Federal Q - The Statutory Dimension

Question 1

Louisville Railroad v. Mottley - Facts

Answer 1

• 1908
• Mottleys ( KY couple) get injured on appellants’ RR in 1871 from the company’s negligence and, instead of getting damages, they agree to receive free transit passes for the rest of their lives (they sign a contract to this effect)
  -They sue the railroad company in 1907 to compel the specific performance of the contract – the railroad company had not issued their passes that year, + Mottleys say this decision was based on a Congressional act of June 29, 1906, which prevented giving of free passes or free transportation
  -Mottleys argue that the Congressional act does not forbid the performance of the contractual obligations and that, if it did, it would violate Fifth Amendment (depriving them of property without due process)

Question 2

Mottley - Ruling

Answer 2

• SCOTUS says the district court didn’t have subject matter jurisdiction and therefore the case should be dismissed
• Court says you can’t prove that a suit arises under federal law merely because it has to do with a potential counterargument the defendant might make – the initial presentation of the cause of action by itself needs to be something arising under federal law

Question 3

Mottley - Standard

Answer 3

• suit arises under the Constitution or federal law only when plaintiff’s statement of his/her own cause of action shows it’s based on those laws or the Constitution
• “Well-pleaded complaint” rule – plaintiff’s statement of his or her own claim determines if suit arises under federal law (a well-pleaded complaint is one that contains the allegations essential to stating plaintiff’s claim w/o any surplusage such as anticipated defenses)
• not enough for pl to allege some anticipated defense to the action and then state why that’s invalid by the Constitution – such allegations suggest a question under the Constitution would likely arise over the course of the suit, but they do not show that the plaintiff’s original action arises under the Constitution

Question 4

Prof’s View on Mottley

Answer 4

• doesn’t appear to like it
• well-pleaded complaint designed to ensure you start by deciding whether or not there’s juris, although since jur can be brought up at any time, can be a very disruptive issue
• Prof thinks you can still artfully find a COA that will let you say your fed thing on a well-pleaded complaint

Question 5

American Well Works v. Layne - Facts

Answer 5

• 1916
• P manufactured and sold pumps on which it held, or had applied for, patents
• D claimed that the P’s pump infringed D’s patent and filed lawsuits/or threatened to sue several users of P’s pump
• In present action, P sued for libel and slander to the title to its pump

Question 6

American Well Works - Issue

Answer 6

• whether this business libel case arose under predecessor to 28 USC § 1338, which provides for exclusive jurisdiction in fed dist courts over ‘any civil action arising under any Act of Congress relating to patents’

Question 7

American Well Works - Ruling

Answer 7

• no
• Holmes reasoned that a suit arises under the law that creates the cause of action.
• Whether business libel by the D was actionable was entirely up to state law, + nothing in fed patent laws imposed liability for such conduct.
• case therefore did not ‘arise under’ fed law, even though resolution of the P’s claim would ultimately turn on a fed issue
• winds up being decided based on the COA even though resolution would turn on fed law

Question 8

Shoshone Mining Co. v. Rutter - Facts

Answer 8

• 1900
• Congress created system for issuing mining patents on fed lands
• stat. provided ‘adv suit’ could be filed in ‘court of competent jurisdiction’ by person who claimed a right of possession to a mine also claimed by another person
• Such disputes were to be resolved by ‘local customs or rules of miners in the several mining districts’ (as long as not inconsistent w/ US law) + ‘by the statute of limitations for mining claims of the State or Territory where the same may be situated’

Question 9

Shoshone - Question

Answer 9

• whether a suit under those provisions could be brought in fed court under the general fed questions statute

Question 10

Shoshone - Reasoning

Answer 10

• couldn’t be brought in fed ct
• essentially b/c might not actually involve fed law - “adverse suit” to determine the right of possession may not involve any question as to the construction or effect of the Constitution or laws of the United States, but may present simply a question of fact as to the time of the discovery of mineral, the location of the claim on the ground, or a determination of the meaning and effect of certain local rules and customs prescribed by the miners of the district, or the effect of state statutes

Question 11

Shoshone - Prof’s View

Answer 11

• people tend to point to this case as indicating exception to rule that that every cause of action created by fed law presents a case arising under fed law
• BUT it’s actually pre well-pleaded complaint rule, so can’t actually get ANYTHING out of it

Question 12

Skelly Oil v. Phillips Petroleum - Core Holding

Answer 12

• if a declaratory action can’t be heard in fed court w/out relying on the Declaratory Judgment Act, the fed court can’t hear the case on that basis

