B.

FEDERAL QUESTION
1. The Well-Pleaded Compliant Rule
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 5 th 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.
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 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.
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 counter 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. Where the federal issue would have come into the case
in a counter-claim. The counter-claim wasnt enough. There can be statutes exceptions. Can be
removed on the basis of patent law counter claims. Under the Act it allows it to come under
counter claim, the
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 the merit and rejection both construction and
constitutional argumetns.
b. Judgment may turn on federal law.
c. Osborn v. Bank of US court broadly defined 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. Bank of the US a party. Federal issue is
still lurking in every case even though it might not be contested. To fall within S1331 the federal issue has to be
disputed. Rule 8: case is only within jx of the federal ct if the bank of the us has the capacity to sue or be sued. It
has to say something in the complaint abut the capacity. Federal issue.

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: Litigants can refer to federal defense in an action to declare
defense invalid
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. RR lawyer: federal statueswant the courts to declare the obligations. RR v. Mottleys: makes it illegal for motley
to give them this pass.
c. 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. Not intended to expand federal jx. Did the act of congress make it illegal
to give the passes to the Mottleys? A dispute would get there that would not otherwise get there. It was
not intended to expand declaratory judgment. Imagine the suit that would have been filed if there was
not declaratory judgmentwhich is purely a state law claim Coercive action. Way to preserve the
notion that declaratory judgment as wasnt intend expand it.
d. Franchise Tax Board v. Construction Laborers Vacation Truststate taxing authority sough a declaratory
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 judgment in state court 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.
State v. Fund for state income tax an obligation to pay would have been a state law claim. Federal law would
have came in as a defense. Ct says if you image the coercive action it would have been a state law claim. Some
say that they should apply it to both so what that it leads to controversies in fed ct that wouldnt be there if
brought in different party or by different claim.

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. Federal law supersedes state law. i.e. fairly liberal requirements as far as drug labeling and state had more
stringent requirements.
b. P v. D1 want to enjoin state from enforcing state from using stringent one. This is brought in federal court S
1331 is the issue on the face of the complaint is an essential element. If the federal law provides a defense.
Injunction: coercive relief. SC HAS SAID 1) look at face of well pleaded complaint 2) find the federal issue
i. Yes it meets motley: Jx under 1331. Even if it seeks declaratory and injunctive relief. Dont do skelly
imagine game.
c. 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.
d. 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.

What give federal courts DC to decide if they had that. S1331: DC is interpreting a federal statute it is interpreting 1331 when it
decides whether it has jx over a case. Gives ct jx to determine thatjx to decide their jx.

Diversity JX Ct interprets and applies the federal diversity statute. (its a federal law issue so S 1331 gives the court the authority to
interpret that or any other fed jx statute.

Insubstantial: used to describe claims. So foreclosed by settled law that it is not open to discussion. Close to a synonym for
frivolous. Ct can dismiss it for lack of jx. Sometimes courts use it to describe lacking jx when it was a hard case.

Sources of Law that make up federal Law

1) Constitution: (Givens Case) guy sues narcotic agents as not approp. Search and seizure. And asks for money damages.
Brings this to federal court. Can a private person sue directly under the 4 th amendment? Ct might say yes or no. Sometimes
it will not infer a money remedy.it will not dismiss for lack of jx. Federal issue of COA available appeared on the face of the
well pleaded claim Distinguish Lack of JX from Failure to State a Claim

2) Federal Statutes
a. S 1331
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 b. Have one that explicitly creates rights/obligations and creates a remedy.
c. Some impose obligations and do not say anything about a remedy. P can come to court and say D violated this
statutory duty and want courts to infer a private right of action so that he or she can sue for private damages. Cts
will say yes or no.
d. Claim arises under federal law. Unless its frivolous it should not be dismissed for lack of jx.

3) Federal Common Law: US issues commercial paper when questions arise judges may have to create judge made law.
Disputes between states about how to apportion inter state stream. Some international law is federal common law.
Congress enacts a skeletal scheme with intention of the courts to put the meat on the bone.

Different Roles that Federal Law may play in a case

Pure Fed Law Pure State Law

(Claim arise purely under fed law) ( Claims purely under state law)
YES FMJ
Constitutions/State Statutes/CL Contract or Tort Claims
Doctrine of Complete Pre-Emption Federal regulation is so complete that it leaves no room for state law to apply.
Claims governed by ERISA
Claims arising under Labor management Relations Act
Claims that fall within the National Bank ACt
99% IF FED law creates COA Federal JX

In the Middle:
Created by state law but copies the federal law. (States can interpret it differently) NO FED SMJ
Claim Created by federal law that incorporation state standards. Tort law governed by the statute.1331 or not. Created
under Federal Law YES go under Federal law.
State law claims with Federal Standards (Ingreidents) : liability when Ds conduct violates the federal statute.
o Smith v. Kansas City
o Merrell Dow
o Grable and Sons
o Gunn v. Minton

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
2. 5 years later Grable brought a quiet title action in state court
i. Darues quitclaim is invalid because IRS failed to notify of its seizure in the exact manner required by
federal lawwritten notice must be given by the Secretary to the owner of the property or left at his
usual place of business.ARG THAT IT REQ PERSONAL SERVICE NOT SERVICE BY CERTIFIED MAIL
that was REQUIRED BY Federal Statute
PP:
1. Darue removed the case to Federal District Court (Interpretation of notice statute =fed law) 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.
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 2. Federal issue does have to be revolved. It appears on the face of the well-pleaded complaint is whole argument. There
is not federal law of action.

