Chapter 2: Jurisdiction

III. Federal Question Jurisdiction

Title 28, Section 1331 of the United States Code confers upon U.S. district courts jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” Section 1331, which grants what is commonly referred to as federal question jurisdiction, is an all-purpose jurisdictional statute,/5/ which is available regardless of the defendants’ identity and, since 1980, is not limited by any requirement that a minimum dollar amount be “in controversy.”/6/ Section 1331 also confers jurisdiction in actions authorized by 42 U.S.C. § 1983 against defendants acting under color of state law./7/ It is generally available in suits against the federal government and its agencies and in actions against federal officers and employees./8/

Both Article III of the Constitution and 28 U.S.C. § 1331 use the same phrase, “arising under,” to define federal question jurisdiction, but the Supreme Court has not interpreted the constitutional and statutory language identically. In addressing the constitutional language, the Court has been expansive, broadly interpreting “arising under” to include any case in which a federal question is an “ingredient of the original cause.”/9/ Either the plaintiff or defendant may pose the federal question. The federal ingredient, however, must be sufficiently central to the case such that its resolution one way or the other will change the outcome of the case./10/ In Osborn v. Bank of the United States, the “ingredient” was the law establishing the Bank of the United States. That ingredient made constitutional a statute enabling the bank to sue and be sued on its contracts (generally state-law claims) in federal courts. However, the Court subsequently made clear that a statute which does nothing more than establish federal jurisdiction cannot serve as the federal law under which an action arises./11/

On the other hand, since Congress conferred general federal question jurisdiction in 1875, the Court has consistently held that the statutory grant is not as broad as the Constitution would allow./12/ The primary test that has been developed for determining whether a civil action arises under the Constitution or laws of the United States for purposes of Section 1331 requires (1) a substantial federal element and (2) such element being part of the plaintiff’s “well-pleaded complaint.”

A case clearly arises under the Constitution for purposes of Section 1331 when the plaintiff claims that, for example, a government officer or employee, acting in his or her official capacity, injures the plaintiff by an action that violates some provision of the Constitution or by action taken on the authority of an unconstitutional statute. The federal question jurisdiction of the district courts encompasses causes of action created by 42 U.S.C. § 1983, which explicitly authorizes a private remedy for acts that are under color of state law and violate rights secured by federal law./13/ In such cases, federal law both creates the cause of action, supplying the underlying substantive rules that govern defendants’ conduct, and authorizes plaintiffs to enforce the rights created. As Justice Stevens remarked for the Court in an opinion that canvassed Section 1331 jurisprudence, “[t]he ‘vast majority’ of cases that come within this grant of jurisdiction are covered by Justice Holmes’s statement (in American Well Works v. Layne and Bowler Co.) that a ‘suit arises under the law that creates the cause of action.’”/14/ A case in which the complaint is based on federal common law also arises under the laws of the United States for the purpose of jurisdiction under Section 1331./15/

The Court interpreted Section 1331 more broadly in Smith v. Kansas City Title and Trust Co./16/ In Smith, a shareholder, alleging that the federal law authorizing bonds was unconstitutional and that a bank, under state law, was allowed to invest only in bonds issued under a valid law, sought to prevent the state bank from buying bonds of a new federal agency. As Justice Holmes’s dissent demonstrates, the case could rationally have been regarded as arising solely under the state law defining the bank’s powers./17/ Yet the Court held that federal jurisdiction existed because the state-law claim involved an inquiry into the constitutionality of a federal statute./18/

The apparent conflict between Smith and American Well Works made it difficult to determine when federal jurisdiction exists in cases where state-created actions require an interpretation of federal law. Merrell Dow Pharmaceuticals v. Thompson/19/ added to this complexity. The case involved a suit under state law based on an alleged violation of a federal statute. One count of what was otherwise a purely state law tort action against a drug manufacturer for harm caused by one of its drugs alleged that the drug was misbranded in violation of the Federal Food, Drug, and Cosmetic Act and that the violation created a presumption of negligence. The Court joined the parties in assuming that the provision of the federal statute relied upon by the plaintiff did not imply a private cause of action. On that assumption, the Court held that assertion of federal jurisdiction would “flout, or at least undermine, congressional intent”/20/ not to create a federal remedy for violation of the federal law. Thus, Merrell Dow suggested that federal jurisdiction was not available for state-law claims which sought to enforce federal standards when there was no federal private right of action to enforce them. More recently, however, the Supreme Court appeared to have confined Merrell Dow to its facts. In Grable & Sons Metal Products v. Darue Engineering,/21/ the Supreme Court upheld federal jurisdiction in a state-law quiet title action which turned entirely on the interpretation of a federal Internal Revenue Service notice provision. The Court held that federal jurisdiction is appropriate in state-law actions if there is a contested and substantial federal question and if federal jurisdiction “is consistent with congressional judgment about the sound division of labor between state and federal courts governing the application of § 1331.”/22/

