important for a plaintiff wishing to
remain in state court to avoid inadvertently alleging a federal question because
the presence of a federal question gives
rise to a right of removal to federal court.
Conversely, the defendant may want to
be able to identify a federal question,
even though the complaint on its face
appears to rely solely on state law theories.1 Thus, it is important for both plaintiffs and defendants to understand the
circumstances in which federal question
jurisdiction may be present, even though
a plaintiff does not expressly invoke federal law as the basis for any claims.2
Additionally, an entire case is removable if at least one separate and independent claim presents a federal question:
Whenever a separate and independent claim
or cause of action within the jurisdiction
conferred by section 1331 of this title is
joined with one or more otherwise nonremovable claims or causes of action, the
entire case may be removed and the district
court may determine all issues therein, or,
in its discretion, may remand all matters in
which State law predominates.4
Thus, as long as a distinct claim in a
complaint presents a federal question,
the defendant may remove the entire
case to federal court.
Determining the existence of a
federal question: the general rule
and exceptions
The primary test for determining
whether federal question jurisdiction
exists is the “well-pleaded complaint”
rule:5
[W]hether a case is one arising under the
Constitution or a law or treaty of the United
States, in the sense of the jurisdictional
statute, . . . must be determined from what
necessarily appears in the plaintiff’s state-
Removal jurisdiction generally
Federal district courts have original
jurisdiction over “civil actions arising
under the Constitution, laws or treaties of
the United States.”3 Cases which present
federal questions are removable to the
federal district courts under 28 U.S.C.
§1441(b) (1988 ed.), which provides in
part:
Any civil action of which the district courts
have original jurisdiction founded on a
claim or right arising under the
Constitution, treaties or laws of the United
States shall be removable without regard to
the citizenship or residence of the parties.
566
ment of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is
thought the defendant may interpose.6
Because the rule focuses on “the plaintiff’s statement of his own claim”, the
Supreme Court has recognized that the
“rule makes the plaintiff the master of
the claim; he or she may avoid federal
jurisdiction by exclusive reliance on state
law.”7 In other words, except in limited
circumstances discussed below, initially
the plaintiff can determine whether its
claim will proceed in state or federal
court. Generally, if the plaintiff wants to
proceed in state court, it can premise its
complaint solely on state law, and ignore
any federal claims that might otherwise
be available.
There are some limits, however, on the
plaintiff’s control over its own jurisdictional destiny. First, as the above statement of the rules suggests, a plaintiff
cannot create federal jurisdiction by
anticipating that the defendant will raise
a federal defense. As a corollary, a
defendant cannot remove a case based on
the plaintiff’s allegation that the defendant will raise a defense based on federal
law:
[I]t is now settled law that a case may not
be removed to federal court on the basis of
a federal defense, including the defense of
pre-emption, even if the defense is anticipated in the plaintiff’s complaint, and even
if both parties concede that the federal
defense is the only question truly at issue.8
Lynn C. Tyler is a partner in the intellectual
property and trade regulation department
at the Indianapolis office of Barnes &
Thornburg. He is a graduate of the
University of Notre Dame (B.A., summa
cum laude, 1981) and the University of
Michigan Law School (J.D., magna cum
laude, 1984). He is a member of the Indiana
State Bar Association.
For example, in Franchise Tax Board
v. Construction Laborers Vacation
Trust,9 the Supreme Court held there was
no federal jurisdiction where the plaintiff
sought a declaration that it was entitled
to collect unpaid state income taxes by
levying on funds held in trust for the taxjune 1994
payers under a vacation benefit plan and
alleged that the defendant would assert
that ERISA10 barred the levies and preempted the plaintiff’s claim.11
the defendant will raise a federal
defense, nor defeat removal by mischaracterizing its claim or omitting necessary
allegations of federal law.
Second, a plaintiff cannot always avoid
federal question jurisdiction: “It is an
independent corollary of the ‘well-pleaded complaint’ rule that a plaintiff may
not defeat removal by omitting to plead
necessary federal questions in a complaint.”12 This is known as the “artful
pleading” doctrine.13 For example, in
Scales v. Nat’l R.R. Passenger Corp.,14
the plaintiff filed a three-count complaint, one under the Federal Employers’
Liability Act (“FELA”)15 and two under
state law. By statute, a FELA claim cannot be removed.16 The court nonetheless
held that removal was proper:
How the plaintiff
can lose control
The first way the plaintiff can lose (and
allow the defendant to seize) control
over jurisdiction is by including federal
law allegations in its complaint, even if
made in a count that purports to be based
on state law. For example, in Benefiel v.