Question 13

Skelly Oil - Facts

Answer 13

-oil co had contracts w/ three producers to purchase gas for resale to pipeline co (had applied to Fed Power Comm for cert of publ convenience + necessity under Natural Gas Act)
-Each contract provided for termination by producer upon notice to respondent at any time after Dec 1, 1946, “but before the issuance of such certificate.”
-Nov 30, 1946 - Comm ordered certificate of public convenience + necessity be issued to pipeline co, upon specified terms + conditions.
-order was not made public until Dec 2, 1946, on which day the producers severally notified respondent of termination of their contracts.
-Alleging cert of pub convenience + necessity, “within the meaning of said Natural Gas Act and said contracts,” had been issued prior to attempt to terminate, respondent sued the three producers in the Fed Dist Ct under the Declaratory Judgment Act for a declaration that the contracts were still “in effect and binding upon the parties thereto.”
-decree of Dist Ct that contracts had not been effectively terminated, + were still in full force and effect, was affirmed by Court of Appeals.

Question 14

Skelly Oil - Reasoning

Answer 14

• Declaratory Judgment Act = “procedural only” - expanded avail remedies, BUT didn’t change jurisdiction of fed cts

Question 15

Skelly Oil - Prof’s Thoughts

Answer 15

• under Frankfurter’s reading, when you run into a declaratory judgment case, whether or not there’s a fed q should be eval’d based on the suit that would have been brought instead
  -> you’re looking at traditional remedies + COAs - if it couldn’t be brought, you don’t get declaratory judgment
  -> Prof says difficult to tell though + there are possibilities for manipulation (could be multiple)

Question 16

TB Harms v. Eliscu - Facts

Answer 16

• 1964
• Eliscu, Def, had interests in copyrighted music.
  -T.B. Harms Co., Pl, alleged Def signed a contract assigning rights to music back to Dreyfus, Pl’s principal stockholder.
• When copyrights about to expire, Def entered into an agreement to assign renewal rights to another individual, Jungnickel, pending determination of Def’s ownership.
  -> told pl he’d assigned renewal rights + filed suit against Pl seeking declaration that he owned a one third interest in the renewal rights and an accounting.
• Plaintiff responded by suing Def in federal court, seeking declaratory relief against Def and Jungnickel.
• Jurisdiction was predicated on 28 U.S.C. § 1338, + all parties =NY citizens.
  -Jurisdiction predicated on the Copyright Act (fed law).
• dist ct dismissed for lack of jurisdiction +pl appealed.

Question 17

TB Harms - Ruling + Reasoning

Answer 17

• Friendly opinion
• no threat of copyright infringement, though this alone isn’t determinative as a matter of statutory language
• quoted another case - ““The Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject-matter of the controversy. For courts of a state may try questions of title, and may construe and enforce contracts relating to patents.” (i.e. just b/c there’s a patent involved, doesn’t mean fed q - might be basic contract law)
• notes that under the Holmes “creation” test of Am Well Works, lots of copyright + patent infringement cases DO actually arise under fed law (since fed laws provide COAs for infringement actions), BUT not in this case (no fed COA for assignments of copyrights)
• DOES also say even if not fed COA, can have fed jur if “complaint discloses a need for determining the meaning or application” of fed law, though also not here

Question 18

TB Harms - Conclusion

Answer 18

• “we think that an action “arises under” the Copyright Act if and only if:
  -> the complaint is for a remedy expressly granted by the Act, e. g., a suit for infringement or for the statutory royalties for record reproduction,
  ->or asserts a claim requiring construction of the Act, as in De Sylva,
  ->or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim.

The general interest that copyrights, like all other forms of property, should be enjoyed by their true owner is not enough to meet this last test”

Question 19

TB Harms - Prof’s Point

Answer 19

• think she may have made some point about manipulating juris - if you want to get into fed ct, you argue infringement, + if you want to get into state court, say contract violation
• she did acknowledge not always two things to choose between though

Question 20

Smith v. Kansas City - Facts

Answer 20

• 1921
• stockholder in a corporation created by state law sued to enjoin the corporation from investing in certain federally authorized bonds
• fed statute provided that the bonds were lawful investments for corps, and state law authorized corp to invest in all lawfully issued gov bonds
• pl’s position - fed statute authorizing the sale of the bonds was unconstitutional

Question 21

Smith - Majority

Answer 21

• held case arose under fed law
• “general rule” = “where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the United States, and that such federal claim is not merely colorable, and rests upon a reasonable foundation, the district court has jurisdiction”
• averments of bill show corp proceeding to make investments in view of act authorizing the bonds, maintaining it was constitutional, + the bonds valid and desirable investments (vs. objecting shareholder says invalid) -> controversy therefore concerns constitutional validity of an act of Congress directly drawn into question + decision depends on determination of this issue.