Rationale:

II.
1. Cts 100 year old precedent that federal courts will be able to hear claims recognized under state law if they turn on
substantial questions of federal law.
a. D was entitled to remove quiet title action if G could have brought it in FED DC originally 28 USC 1441( as a
civil actin arising under the Constitution, laws, or treaties of the US S 1331
b. Smith v. Kansas City Title and Trust suit by a shareholder claiming that the D corporation could not buy
certain bonds of the gvt because their insurance was unconst. Missouri law provided a cause of action, ct
recognized fed jx because the principal issue in the case federal constitutionality of the bond issue.
i. Right to relief depends upon construction/application of federal law FROM THE COMPLAINT.
c. Shulthis v. McDougal ct confined to those that really and substantially involve a dispute or controversy
respecting the validity, construction, or effect of federal law.
2. Even where state action discloses a contested and substantial federal question, the exercise is subject to a possible
veto.
a. Federal issue will qualify for fed forum only if fed jx is consistent with the congressional judgment about
the sound division of labor between state and federal courts governing the application of 1331
b. Franchise Tax considering the welter of issues regarding the interrelation of federal and state authority and
the proper management of the federal judicial system.
III.

A.

1. This Case warrants fed jx. G premised his claim on failure by irs to give adequate notice within the meaning of the
fed statute. Ct rejects a bright line rule. It is not a necessary pre-requisite.
a. Other Fed Questions: 1) whether g was given notice within the meaning of the fed statute and 1) meaning of
the fed statute.
b. Gvt strong interest prompt and certain collection of delinquent taxes and the ability of the IRS to satisfy its
claims from the property of delinquents---requires clear terms of notice (direct interest in fed forum to
vindicate its own admin action).
c. Only a small effect on federal state division of labor because these cases are so rare.
2. Quiet title actions have been subject of some of earliest exercise of fed jx
a. Hopkinsfed jx over a quiet title action based on p allegation that federal mining law gave them superior
claim.

B.

1. Merrel Dow Pharmaceuticals Inc. v. Thompson state tort claim resting in part on the allegation that the D drug co
had violated a federal misbranding prohibition and was neg under OHIO law. CT held fed jx unavailable because
cause had not provided for a private fed cause of action for violation of the fed branding req.
a. G argues: no fed law provides for no quiet title action so it cant be brought in fed jx.
b. In m: determinations about fed jx req sensitive judgment about congressional intent, judicial power, and the
federal system
i. It should be read in its entirety as treating the absence of a fed private right to action as evidence
relevant to but not dispositive of the sensitive judgments about congressional intent.
ii. Ct concerned about 1) mislabeling traditionally state claim jx becoming fed jx increased volume in
litigation and 2) importance of adhering to legislative intent

c. In this case1) MD should be read in its entirety as treating the absence of a federal private as evidence
relevant to but not dispositive of. 2) SEE 961opinion to be read as a whole not overturning years of
precedent. rare state quiet title action that involves contested issues of federal always would not

5
 materially affect the normal currents of litigations; no good reason (??not) to have federal jx.
Concurrence (THOMAS)
In this case no one asked them to overrule the precedents and adopt rule of Justice homes limiting 1331 jx to those
cases in which federal law creates the cause of action pleaded on the face of the Ps complaint
In a different case, he might consider the other course. (willing to see the Holmes approach)
This whole analysis is kind of dicey I would be happy to consider going back to the Holmes test to determine cause of
action and JX.

Should it depend on whether opening the floodgates would be a problem? Even if you think it is then would briefs have to
contain empirical data
Notes and Questions
1. Look first at body of law that provides for or creates the claims asserted in the complaint. FQ jx generally upheld where FED
law creates cause of action.
a. Holmes argued jx inquiry should stop there, where body of law it arises under creates right of action
b. Irreconcilable cases where state created claim + federal ingredient
i. Smith v. Kansas city title and trust coshareholder of d corp brought suit in fed ct to enjoin co from
investing in bonds issued under the authority of the federal farm loan act. Complaint alleged that Missouri
law imposed a fiduciary duty on the corporation---limiting its investments to bonds that had be issued and
validly authorized.
1. Further alleged that Congress could no consistent with constitution adopt FFLA or authorize
insurance of bonds in question.
2. Ct held: upheld jx (upheld fed ct) reasoning that the right to relief depends upon the construction
or application of the Constitution or laws of the US State law gave rise to a COA where
constitutional of federal law was determinative
3. State law claim: breach of fiduciary duty to invest in bonds that were not properly issued. The Act
under which they were issued were allegedly unconstitutional. Authorized by an act that was
alleged to be unconstitutional.
4. Federal Issue on the face on the well-pleaded complaint determinative Of the action.
5. Federal constitutionality of the bond issue.
ii. Moore v. Chesapeake & Ohio RR ct refused allow jx over claim of an injured RR worker. P brought suit
under KY statute that allowed recovery of damages for personal injuries and declared that doctrines of
contrib neg were inapplicable when employer/d had violated the federal safety standard.
1. Ct held: state created claim did not arise under federal law rather statute touched the
employer at a single point
2. P v D on KY statute. D asserts defense on assumption of rish and P responds that defenses are
not applicable because D failed to comply with the federal safety compliance act. Federal issue is
coming into the case as a response to the defense.

Suppose a defendant move to dismiss for lack of SMJ and lack of federal jx.

