Federal Courts Pettys Fall 2012
a. Art. III, Sec. 2: judicial power extends to cases arising under constitution, laws of the US, controversies to which US is a party, and diversity cases
b. Federal question jurisdiction: federal courts are courts of limited jurisdiction
i. Need for both constitutional and statutory authority
1. Constitutional authority derives from Art. III, which provides for fed judicial power over nine categories of cases and controversies
a. Can vindicate and enforce powers of fed govt. (cases arising under the constitution, treaties, and laws of US)
b. Authority to hear all cases in which US is a party
2. Art. III gives fed courts authority to decide controversies between two or more states, between a state and citizens of another state, between citizens of different states, and between citizens of the same state claiming land in other states
a. 11th A modifies Art. III by denying fed courts ability to hear suits between a state and citizens of another state
ii. Ever since Judiciary Act of 1789, fed jurisdiction has never included the authority to adjudicate all matters allowed by Art. III
iii. Presumption against fed court jurisdiction: burden is on party seeking to invoke fed jurisdiction to demonstrate that fed court has authority to hear the case
1. Jurisdiction cannot be gained by consent of the parties
2. Subject matter may be challenged at any point and by either party (or by fed courts themselves)
iv. Typically jurisdiction is concurrent (state courts have power to hear fed law suits)
c. Why fed courts are often preferred
i. technical competence – smaller number of officials, higher pay, constitutionally mandated appointment (selection process), constant exposure to fed questions
ii. psychological set – institutional culture due to directly “reporting” to SC
iii. majoritarian pressures – many states judges are subject to election
iv. comparable experience in fed courts (McDonald's example – franchise); familiarity in how courts operate
1. more granting of SJ
2. pleading standards tougher in fed courts
3. Rule 11 – burden on attorneys to make argument grounded in fact
d. Fed jurisdiction, diversity, supplemental jurisdiction (personal)
1. personal – fundamental fairness (DP) gives rise to personal jurisdiction – court's relationship to person
2. subject matter – types of lawsuits courts can hear (fed courts have limited jurisdiction): includes diversity, supplemental, FQJ.
II. Article III (Constitutional Scope)
a. SC has interpreted the constitutional provision (Art. III) very expansively
b. There is federal jurisdiction under Art. III whenever federal law is a potentially important ingredient of a case
i. proportion is not important; merely need one fed ingredient (no well-pleaded complaint rule – not limited to P; low degree of certainty)
ii. SC has never answered question (Lincoln Mills case) as to whether a law granting federal jurisdiction is sufficient to create FQJ (i.e. is mere sue or be sued clause enough?)
i. Osborn v. Bank of US: OH was trying to tax US Bank, and state officials took the money by force. Bank sued in fed court to recover the money
1. issue was whether federal court had jurisdiction to hear US Bank's suit
2. McCulloch had held that it was constitutional for Congress to create Bank of the US and that it was unconstitutional for MD to tax the bank
3. SC explained that under the constitution, a cases arises under federal law whenever fed law “forms an ingredient of the original cause” even though other questions of fact or law may be involved
a. Concluded that because the Bank was created by fed law, any action brought by it arose under fed law
4. Here, the act of Congress (charter of incorporation) is the first ingredient in the case; is the origin from which every other part of the case arises (every act of the bank arises out of the law)
III. §1331 provides that the district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the US
a. SC has taken narrower view in interpreting 1331
b. A case arises under federal law if it is apparent from the face of P's complaint either (1) that P's cause of action was created by fed law; (2) or, if P's cause of action is based on state law, a federal law that creates a cause of action or that reflects an important national interest is an essential component of P's claim
c. Three components of the rule:
i. Well pleaded complaint rule: It must be clear from face of P's complaint that there is a federal question (Mottley)
1. Federal jurisdiction cannot be based on a federal law defense or P's anticipation of federal law defense
2. Application in declaratory judgment cases: P may not circumvent rule by seeking a declaratory judgment that fed law is unconstitutional or inapplicable if the complaint in a lawsuit for redress would not state a federal question (Skelly)
a. if, but for the availability of the declaratory judgment procedure, the federal claim would arise only as a defense to a state created action, jurisdiction is lacking
i. If you're going to bring a suit for something other than declaratory relief, and court decides you cannot get into federal court, then the declaratory judgment does not allow you to get in
1. if P could get in with some other claim, then declaratory judgment lawsuit belongs in federal court
2. if P could not get in with other claim, then we cannot let P in; we're expanding our jurisdiction to allow cases that otherwise would not get in
ii. analysis: (1) Could P have sued for coercive cause of action? (2) Does it pass Gully test?