The Court viewed Merrell Dow’s focus on the absence of a federal private right of action (there was no available federal quiet title claim) as a clue to, but not dispositive of, the jurisdictional question. Rather, the Court distinguished Merrell Dow on the ground that granting jurisdiction there would have swept thousands of state negligence per se claims based on federal standards into the federal courts, thereby upsetting the division of labor between federal and state courts. Jurisdiction over quiet title actions arising from federal tax controversies would not similarly affect the “normal currents of litigation.”/23/ Declaring that Merrell Dow did not, as some courts believed, overrule Smith, the Court reaffirmed the notion that federal courts can hear state-law claims that turn on questions of federal law. The Court also adopted a functional, rather than a “single, precise, all-embracing”/24/ test for “arising under” jurisdiction./25/

Not only must the action “arise under” the Constitution or federal law, but also the federal question must appear on the face of a “well-pleaded complaint.”/26/ In practice, this means that plaintiffs may not invoke federal jurisdiction by raising inessential federal issues in the complaint/27/ or anticipated federal defenses./28/ At the same time, the Court has not been willing to allow a plaintiff seeking to avoid removal to federal court to omit artfully a substantial federal question./29/

In general, the Declaratory Judgment Act does not alter this principle./30/ Federal jurisdiction would lie only if there had been federal jurisdiction over the suit that would have been filed in the absence of the Act./31/

5. In addition to the general federal question jurisdiction conferred by Section 1331, Congress has enacted a number of more specific statutes conferring jurisdiction on the district courts in cases arising under particular federal laws. One of these, once of considerable importance, grants jurisdiction of cases arising under any congressional act regulating commerce, 28 U.S.C. § 1337. Section 1337 and provisions conferring jurisdiction in admiralty, bankruptcy, and patent, trademark, and copyright cases (28 U.S.C. §§ 1333, 1334, and 1338) are in the district court jurisdiction chapter of the Judicial Code (Chapter 85 of Title 28). Others, such as the provision for district court jurisdiction of actions to review adverse social security decisions, discussed in Section IV.F below, are in other titles of the Code, typically in agency organic statutes. Besides conferring jurisdiction in the federal courts, such organic statutes may waive sovereign immunity, create causes of action, or specify relief.

6. Until 1980, Section 1331 was limited by a $10,000 amount-in-controversy requirement. Before the repeal of the jurisdictional amount requirement, plaintiffs with federal statutory claims involving $10,000 or less for each plaintiff had to rely on other jurisdictional provisions not so limited. Plaintiffs often invoked 28 U.S.C. § 1337 since much legislation that is litigated finds its constitutional authority in the commerce clause.  Section 1337 is now superfluous. See ErieNet Inc. v. Velocity Net Inc., 156 F.3d 513, 519-20 (3d Cir. 1998). Similarly, before 1980, in Section 1983 litigation involving $10,000 or less, plaintiffs relied on 28 U.S.C. § 1343(a)(3), the jurisdictional counterpart of Section 1983.  While this jurisdictional provision is now also superfluous, it is often still invoked along with Section 1331 in civil rights cases.  See, e.g., Clinton v. Jones, 520 U.S. 681, 685 n.1 (1997); Dixon v. Burke Co., Ga., 303 F.3d 1271, 1274 (11th Cir. 2002).

7. For an example of how to plead jurisdiction in such a case, see the Documentary Suplement, Document 1, Complaint, ¶3.  See also 28 U.S.C. § 1343.

8. See, e.g., Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971).

9. Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 823 (1824); see also Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.480, 492 (1983) (Foreign Sovereign Immunities Act is constitutional as actions against foreign sovereigns or foreign plaintiffs in U.S. courts require the application of federal law).

10. Osborn, 22 U.S. (Wheat.) at 822-23.

11. Verlinden, 461 U.S. at 496 (“Congress may confer on the federal court jurisdiction over any case or controversy that might call for the application of federal law.”).