2. Merrell Dow
a. Whole thing was built on the parties concession. Backdrop: marketed drug Bendectin to treat morning sickness
but children were born with birth defects
i. 3 Remedies for Personal Injury.
1. Children/guardians bring suit under state law seeking damages for negligence or failure to warn
2. Ask for FDSA to pursue some sort enforcement action against company on their behalf does
not create an express federal right of action enabling individuals to sue for personal injuries
caused by violations of the act.
3. Children might bring suit under federal law provided the Act congress creates both a federal right
to properly labeled drugs and right individuals to bring suit for damages as a result of
mislabeling/branding.
ii. Bell v. Hoodct rejected attempt to link jx inquiry to a determination the complaint states a claim for

6
 relief. To decide if FQ JX ct must look to the way the complaint is draw to see if it is drawn so as to claim a
right to recover under the Constitution and us laws. Recognizes that there can be jx even though there is
no claim. (MD if there is no claim there should be no jx)

b. The Ohio Litigation: Thompsons and McTavishes from Canada and Scotland respectively filed personal injury
claims in Ohio. Did not allege existence of implied federal right of action, sought recovery of CL theories of liability.
i. Sued in Ohio the place of incorporation so it could not be removed on forum nonconveniens
ii. Co removed and Ct found a state created negligence cause of actin with a federal statutory ingredient.
iii. DCdismissed forum non conveinens; 6xth Circuit ctreversed.

c. The Majority Opinion: SC affirmed; importance of making sensitive judgments about congressional intent, judicial
power, and the federal system. **FACTORS***
i. No federal cause of actin for FDCA violations. P are not part of class for whose special benefit that statute
was passed
ii. Leg intent reveal no congressional purpose to provide a private cause of action
iii. Federal cause of action would not further the underlying purpose of the leg scheme.
iv. Cause of action is traditionally regulated by state law
v. Arguments in support of JX
1. Case represents a straight forward application of Franchise tax board fq jx is proper when it
appears that some substantial disputed question of law is a necessary elements of one of the
well pleaded claims Ct held: presence of a federal issue does not confer federal jx.
2. Ct rejected contention that assertion of fed jx was necessary to help ensure uniform
interpretation of the law.
3. Argued that special circumstances justified fq jx. Unclear whether the FDCA applies to sales in
Canada and Scotland. Ct held: novelty of issue is not enough to grant jx.
d. Dissent (brennan)
i. Any substantial federal ingredient in a state created COA would suffice to confer federal question jx.
ii. Need to determine the meaning and application of the FDCA
iii. 2) looked at the negative implication that would flow from the absence of an implied Right of action
No Fed claim, no federal fourm.
e. Postscript on Forum Non Conveniens:
i. At time of litigation, Ohio had not accepted view of forum non conveniens that prevailed in fed cts
ii. Chambers v. MDP: SC adopted view like federal rule and case of foreign Ps was dismissed

f. Postscript on Implied Right of Actions:

i. In re Bendectin Litigation ct held that there was federal question jx over claims made by ps who sued
Merrell Dow in federal court claiming injury caused by B. Ct said that a reading of complaint gives the
undeniable impression that P intended to allege an implied COA under the FDCA. Federal claims were not
wholly insubstantial
3. Ct rejects argument that express or implied federal right of action should be seen as an absolute pre-condition to the
exercise of federal jx. Ask whether it would disturb any congressionally approved balance of federal and state judicial
responsibilities.
a. Balance of Responsibilities Factors:
i. Inferences court should draw from Congressional inaction
ii. Likely impact on federal dockets.
iii. Significance of the federal question.
4. Substantiality a FQ must be before a federal court can dismiss it for want of SMJ Carr v. Tillery
a. City of Chicago v. International College of Surgeons ct held that federal law element of a state law claim
sufficed to create jx under 1331. Int college sough to review in state court decision of Chicago landmarks
commission to designate two building the college owned as landmarksmeant that the college could not develop
property how they wanted. Federal constitution contentions based on DPC and EPC of 5 th and 14th amendments.
b. Empire Healthchoice Assur. Inc v. Mc Veigh a federal employee who had been injured in an automobile accident
recovered medical benefits under the terms of a comprehensive federal insurance program. Employees estate
brought suit in state court to recover tor damages in connection with accident. When settled, federal insurance
plan brought suit in fed ct to enforce a lien on the proceeds of the settlement to compensate the Plan for its
7
 payments to victim
i. Plan argued that state law claim incorporated a federal ingredient --> beneficiary federal obligation to
reimburse the plan for the amounts of benefits it had paid.
ii. Ct found issue involved the fact question of what amount to reimburse the plan arose in connection with
state tort litigation.viewed state court as competent to addressed it, taking into account applicable
federal law.

5. Specialized jx statutes: do not call for an interpretation of the general federal questions provision in S 1331, but invite
consideration of whether Congress had exceeded the bounds of article 3.
a. Mesa v. CA fed officers may not remove and action from state to fed ct unless they tender defense governed by
federal law
b. Textile Workers Union v. Lincoln Mills law to be applied in suits to enforce collective bargaining agreements
between unions and employers was federal law.