b. Franchise Tax Board complicates analysis: court says to focus on defendant; “fed courts have regularly taken original jurisdiction over DJ suits in which, if the DJ D brought a coercive action to enforce its rights, that suit would necessarily present a fed question”
i. FN 19 – have allowed DJ acts for patent infringement, where possible infringers have brought DJ actions…fed courts have taken jurisdiction where “D would raise a fed question over which fed courts have exclusive jurisdiction”; i.e. necessarily presents fed question
c. Exception to D-oriented analysis: in DJ suits (regardless of fed or state statute), if neither party has a coercive cause of action, then no FJ (see Skelly). If both parties have a coercive cause of action that would arise under fed law, then FJ. If DJ P has coercive cause of action that arises under fed law, then FJ (well pleaded complaint rule). *If only D has coercive cause of action against DJ plaintiff, (a) FTB says that there is FJ so long as P is not the state; (b) and that suit would necessarily present a fed question
a. Louisville & Nashville RR v. Motley: as part of settlement, Mottleys were given free RR passes for their lives. Congress later adopted a law prohibiting free RR passes, and the RR refused to issue the passes. Mottleys sued for breach of K.
i. SC held no SMJ; fed issue arose only from the P's anticipation of a defense based on the fed statute (5th A issue arose only if/when D cited federal law prohibited RR passes)
b. Skelly Oil Co. v. Phillips Petroleum Co: Phillips k'd with Skelly to purchase natural gas, subject to condition that Phillips obtain a certificate from Federal Power Commission. Phillips obtained it, but Skelly contended that conditional cert did not meet the requirements of the k and gave notice it was terminating. Phillips then brought fed action seeking DJ that proper cert was issued by FPC and that k had to be performed. SC held no FQJ because fed issue arose solely as anticipation
i. If case has been presented, there would have been state law breach of k claim by Phillips and Skelly's defense would then have rested on nature of cert issued by FPC
ii. Satisfied Gully – substantial federal issue that is essential to the claim
iii. However, Court says the Declaratory Judgment Act does not expand jurisdiction
c. Franchise Tax Board v. Construction Laborers Vacation Trust: CLVT administered a fund that provided for paid vacation for workers. The trust fund was an employee welfare benefit plan and thus regulated by ERISA. FTB sought unpaid taxes from union members and requested trust to pay the sums due; CLVT claimed that under ERISA the state could not seek payment from funds held by the trust.
i. FTB filed suit, stating two causes of action: the first cause sought unpaid taxes, and the second requested a DJ that ERISA did not preempt the ability of the state to obtain payment from the trust.
determine substantiality of fed interest (despite fact that language in MD suggests that case turns on whether fed cause of action is created)
a. Does the constitution grant jurisdiction?
i. If there is a “federal ingredient,” including potential defenses, test is satisfied
b. Does § 1331 grant jurisdiction?
i. Based on complaint: if federal law creates the cause of action, we're OK–Well Works
1. Because it's an essential and substantial element of the case (see below)
2. But, see Shoshone section
ii. If state law creates the cause of action, we need to go further
1. does it arise under federal law for § 1331?
a. is federal law an essential (Gully) and substantial (Grable and Merrell Dow) element of the case
i. if Congress created a private cause of action for violating the federal statute (even if it is not the cause of action the parties are trying to bring), then it is substantial
ii. Grable says the big question when someone files state cause of action is: is there a substantial federal interest?
1. One way to do it is to see if Congress created private cause of action, but that's not the only way
2. when P's cause of action is dependent upon fed statute, analyze underlying fed obligation to determine if it is a substantial federal interest (look to Congress' intent – if Congress created cause of action, FJ; if not, still may be substantial)
I. Circuit court of appeals
a. Methods of obtaining circuit court jurisdiction include 1291 and 1292
b. §1291 Final decisions of district courts: The courts of appeals (other than the United States Court of Appeals for the Federal Circuit) shall have jurisdiction of appeals from all final decisions of the district courts of the United States… except where a direct review may be had in the Supreme Court.
i. statutorily imposed requirement of finality (1291) governs appeals from the federal DC to federal court of appeals; generally, cases construing the two finality requirements are cited interchangeably
ii. However, no safety valve (1292(b) interlocutory appeals) in state courts
c. §1292 Interlocutory decisions
i. (a) Except as provided in subsections (c) and (d) of this section, the courts of appeals shall have jurisdiction of appeals from:
1. Interlocutory orders of the district courts of the United States…or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court;
2. Interlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property;
ii. (b) When a district judge . . . shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.