Exxon Corp.,22 the plaintiffs were
California residents who sued Exxon to
attempt to recover the increased price of
gasoline which they allegedly paid
because of the spill by the Exxon
Valdez. The plaintiffs sued in state court
but Exxon removed the case to federal
court.
(continued on page 568)
Although couched in FELA language,
plaintiff’s Complaint seeks relief for harassment in connection with allegedly ‘baseless’ disciplinary charges and proceedings.
Thus, the Complaint alludes to terms and
conditions of employment subject to the
[Railway Labor Act17]. This Court will not
permit plaintiff’s pleading to conceal the
essential nature of its claim, which is at bottom a labor dispute rather than a tort
action.18
Examples of cases in which the 7th
Circuit has applied the “artful pleading”
doctrine include: (1) a complaint asserting failure to pay a settlement under a
workers compensation law was held to
be a challenge to federal tax laws where
the reason the insurer did not pay as
requested was the refusal of the plaintiff’s attorney to supply a taxpayer identification number;19 (2) a breach of contract claim was held to be an ERISA
claim where the contract was a pension
plan;20 and (3) a trespass claim against
the United States was held to be a claim
for inverse condemnation under the Fifth
Amendment to the United States
Constitution.21
In short, while the plaintiff is generally
the master of its claim, it can neither create federal jurisdiction by alleging that
res gestae
567
Federal question
continued
On appeal, the plaintiffs argued that
they had intended to assert only state law
claims, but the 9th Circuit rejected this
argument, holding:
For purposes of this case, it is enough to
observe that the basis for federal question
jurisdiction was pleaded on the face of the
plaintiffs’ complaint, which alleged, among
other things, that “[s]trict liability, without
regard to fault, is imposed by TAPAA” [the
Trans-Alaska Pipeline Authorization Act23]
and that defendants are liable “[i]n accordance with the TAPAA provisions.”24
In light of these specific allegations, the
Court concluded that the plaintiffs’ complaint, “reasonably read,” alleged a claim
based on a federal question.25 Therefore,
the case was properly removable.
The “complete pre-emption” doctrine
may also deprive a plaintiff of control
over jurisdiction. The Supreme Court has
summarized this doctrine as follows:
There does exist, however, an “independent
corollary” to the well-pleaded complaint
rule, known as the “complete pre-emption”
doctrine. On occasion, the Court has concluded that the pre-emptive force of a
statute is so “extraordinary” that it “converts an ordinary state common-law complaint into one stating a federal claim for
purposes of the well-pleaded complaint
rule.” Once an area of state law has been
completely pre-empted, any claim purportedly based on that pre-empted state law is
considered, from its inception, a federal
claim, and therefore arises under federal
law.26
In other words, even if the plaintiff’s
complaint relies solely on state law,
when the complete pre-emption doctrine
applies federal courts will deem the state
claims to be federal claims for jurisdictional purposes.
To date, the Supreme Court has applied
the “complete pre-emption” doctrine in
two circumstances. First, in Avco Corp.
v. Aero Lodge No. 735, Int’l Ass’n of
Machinists,27 the Court held that Section
301 of the Labor Management Relations
Act28 pre-empts claims for breach of
contract in the context of collective bargaining agreements, so such claims are
removable to federal court.29
Second, in Metropolitan Life Ins. Co. v.
Taylor,30 the Court held that “state common law causes of action asserting
improper processing of a claim for benefits under an employee benefit plan regulated by” ERISA were “not only preempted by ERISA, but also displaced by
ERISA’s civil enforcement provision . . .
to the extent that complaints filed in state
courts purporting to plead such state
common law causes of action are removable to federal court under 28 U.S.C. §
1441(b).”31 In Taylor, the Court also
suggested that it will be reluctant to recognize any additional areas of complete
pre-emption, absent clear Congressional
intent to pre-empt.32
Lower federal courts have concluded
both pre- and post-Taylor, however, that
the Federal Communications Act completely pre-empts any and all claims
against communication carriers, especially claims relating to rates or services.
For example, in Ivy Broadcasting Co. v.
American Tel. & Tel. Co.,33 Ivy sued
AT&T for gross negligence and breach
of contract in the installation and operation of telephone lines for broadcasting
football games and political conventions.