FED JX lacking can remand to state court

IF fed court addresses the PJ ct first it is taking it away from the state court, when it could have merely remanded.
!) SMJ 2) PJ
Supreme court there is no unyielding Hierachy
o Sinochem: until one has decided that court of filing had SMJ. If the Pj question is hard just dismiss it.
1) Gunn v. Minton.
2) Statute S 1367

8
T UP Pages 27-29

Case: Eldee-K Rental Properties LLC v. Direct TC

1. Ct upheld the dismissal on SM grounds because the suit was a local action under CA law and had had to be brought in CT
where the real property was located

2. Suit was a class action on behalf of all LL where Direct tv installed equipment in common areas without their permission (ll
permission was a legal req)d
a. P argued: 1) Direct tv practice violated Ca Unfair competition act and 2) claims of negligence.
b. Ps apartment house was in CT.

3. Could of raised gen jx issues (as in Daimler)

a. Because whatever installations d had in CA would not provide a basis for jx in suit against installations in other
states.
b. Direct Tv was headquartered in Caso it would be truly at home there and subject to general jx.

4. Rationale
a. Examined 100 year old precedent that emphasized the distinction between local and transitory actions were
recognized at a part of CL. (in the case of Livingston)
b. And that SC misinterpreted Livingston ct here holds that the local action doctrine affects SMJ.
c. Action is local under CA version of the rule and is beyond fed courts SMJ

5. Wallace v. Wallace
a. Wife brought divorce action in state court and husband brought suit against wife in federal ct
b. Husband claimed that wife stole his identity and run up credit card bills over $40,000sought 100k in relief and
injunction against wife use of his identify
c. DC dismissed for lack of jx because credit card issues were among the matters being raised by the parties in the
divorce litigation
d. If federal ct were to award husband the injunctive relief he requests, the award would undermine the judgment of
the state ct.

The Buffalo Creek Disaster

BMC: WV corporationsole stock holder is Pittston Co. in NY. wanted to be sued in WVstate cts more politically tied
to the mining.
Brought suit in: US DC for SD of WV on Federal Diversity grounds: Pittston was in NY and victim in WV
*had to pierce the corporate veilpermit injured person to sue corporations shareholders.
FQ: Prob No Federal Coal mine Health and Safety Act of 1969: but it only applied to employees on site not
their families, and there were none on site when the disaster took place.
State Law: WV had a statute prohibiting construction of dam/obstruction over 15 ft across any stream or
watercourse without prior determination by statewhich it did not have
Recovery
* Legislature limited the recovery of a wrongful death to 10k unless family could prove greater financial
dependency
* Punitive damages show that they were more than careless or negligent then they could get more money
* No aggregation because Ps claims were separate
* $ 11 mill in real property, $50/person for psychic impairment
* $21 mil in punitive damages (have of Ps $42 mil net income)

9
C. The Penumbra of Federal Judicial PowerSupplemental Jurisdiction
1. Codifying Supplemental Jurisdiction
Osborne v. Bank of US held that Congress could grant the federal courts jx over a whole case so long as
federal issue was an ingredient in the original case asserted; grants jx over any action which the US bank was a
party (broad inter of art 3, 1201)
Constitution only requires minimal not complete diversity
Pendent jurisdiction is the authority of a United States federal court to hear a closely related state law claim
against a party already facing a federal claim, described by the Supreme Court as "jurisdiction over nonfederal
claims between parties litigating other matters properly before the court."

Case: United Mine Workers v. Gibbs (1966)SC of the United States

Facts:
1. Tenn closed its coal mine and laid of 100 workers all members of the United Mine Workers (UMW)

2. Mine was set to re-open later that year: Gibbs the supervisor of the venture had contracted to haul the coal markets.
a. Was to employ members from the Southern Labor Union, UMW rivals
b. UMW had a nonviolent picket line and kept mine closed for several months

3. Gibbs Sued
a. The national union under the federal labor Management Relations Act (LMRA section 303) which authorizes
any person to recover damages for loses to his business or property suffered as a result of unlawful boycott.
b. 2) sought damages for intentional interference with advantageous commercial relations under TEN tort law.
c. LMRA pre-empted state tort law grounds and substituted a comprehensive scheme regulating labor
management relations.
PP:
1. 1) Fed claim under LMRA S 303 and 2) State interference claim under Ten Tort law
2. District Ct: enter judgment solely on claims under state law; granted unions motion for judgment as a matter of law on
federal claim (but not for state law)
a. Submitted both the federal claim and state law claim to the jury.
3. Supreme Ct: where the case is now (disagrees?) (State law could be attached because it was so related)

Holding/ Rationale
1. JX depended on finding that state claims were so related to federal secondary boycott claim under 303 to satisfy
pendant jx
Pendant Jx: there is a fq claim and the relationship between that claim and the state claim permits the
conclusions that the entire action before the court comprises but one constitutional case
Federal claim must 1) have substance sufficient to confer SMJ on the court 2) must derive from a common
nucleus of operative fact
Factors: 1) judicial economy, convenience and fairness to litigants.

1) substantial federal question claim: would survive 12 b1 2) Share a common nucleus of operative fact 3) expect P to
try them together. And then will be part of the article 3 case.
2)
2. In the present case state claim implicates the federal doctrine of pre-emption (relevant to exercise of discretion)
Other factors to exercise over state claims: likelihood of jury confusion in treating divergent legal theories of
relief.
Issue of Pndt Jx: remains open throughout litigation.
Power to adjudicate the whole case attached at the outset. Decision to submit both federal and state law
claims to jury served the interest, convenience, and efficiency and did not constitute and abuse of discretion

1) Anciliary JX: multiple D can assert cross claims

P v. D1 v. D2
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 o Fed question must be substantial. Claim must derive from common nucleus. Then federal court would
have ancillary jx over the state law claim.
P v. D 1 v. D2
o P v D Only diversity jx. IF d asserts a state law counter claim against P for less than $75k and is
compulsory. No, If it satisfies it we would not have to think about compulsory jx. If compulsoryarose
out of the same transaction so it shares a common nucleus.
P IL v. D1 + D2 (both NY)
o D1 asserts a cross claim against D2 it must arise out of the same cross claim or insurance.
o Ancillary jx over d1 to d2 cross claim? Yes there is power under controversy to hear cross claim. Ct can
hear a cross claim that is a state law claim between non-diverse parties. Doesnt violate complete
diversity because each D is diverse from P.