12. See generally Charles A. Wright & M. Kane, Law of Federal Courts § 17 (6th ed. 2002), see also Verlinden, 461 U.S. at 495; Louisville and N.R. Co. v. Mottley, 211 U.S.149 (1908). The Article III catalogue of cases to which the federal judicial power extends does not by itself empower any federal court to hear such cases. The creation of courts inferior to the Supreme Court is left by Article III to Congress, and their jurisdiction similarly is for Congress to define, within the outer limits of the Article III judicial power. By employing in Section 1331 the identical “arising under” phrase and a virtually identical list of federal laws, Congress might have been thought to be conferring the broadest possible federal question jurisdiction. But the Court has interpreted the statute narrowly to keep the district courts’ caseload manageable and to minimize intrusion on state courts.

13. See Grable & Sons Metal Products v. Darue Eng’g. and Mfg., 125 S. Ct. 2363, 2366 (2005).

14. Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808 (1986) (quoting Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 8–9 (1983) (which in turn quoted American Well Works Co. v. Layne and Bowler Co., 241 U.S. 257, 260 (1916) (suit for damages to business allegedly resulting from slanderous accusations that plaintiff had infringed defendant’s patent arises under state law even though federal patent law was an ingredient to the claim).

15. Illinois v. City of Milwaukee, 406 U.S. 91 (1972).

16. Smith v. Kansas City Title and Trust Co., 255 U.S. 180 (1921).

17. Id. at 213–14 (Holmes, J., dissenting).

18. See also Sweeney v. Abramowitz, 449 F. Supp. 213 (D. Conn. 1978) (federal court has jurisdiction over suit for malicious prosecution based on filing of a claim under Section 1983 because an essential element of plaintiffs’ complaint is that the defendant had no probable cause to believe that he had a valid Section 1983 claim).

19. Merrell Dow Pharmaceuticals, 478 U.S. at 804.

20. Merrell Dow, 478 U.S. at 812.  Like several of the other cases that have defined the contours of “arising under” jurisdiction, Merrell Dow involved not an original action in a federal district court but an attempt to remove a case brought in state court to the federal court.  The Supreme Court said that  “ [s]ince a defendant may remove a case only if the claim could have been brought in federal court…the question for removal jurisdiction must…be determined by reference to the ‘well-pleaded complaint’” under Section 1331.  Id. at 808.  See also Caterpillar Inc., v. Williams, 482 U.S. 386, 392 (1987); Franchise Tax Board, 463 U.S. at 9-10.  Removal is treated separately in this chapter in Section VII.

21. Grable & Sons Metal Products v. Darue Engineering, 125 S. Ct. 2363 (2005).

22. Id. at 2367.

23. Id. at 2371.

24. Id. at 2368 (citation omitted).

25. The Supreme Court subsequently held that Grable did not extend federal jurisdiction to a claim by a private health insurer who sought reimbursement of money recovered in a state court tort action by a former federal employee insured under the Federal Employees Health Insurance Benefits Act.  Empire HealthChoice Assur. Co. v. McVeigh, No. 05-200,  2006 U.S. LEXIS 4679, at *44-47 (U.S. Jun. 15, 2006).

26. Franchise Tax Board, 463 U.S. at 9–10.

27. Nor can federal jurisdiction be founded on insubstantial or frivolous federal claims. Hagans v. Lavine, 415 U.S. 528, 535, 542–43 (1974).

28. The case most often cited for this proposition, though not the first, is Mottley, 211 U.S. at 149. In Mottley the plaintiff alleged that a federal defense the plaintiff anticipated violated the Constitution. The Supreme Court denied jurisdiction because “a suit arises under the Constitution and laws of the United States only when the plaintiff’s statement of his own cause of action shows that it is based upon those laws or that Constitution.”Id. at 153. See also Merrell Dow, 478 U.S. at 808 (relying on Mottley, 211 U.S. 149).

29. For example, in Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 66 (1987), the Court permitted removal to federal court where Congress “clearly manifested an intent” to preempt the field and all state causes of action; see also Aetna Health Care Inc. v. Davila, 542 U.S. 200 (2004) (Clearinghouse No. 55,597); Beneficial National Bank v. Anderson, 539 U.S. 1, 8  (2003); Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 476 (1998).

30. Declaratory Judgment Act, 28 U.S.C. § 2201.

31. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 673–74 (1950) (Declaratory Judgment Act does not alter federal court jurisdiction); see also Franchise Tax Board, 463 U.S. at 16.

IV. Other Jurisdictional Statutes >