In light of the Federal Communications
Act, the 2nd Circuit held Ivy’s claims
arose under federal law within the meaning of 28 U.S.C. §1331:
[Q]uestions concerning the duties, charges
and liabilities of telegraph or telephone
companies with respect to interstate communications service are to be governed
solely by federal law and . . . the states are
precluded from acting in this area. Where
neither the Communications Act itself nor
568
june 1994
the tariffs filed pursuant to the Act deals
with a particular question, the courts are to
apply a uniform rule of federal common
law.34
Similarly, in Komatz Const., Inc. v.
Western Union Tel. Co.,35 Komatz sued
Western Union for delivering a telegram
too late. The Minnesota state court held
that the claim was governed by federal
law, to the exclusion of state law:
Ever since federal control was . . . established, telegraph companies, as to interstate
transactions, have been subject to a national
and the uniform rule of law.
Notwithstanding Erie R. Co. v. Tompkins . .
. interstate message transactions are still
governed by federal law to the exclusion of
conflicting state laws; and this means they
are governed not merely by the provisions
of federal statutes but by “federal common
law” as well.36
Given these and similar decisions, in
cases by or against communications carriers, the possibility of removal always
must be considered.
The Supreme Court has held that a second exception to the well-pleaded complaint rule exists in the following circumstances:
Even though state law creates appellant’s
cause of action, its case might still “arise
under” the laws of the United States if a
well-pleaded complaint established that its
right to relief under state law requires resolution of a substantial question of federal
law in dispute between the parties.37
stitutional.
Kansas City Title & Trust Company
removed the case from state court to federal court and the Supreme Court concluded that the case presented a federal
question:
In the instant case the averments of the bill
show that the directors were proceeding to
make the investments in view of the act
authorizing the bonds about to be purchased, maintaining that the act authorizing
them was constitutional and the bonds valid
and desirable investments. The objecting
shareholder avers in the bill that the securities were issued under an unconstitutional
law, and hence of no validity. It is, therefore, apparent that the controversy concerns
the constitutional validity of an act of
Congress which is directly drawn in question.39
In other words, because the case concerned the validity of an act of Congress,
the Supreme Court concluded that jurisdiction existed under 28 U.S.C. §1331
and removal was proper.40
Lower federal courts have invoked the
Smith principle in a variety of cases. For
example, in Christopher v. Cavallo,41
Christopher entered an agreement with
Cavallo to produce and present a play
which Cavallo claimed to own.
Christopher was later sued by the owner
of the copyright of the play and lost.
Christopher then sued Cavallo for misrepresenting that her work did not
infringe a copyright and for breaching a
warranty of title. Even though the claims
were for misrepresentation and breach of
warranty of title, typically state law
claims, the 4th Circuit held that it had
federal jurisdiction:
Proof of [the plaintiff’s] claim plainly
required the construction of the copyright
laws of the United States in order to establish the existence of the infringement, for
the existence of the infringement was necessary to prove the breach of warranty. The
case is therefore cognizable pursuant to 28
U.S.C. §1338(a) as one which presents a
substantial federal question as one of its
essential elements.42
That is, because the plaintiff’s right to
relief depended on a construction of
copyright law, it “arose under” that law
for jurisdictional purposes.43
Other cases in which federal courts
have upheld removal based upon the
need to resolve a substantial question of
federal law include: (1) claims for breach
(continued on page 571)
A plaintiff, then, can again lose control
over jurisdiction if its allegations of a
state law claim include allegations that
make its right to relief dependent on the
outcome of a question of federal law.
Smith v. Kansas City Title & Trust
Co.38 is the leading case recognizing this
exception. Smith was a shareholder who
filed suit against Kansas City Title &
Trust to enjoin it from investing money
in farm loan bonds issued by Federal
Land Banks. The suit alleged that the
creation of the banks was beyond the
power of Congress and therefore unconres gestae
569
Federal question
continued
of contract by affiliates of a building
developer against owners of the building,
which involved the Condominium and
Cooperative Abuse Relief Act;44 (2) a
breach of contract claim arising out of a
conciliation agreement between the
defendant and the United States
Department of Labor;45 (3) a claim that a
due-on-sale clause found in a mortgage
owned by a federally chartered savings
and loan was not enforceable because it
violated state law;46 (4) a claim that,
because of intervening federal wage and
price regulations, a party was entitled to
additional compensation under a contract
to supply oil;47 (5) claims calling into
question prior orders of a federal court;48
(6) a claim for unjust enrichment that
required construction of a collective bargaining agreement and the duty of fair
representation;49 and (7) a malicious
prosecution claim arising out of an
underlying Section 1983 claim,50 and
therefore involving resolution of the
meaning of Section 1983.51
a claim “arising under the Constitution,
laws or treaties of the United States.” 28
U.S.C. §1331.53
The Court reasoned that if Congress did
not provide a private federal cause of
action, Congress implicitly felt that the
question was not substantial enough to
warrant federal jurisdiction.54 Where
Congress had not provided for access to
federal court, the Supreme Court was
understandably reluctant to render a
decision of Congress meaningless.55
Thus, if a party seeks to base removal on
a substantial question of federal law,
Merrell Dow requires the party to show
that the federal law in question authorizes a private right of action.56
basis for its claims. A plaintiff, however,
can neither create federal jurisdiction by
anticipating a defense based on federal
law nor deprive a federal court of jurisdiction by omitting to plead necessary
federal questions in its complaint.