P v. D v. X under rule 14 X is insuranc e policy

o X and D is a citizen of NY: ancillary jx?
Public policy: would be waseful to have to split if off. Good for judicial economy+ parties dont have to
repeat testimony and the like. Gives the D some protection. Each have them have been dragged into court
against its will so it gives them the benefit to have all the resputes disovled at one

Case: Owen Equipment & Erection Co. v. Kroger (1978)SC of the United States
Facts:
1. Kroger (citizen of Iowa) filed suit for the wrongful death of her husband against Omaha Public Power District ( citizen of
Nebraska) invoked diversity jx
2. OPPD impleaded Owens Equipment under Rule 14 Owen owned the crane that decedent was working at time of his
death.
3. K amended her complaint to allege claims directly against Owen.
a. Owen like the P was a citizen of IowaHDQ in Iowa even thought appeared to be on Nebraska side of Missouri
River.
b. By the time this became clear, Iowas statute of limitations would have barred a new suit against Owen
c. DC retained JX
PP:
1.DC retained Jx ruled for K
2.Ct of Appeals: Affirms DC ruling; common nucleus of operative fact test also determines the outer boundaries of fed jx
(Gibs test).
a. Relied on the doctrine of ancillary jx
b. Gibbs concerned resolution of Ps fed and state law claims against a single D in one action
i. This claim no claim based on substantive fed law. State law tort claim against 2 different Ds.
3. SC of the US: where the case is now
Holding/ Rationale
1. Constitutional Power Article 3 or Acts of Congress First hurdle for jx
a. Statutory law may limit federal cts jx, over nonfederal claims.
b. Aldinger v. Howard Ct held that a fed DC lacked jx over a state law claim against a county even if the claim
was alleged to be pendent to one against county officials.
c. Zahn v. International Paper Co Ct held that in a diversity class action each member of the P class must
independently satisfy the min jx amount set by 1332 a; rejected arggm that jux existed over claims that
involved less
d. Both Cases: federal and non federal claims arose from a nucleus of operative fact + statute conferring jx did
not allow the exercise of jx over non federal claim
i. Gibbs test is not the end .

2. Need 1) examination of the posture in which the non-federal claim is asserted + 2) examination of the specific
statute that confers JX over the federal claim in order to determine if Congress has express/implication negated
exercise of jx over the particular non federal claim

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 in this case: Diversity Statute has been interpreted to require complete diversity. K could not have originally
have brought suit in fed court naming Owen and OPPD as co Ds.

Context in which non-fed claim is asserted is crucial.

o 1) Non federal claim not ancillary to the federal one like in the way that the impleader by a d of 3 rd
party always is 3rd party complaint depends at least in part upon the resolution of the primary
lawsuit. Logical dependence.
Here: K claim against Owen was ENTIRELY SEPARATE from her original claim against OPPD
(not dependent)

o 2) Non-federal claim here was asserted by the P who voluntarily chose to bring suit upon a state-law
claim in a federal court.
Ancillary jx typically involves claims by a defending party haled into court against his will or
by a person whose rights might be irretrievably lost unless he court assert them in fed ct.
Here P cannot complain if ancillary jx does not encompass of his possible claims in a case
such this one ...because she chose the federal rather than state forum.

3. Neither convenience of litigants nor considerations of judicial economy can suffice to justify the extension of doctrine
here.
4. REVERSE

Notes and Questions:

1. Pendant party jx was thought to arise in the context of federal question proceedings.
a. Aldinger v. Howard P brought suit against county and its official saying that she was fired from her county job
unconstitutionally.
i. S 1983 did not permit suit against the countyso she asserted constitutional claims against the officers
and state law pendent party claims against the county.
ii. Held: Because congress had excluded counties from liability under 1983 it had by implication negated the
existence of pendent party jx over county.
iii. P v. D1 (fed q) + D2 (state law claim)
1. Fed claim was dismissed but does P stil have PP jx over D2. YES met Gibbs test 1. Substantial fator
2. Normally tried together
2. But no jx here S 1983 claims no jx ver ppl who cant be sued (county/official are excluded form
liability)
2. Diversity Jxpendant claim and pendent party jx have little relevance
a. Once diversity has been established , the P can join all extant claims against a particular D even if the claims bear
no relationship to one another
b. Ct consistently refused to permit aggregation of the value of the claims of multiple Ps to satisfy the requirement.
Each P must individually assert a sufficient claim.
c. In Class actions req could not be satisfied by aggregating total claims of all the class members.
d. Synder v. Harris Ct held that even if the named class rep in a state law class action had a sufficient claim, jx
would not extend to the related claims for other class members, each also had to satisfy requirements.

3. Finley v. US: SC ended the era of judge made pendent party and ancillary jx holding that the absence of statutory
underpinning was fatal to exercise of jx over claims against non-diverse parties
a. Facts: Plane crash at airport in San Diego. P sued the fed gvt under the Federal Tort Claims Act 1346 seeking
damages for neg of the FAA in handling of air traffic control and its upkeep of the runaway.
i. P also proposed to name two additional D on the state law neg claims in connection with same plane
crash
b. Hold: Ct explained the important of statutory support for the joinder of additional parties
i. Grant of jx over claims involving particular parties does not itself confer jx over additional claims by or
against different parties
ii. Even where there is exclusive federal jx of a claim against one D, a fed ct could not exercise jx over a state
law claim against a non-diverse coD.

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 iii. Overrules Aldinger. You need 1) Constitutional provision or 2) statutory grant
iv. This over-ruled S 1367.

4. 28 USC 1367:
a. A: broadly defines the supplemental jx of DC extending it to all claims that are so related to the claims in the civil
action of which the court has original jx.
i. Shall include claims that involved joinder or intervention of additional parties.
ii. Reaches at least broadly the common nucleus test of Gibbs
iii. Rule 13 while permissive counter claims do not arise from the same transaction or occurrence as the
claims of the P, D may have a strong interest in asserting them.
1. Jones v. Ford Motor Credit Co upholding supplemental jx over permissive counter-claim.
2. Global Naps Inc v. Verizon of New England concluding that Gibbs common nucleus test no
longer control and upholding supplemental jx over permissive counter claims

b. B: sets for a series of exceptions that qualify the broad grant of supplemental jx
i. Only apply to claims made by P thus allowing the assertion of supplemental jx over claims by D
ii. Forbids assertion of claims by P against other parties joined under Rules 14, 19, 20, 24.
iii. Fails to create an explicit exception for claims by P who were enjoined under Rule 20 and Rule 23.

c. C: provides the bases on which DC may decline to exercise supplemental jx. The fact that it may apply does not
require dismissal.
i. Executive Software North America, Inc c. US DC once it is determined that the assertion of sup jx is
permissible under 1367 a +b, c provides the only valid basis for declining.1) identifies a factual predicate
in the case that corresponds to on of those enumerated in the statutes.
ii. Montano v. City of Chicago failure to exercise sup jx over state law claims was an abuse of discretion
iii. Motorola Credit Corp v. Uzan DC was not required to decline to exercise supplemental jx over state law
claims after dismissing all federal claims because the ct was fully conversant with facts and had conducted
a trial on the merits.

d. D: for a party that unsuccessfully invoked supplemental jx d tolls the running of the limitations period during
the time the federal case is pending and for 30 days after-----permitting the party to file all the claims in the state
court if proceeding in federal courts becomes impossible.
i. Should solve statute of limitations problems.

2. Interpreting the Supplemental JX Statute

Case: Exxon Mobil Corp v. Allapattah Service Inc.

Rosario Oretega v. Star-Kist Foods Inc.
SC Of US (2005)
Facts/ PP:

Exxon
1. District Ct: 10,000 Exxon dealers filed a class action suit against Exxon in US DC of FL. They alleged an intentional and
systematic scheme by Exxon under which they were overcharged for fuel purchased from them.
a. Invoked Diversity Jx (1332 a)
b. Held unanimous jury verdict for P; ct certified case for an interlocutory reviewasking whether it had
properly exercised 1367 supplemental jx the claims of class members who did not meet minimum amount
2. Ct of Appeals for 11th Circuit upheld jx

Star-Kist
1. District Ct of PR: 9 year old girl sued SK in a diversity action in US DC of Puerto Ricoseeking damages for unusually
severe injuries she received when she sliced her finger on a tuna can
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 a. Family joined on the suit seeking damages for emotional distress and certain medical expenses
b. Held: Granted summary judgment to SK finding none of the Ps met the min in controversy amount.

2. Ct of Appeals of 1st Circuit: injured girl but not her family made allegations of the requisite amount
a. 1367 authorized supplemental jx only when DC has original jx over the action and in a diversity case it is
lacking if one P fails to satisfies the amount in controversy requirement.

SC of the US: where the cases are now (consolidated).

Issue:
1. Whether a federal ct in a diversity action may exercise supplemental jx over additional Ps whose claim do not satisfy
the minimum amount in controversy requirementprovided that claims are part of the same case/controversy? Yes
2. Whether a diversity case in which the claims of some Ps satisfy the amount tin controversy requirement but the
claims of other Ps do not present a civil action of which DC have original jx? YEs

Holding/ Rationale

II.

A.
1. DC posses only the power authorized by constitution or statutes.
2. Distinguishing between Diversity Req and other like FQ and AMT IN C Ct has not adopted Gibbs expansive
interpretive approach to this aspect of jx statue
Under Gibbs Diversity Req: 1) must have original jx over at least one claim in the action. Incomplete
diversity destroys oj with respect to all claimsnothing to which supplemental jx can adhere
FQ and AMT IN C: can only be analyzed claim by claim.
Cts have taken a more restrictive view:
o Clark v. Paul Gray: P must separately satisfy the amount in C req.
o Zahn v. Intl: reaffirmed Gray in context of a class action brought invoking 1332 a

1989 3 Steps
1. Diversity requirement required complete diversityin Section 1332 a if not they lacked oj
2. IF DC had oj over one claim then had suppl jx over all other claims arising out of the same action
3. Jx statutes did not authorize supplemental jx over additional claims involving other parties
B.
1. Examine 1367a: grant of supplemental jx extends to claims involving joinder or intervention of additional parties.
a. Here: when the well pleaded complaint contains at least 1 claim that satisfies the amount in controversy req
+ no other relevant jx defect DC has original jx.
i. If ct has oj over a single claim in the complaint, it has oj over a civil action within the meaning of
1367 a.
2. Examine 1367 (b): to determine if any of the exceptions apply
a. Here: does not withdraw sup jx over the claims of additional parties at issue here. Nothing in text withholds
jx over claims of Ps joined under Rule 20. Or certified in class actions like 23
b. Cts dont need oj over every claim in complaint.