Moreover, even if a plaintiff carefully
limits its complaint to state law theories,
the complaint may nonetheless be
removable if federal law completely preempts the plaintiff’s claims or the plaintiff’s claims require the resolution of a
substantial question of federal law. A
question of federal law is not sufficiently
substantial to allow removal if Congress
(continued on page 572)
Conclusion
Under the well-pleaded complaint rule,
the plaintiff can generally control
whether federal question jurisdiction
exists (allowing removal) by either
including or omitting federal law as a
In Merrell Dow Pharmaceuticals, Inc.
v. Thompson,52 the Supreme Court limited the types of questions that federal
courts can consider “substantial” for purposes of removal under this doctrine. In
Merrell Dow, the Supreme Court held:
We conclude that a complaint alleging a
violation of a federal statute as an element
of the state cause of action, when Congress
had determined that there should be no private, federal cause of action, does not state
res gestae
571
Federal question
continued
has not provided for private access to
federal courts.
©Barnes & Thornburg 1993
1. For example, in the case which gave rise to much of
the research contained in this article, the plaintiff
filed its complaint in state court and obviously had
hoped to remain there since it alleged state
antitrust claims, but not federal antitrust claims. In
one count which purported to state a claim under
state law, however, the plaintiff made two explicit
references to the Federal Communications Act of
1934, 47 U.S.C. §§151-609 (1988 ed. and Supp. III),
and related regulations of the Federal
Communications Commission. As shown in the
text, these allegations provided the defendant with
grounds to remove the complaint to federal court.
2. This article is concerned only with circumstances
in which the original complaint can be removed to
federal court. It does not address the circumstances
in which counterclaims, under Fed. R. Civ. P.13, or
third party claims, under Fed. R. Civ. P. 18, can be
asserted in federal court.
3. 28 U.S.C. §1331 (1988 ed.).
4. 28 U.S.C. §1441(c) (1988 ed. and Supp. IV).
5. Franchise Tax Board v. Construction Laborers
Vacation Trust, 463 U.S. 1, 9 (1983).
6. Id. at 10 (quoting Taylor v. Anderson, 234 U.S. 74,
75-76 (1914)).
7. Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)
(footnote omitted).
8. Caterpillar, 482 U.S. at 393 (emphasis in original).
9. See note 5 supra.
10. Employees’ Retirement Income Security Act, 29
U.S.C. §§1001 et seq. (1988 ed. and Supp. III).
11. Franchise Tax Board, 463 U.S. at 14-22.
24. 959 F.2d at 807.
25. Id. Arguably, the Benefiel case simply represents
an application of the principle, discussed below,
that a case presents a federal question if the plaintiff’s “right to relief under state law requires resolution of a substantial question of federal law.” See
text at note 37 infra. Because Benefiel did not
expressly rely on this principle or cite any of the
pertinent cases, it is discussed separately.
14. 634 F. Supp. 1 (E.D. Pa. 1984).
26. Caterpillar, 482 U.S. at 393 (citations omitted). See
also Lister v. Stark, 890 F.2d 941, 943 (7th Cir.
1989), cert. denied, 111 S. Ct. 579 (1990) (“complete
pre-emption” exception permits recharacterization
of a plaintiff’s state-law claims to a federal claim so
that removal is proper).
12. Id. at 22.
13. Burda v. M. Ecker Co., 954 F.2d 434, 438 (7th Cir.
1992).
15. 45 U.S.C. §§51 et seq. (1988 ed.).
27. 390 U.S. 557 (1968).
16. 45 U.S.C. §1445(a) (1988 ed.).
28. 29 U.S.C. §185 (1988 ed.).
17. 45 U.S.C. §§151 et seq. (1988 ed.).
29. 390 U.S. at 560-62.
18. 634 F. Supp. at 3.
30. 481 U.S. 58 (1987).