3. Two Theories
a. Indivisibility theory: all claims in complaint must stand or fall as a single indivisible civil action
i. Ct Holds: Easily dismissed as inconsistent with notion of sup jx.
1. would have been no oj in Gibbs
2. fq and diversity casesallowing fed cts to cure jx defects by dismissing the offending
parties rather than dismissing the entire actions
3. Exact phrase of original jx of all civil actions does not mean different things of all civil
actions in 1331 and 1332

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 b. Contamination Theory: inclusion of a claim or party falling outside the DC oj contaminates every other claim
in the complaintdepriving ct of oj over any of the claims.
i. Ct held: makes some sense in complete diversity req because the presence of non-diverse parties
on both sides of lawsuit eliminates the justification for federal forum
ii. Makes no sense for AMT in C: presence of a claim that fall short of the min amount in cont does
nothing to reduce the importance of the claism that do not meet this req.
iii. No logical connection between AMT in C and diversity jx.

4. Not immediately obvious why Congress withhold sup jx for p joined under Rule 19 +20
a. Could have been an unintentional drafting gapif so it is for congress not the court to fix it.

C.
1. 1367 is not ambiguous.
2. Legislative history did not shed useful light on the question

D.
1. Class Action Fairness Act had no bearing on the analysis of these cases.
2. Affirmed the 11th Circuit Exxon ruling.

Dissent (Stevens)
Agreed with Ginsburg dissent that showed that Cts view of sup jx was overly ambiguous
Leg history provides powerful confirmation that objective of 1367 was essentially to restore the pre-finely
understanding of the limits of sup jx.

Dissent (Ginsberg)
1. Wants a narrow construction of 1367: DC have oj. Each P must independently satisfy the amt in ct requirement
unless congress expressly orders otherwise.
2. Context is a crucial guide: tied to the grant the non-aggregation rule the court has long applied to matters in
controversy.

3. Read 1367 a: to incorporate the rules on joinder and aggregation tied to 1332 at the time of -67 enactment
a. Complaint must 1) meet Org JX req If not, then no sup jx is authorized and 2) IF Supp jx is authorized,
would have complete diversity and restricting aggregation
b. Not a sharp distinction between Diversity and Amount: doesnt disregard developed doctrines of pendent
and ancillary jx.
c. Takes in count Rule 20 +23: Ps who fail to meet req amount fail at 1367 a thresholdso they would not
have to be included. Congress didnt have a reason to turn them away later.

4. (b): stops Ps from circumventing 1332 jx req by using anothers claim as a hook to add a claim that the P could not
have brought in the first instance.

Notes and Questions:

1. Mistake in 1367 (b) was that it could undermine the complete diversity rule
2. Supreme Tribe of Ben-Hur v. Caublect held that diversity req was satisfied if the named Ps were diver from Ds even
though unnamed class members were not.
3. Merrill Lynch v. Allegheny Energy Inc extensive interpretation of 1367 does not extend to additional parties who
presence defeats diversity.
4. Lower cts have given effect to the prohibition on supplemental j over Rule 24 P intervenors
a. Re Olympic Mills Corp upholding the exercise of jx over nondiverse intervening Ps without considering
language of 1367

5. 1367 B prohibits claims by Ps against non diverse intervening Ds under Rule 24 as well as claims by non diverse
intervening Ps under rule 24.
a. Cts do not necessarily accept the P;s own description of their status as P or D but align them in accordance with
their interests.
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 b. Price v. Woford: upheld sup jx. Over the claim of non-diverse intervener who sought to impress to a lie on the
proceeds of a settlement fund.

6. Voda v. Cordis Corp

a. Voda brought suit in OK FD against Cordis a medical device manufacturer alleging infringement of a patent on a
catheter used in cardiology treatments. DC have exclusive jx over patent claim under 1338.
i. Cordis infringed patents he obtained in BG, France, Canada, and Germany.
ii. Voda urged that state courts could exercise general smj over foreign patent infringement claims.
b. Ct appeals blocked assertion of sup jx. Viewed patent rights as extending only through the territory of the
soverign that conferred those rights. Feared that assertion of jx would interfere with sovereign right of other
nations to control their patent regulatory system.

UP Pages 29-30:

Three approaches by State Courts: 1367 d: its clearly 30 days but it could be longer
1) Suspension Approach: Statute Stops running of limitations period and following dismissal permits filing in state court
within the time remaining on the limitations period when the federal filed + 30 days
2) Grace Period Approach: ensures the dismissed claimant can filed in state court within 30 days of dismissal
3) Substitution Approach: direct that refilling occur within 30 days no matter how much time remain on the limitations
period

Case: City of Los Angeles v. County of KernCA SC (2014)

1. Ct opted for the grace period approach.
Recognized that the use of the word tolling in the statute would support the suspension approach as a matter of
language but concluded that statute was ambiguous
Suspension approach would produce more intrusive results.

2. Legislative history strongly support the grace period approach

Consistent with approach adopted by American Law Institute

3. Approach was Respectful of state law

Congressional goal was only to provide a reasonable opportunity for a dismissed claimant to re-file in state court.
(d) has no effect if dismissal occurs more than 30 days before limitations expires

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a. State Law Claims with Federal Ingredients Cases
i. Mottley: look to well-pleaded complaint to determine SMJ based on federal Q S1331; issue has to appear
on the face of the complaint. Federal law must be source of the claim

ii. Gully: Federal issue has to be a determinative element of the claim

iii. Smith v. Kansas City Title and Trust Co.

1. Federal issued bonds were involved and federal law was an essential ingredient of Ps state COA
so there was fed JX
2. State law claim: breach of fiduciary duty to invest in bonds that were not property issued. The
act under which they were issued as allegedly unconstitutional.
3. Fed Q jx proper where state law gave rise to a COA where the constitutionality of fed law was
determinative.
4. Right to relief depends upon construction/application of federal law from complaint.
5. Even though claim is creating by state law statue was constitutional.
6. Significant was right to relief depended on the construction of federal law.

iv. Merrell Dow v. Thompson:

1. Facts: MD marketed a drug to treat morning sickness but children were born with birth defects.
Thompson brought a State court claim (Ohio) where Thompson claimed that D drug company
had violated a federal misbranding statute was negligent under Ohio law. Negligence
mislabeled under the FDCA.
2. PP: 1) filed personal injury claims in Ohiodid not allege existence of implied federal right of act,
sought on CL theories of liability.
a. MD removed the case to fed ct and DC dismissed: forum conveinens
b. 2) 6th Circuit Ct reversed---no private right of action (does not state a claim arising
under Const, laws or treaties of US S 1331)
c. 3) SCaffirms
3. Hold: fed jx unavailable because cause had not provided for a federal cause of action for a
violation of the branding requirement.
4. Rationale: Federal issues appearing on the complaint and satisfies Mottley. Determinations
about federal jx require sensitive judgment about congressional intent, judicial power, and the
federal system.
a. No federal cause of action for FDCA violations
b. Ct concerned with 1) mislabeling traditionally being state claim jx becoming fed jx. It
would mean increased volume in litigation 2) importance of adhering to legislative
intent
c. Factors when Statue allows for Private Right of action Parties concede that that there
is no private right of action. Doesnt decide whether the FDCA creates a private right
of action.
i. P was part of class for whose benefit statute was passedHere: P was not a
class for whose benefit the statute was passed
ii. Leg intent/purpose was to provide private COA Here: leg intent did not
reveal congressional purpose to provide COA
iii. Federal COA will further underlying purposes of leg scheme
iv. COA isnt subject to state law here traditionally regulated by state law
d. If no federal claim available (whether or not asserted) then no federal forum
provided. IF there is a federal claim available then there should be a federal forum. k
5. Dissent: Any substantial federal ingredient in state created COA would suffice to confer federal
jx. Not logical to make jump from no COA to no SMJ. Should look to traditional things like
uniformity and expertise

v. Grable and Sons v. Darue:

17
 1. Rationale: fed cts will be able to her claims recog under state law if they turn on substantial
questions of federal law.
a. Lack of federal COA not determinative
2. FQ jx over a state claim is appropriate only when it appears that a substantial and actually
disputed federal issue is in the well pleaded complaint. Look to
a. Is fed statute essential element of claim?
b. Is fed right of action?
c. Does govt have interest in resolving this claim? Here Yes National interest I n
providing a federal forum for federal tax litigation---promote and make certain
collection of delinquent taxed and it affects the ability of the IRS to satisfy its claims
from property of delinquents.
d. Will it affect federal/state division of labor? Here type of case is rare so it would only
have a small effect on federal state division of labor.
3. Vs Marrrel Dow there many like it a lot of tort claims, here it is rare not a common claim.
4. TEST A Federal forum may entertain without disturbing any congressionally approved
balance of federal and state judicial responsibilities.

vi. Gunn v. Minton:

1. Fed law S 1338 confers jx on the fed state cts to hear any civil actin arising under any Act of
Congress relating to patents and deprives the state courts of jx over any claim for relief arising
under patent law.
2. State law claim that lawyer committed malpractice with a patent case. Failed to make it in a
timely fashion it had lost it. (failure to make patent law in a timely fashion)appeared on
complaint. Essential element of the claim, actually disputed. Would it disrupted.
3. SC held that patent malpractice claims did not arise under federal law for jurisdictional purposes
and did not fall within exclusive federal patent jx.
a. Patents met standard for necessarily presented and disputed
b. Jx was improper because the federal patent did not meet the substantiality
requirement.
c. Any finding would affect only the resolution of the malpractice claim it would not re
open or alter decisions to the validity of the patent. Not rising in the context of an
actual judication. State torts descions wont undermine the uniformity that federal court
seeks to create.
d. Facts based applications is not sufficient.==> If an issue is very tied to the facts it will
not be held to be sufficiently substantial.
e. Familiarity with patent law was not a good enough reason.
f. In the absence of a substantial federal question, assertion of jx would upset the federal
state balance in light of the strong state interest in maintain standard for the practicing
bar.
g. No reason to think congressional conferral was meant to bar state courts from legal
malpractice claims because require resolution off hypothetical patent issue. Did not
intend for the m to go to state courts.

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