19. Burda, 954 F.2d at 438.
31. Id. at 60, 62-67.
20. Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073,
1075 (7th Cir. 1992).
32. Id. at 65.
21. Reid v. United States, 715 F.2d 1148, 1153 (7th Cir.
1983). For more examples of cases applying the
“artful pleading” doctrine, see generally 14A
Charles A. Wright, Arthur R. Miller and Edward
H. Cooper, Federal Practice and Procedure §3722,
at 266-76 (2d ed. 1985).
34. Id. at 491 (emphasis in original). For a more recent
case applying the holding of Ivy, see Nordlicht v.
New York Tel. Co., 799 F.2d 859, 862 (2d Cir. 1986).
22. 959 F.2d 805 (9th Cir. 1992).
36. 186 N.W.2d at 694 (quoting Siats v. Western Union
Tel. Co., 88 N.W. 2d 199, 202 (1958)). See also
O’Brien v. Western Union Tel. Co., 113 F.2d 539,
541 (1st Cir. 1940) (libel action against telegraph
company for delivering allegedly defamatory
telegrams “governed by uniform federal rules.”).
23. 43 U.S.C. §§1651 et seq. (1988 ed. and Supp. III).
33. 391 F.2d 486 (2d Cir. 1968).
35. 186 N.W.2d 691 (Minn.), cert. denied, 404 U.S. 856
(1971).
Section 414 of the Federal Communications Act, 47
U.S.C. §414, states that nothing in the act “shall in
any way abridge or alter the remedies now existing
at common law or by statute, but the provisions of
this chapter are in addition to such remedies.”
Citing this section, some courts have held that the
Federal Communications Act does not pre-empt all
claims against communications carriers and therefore does not authorize removal. E.g., Financial
Planning Institute, Inc. v. American Tel. & Tel. Co.,
788 F. Supp. 75, 77 (D. Mass 1992) (remanding case
against AT&T for overcharging for 800 service);
American Inmate Phone Systems, Inc. v. U.S. Sprint
Communications Co., 787 F. Supp. 852, 856-58
(N.D. Ill. 1992) (remanding case which had been
removed based on Communications Act). It
appears that whether the Communications Act preempts state claims may depend on the nature of the
claim. See Harrison Higgins, Inc. v. AT&T
Communications, Inc., 697 F. Supp. 220, 222, 224
(E.D. Va. 1988) (holding that claims for breach of
contract and negligence in the provision of interstate telecommunication services were removable).
37. Franchise Tax Board, 463 U.S. at 13.
38. 255 U.S. 180 (1921).
39. 255 U.S. at 201.
40. Id. at 202.
41. 662 F.2d 1082 (4th Cir. 1981).
42. 662 F.2d at 1083-84 (footnote omitted).
43. The fact that the Christopher case involved a
572
june 1994
copyright, and thus jurisdiction existed under 28
U.S.C. §1338(a) rather than 28 U.S.C. §1331(a),
makes no difference in the analysis. The issue
under both statutes is whether the claim “arises
under” either patent, copyright or trademark laws
(in the case of §1338(a)) or the Constitution, laws
or treaties of the United States (under §1331(a)).
44. West 14th Street Commercial Corp. v. 5 West 14th
Owners Corp., 815 F.2d 188, 193 (2d Cir. 1987).
45. Eatmon v. Bristol Steel & Iron Works, Inc., 769 F.2d
1503, 1517 (11th Cir. 1985).
46. First Federal & Loan Ass’n v. Brown, 707 F.2d
1217, 1221 (11th Cir. 1983).
47. Mountain Fuel Supply Co. v. Johnson, 586 F.2d
1375 (10th Cir. 1978), cert. denied, 441 U.S. 952
(1979).
48. E.g., Nowling v. Aero Services Int’l, Inc., 734 F.
Supp. 733, 737 (E.D. La. 1990).
49. Int’l Brotherhood of Teamsters v. Ass’n of Flight
Attendants, 663 F. Supp. 847, 850, 854 (D.D.C.
1987).
50. See 42 U.S.C. §1983 (1988 ed.).
51. Sweeney v. Abramowitz, 449 F. Supp. 213, 214-15
(D. Conn. 1978).
52. 478 U.S. 804 (1986).
53. 478 U.S. at 817.
54. Id. at 814.
55. Id at 812.
56. The Merrell Dow case may well call into question
the validity of some of the lower court decisions
discussed immediately above in the text. In light of
Merrell Dow, the continued validity of those decisions will depend on whether the federal law at
issue creates a private, federal cause of action.
res gestae
573