Question 22

Smith - Holmes

Answer 22

• dissent
• arguing didn’t arise under fed law b/c state law provides COA, + if the validity of the bonds is relevant, only b/c state law makes it so

Question 23

Smith - Prof’s View

Answer 23

• think ordinarily pl wouldn’t have been able to argue the Con point in well-pleaded complaint, BUT state pleading rules for shareholder derivative suits required you to plead the nub of the controversy (would be different if came up now w/ fed pleading rules)

Question 24

Moore v. Chesapeake and Ohio Railway

Answer 24

• 1934
• Moore = railroad worker
  -Sued RR in fed court under KY statute covering injuries in intrastate commerce
  -That statute incorporated portions of the Fed Safety Appliance Acts, which covered railroad injuries in interstate commerce
  -Under the KY statute, violation of the fed acts would constitute negligence per se and bar the railroad from relying on contributory negligence or assumption of risk
  -Court nevertheless held that Moore’s claim did not arise under federal law
  -The Court noted, however, that questions concerning the meaning of the Fed Safety Appliance Act arising in such state court litigation would be reviewable on appeal in the SC, but case didn’t arise under fed law for purposes of trial court jurisdiction

Question 25

Franchise Tax Board v. Laborers Vacation - Facts

Answer 25

• 1983
• Appellee Construction Laborers Vacation Trust for Southern California (CLVT) estd by agreement between construction industry employer assocs + labor union to provide mechanism for administering provisions of a collective bargaining agreement granting construction workers a yearly paid vacation.
• The trust qualifies as a “welfare benefit plan” w/in meaning of § 3 of the Employee Retirement Income Security Act of 1974 (ERISA) -> subject to regulation under ERISA.

California Franchise Tax Board filed a complaint in California state court against CLVT and its trustees, alleging two causes of action:
-CLVT failed to comply w/ certain tax levies under Cali statute
- that, in view of defs’ contention that ERISA preempted state law + that the trustees lacked power to honor the levies, a judgment be issued declaring the parties’ respective rights

Question 26

Franchise Tax Board - Holdings

Answer 26

• Brennan Op.
• Where no diversity, removal turns on whether fed q juris under 28 U.S.C. § 1331 -> well-pleaded complaint rule (can’t remove on basis of fed defense, even if anticipated in the complaint + both parties admit it’s the only true q at issue)
• 1st COA purely state law issue, not removable
• 2nd COA - also not removable - fed courts don’t have juris when a fed q presented by a complaint for a state declaratory judgment, + where, if the pl had sought fed declaratory judgment, fed jur would be barred by Skelly Oil Co., (under Skelly, fed jur is lacking if, but for the availability of the fed declaratory judgment procedure, fed claim would arise only as a defense to a state-created action)
• suit by state tax authorities under a statute like the Cali one involved here does not “arise” under ERISA - State’s right to enforce its tax levies is not of central concern to the federal statute.

Question 27

Franchise Tax - ERISA Reasoning

Answer 27

• Even though ERISA may preclude enforcement of the State’s levy in the circumstances of this case, an action to enforce the levy is not itself preempted by ERISA.
• ERISA enumerates the parties entitled to seek a declaratory judgment under § 502 of that Act; it does not provide anyone other than participants, beneficiaries, or fiduciaries of an ERISA-covered plan with an express cause of action for a declaratory judgment on the issues of this case. A suit for similar relief by some other party does not “arise under” that provision.

Question 28

Franchise Tax Board - Declaratory Judgment

Answer 28

• “The only questions in dispute between the parties in this case concern the rights and duties of CLVT and its trustees under ERISA”
• “Not only does appellant’s request for a declaratory judgment under California law clearly encompass questions governed by ERISA, but appellant’s complaint identifies no other questions as a subject of controversy between the parties. Such questions must be raised in a well-pleaded complaint for a declaratory judgment. Therefore, it is clear on the face of its well-pleaded complaint that appellant may not obtain the relief it seeks in its second cause of action…without a construction of ERISA and/or an adjudication of its preemptive effect and constitutionality – all questions of federal law.”

Question 29

Franchise Tax Board - State Dec Judg Holding

Answer 29

• “we hold that, under the jurisdictional statutes as they now stand, federal courts do not have original jurisdiction, nor do they acquire jurisdiction on removal, when a federal question is presented by a complaint for a state declaratory judgment, but Skelly Oil would bar jurisdiction if the plaintiff had sought a federal declaratory judgment.”

Question 30

Franchise Tax Board - Summary Holding

Answer 30

• “we hold that a suit by state tax authorities both to enforce its levies against funds held in trust pursuant to an ERISA-covered employee benefit plan and to declare the validity of the levies notwithstanding ERISA is neither a creature of ERISA itself nor a suit of which the federal courts will take jurisdiction because it turns on a question of federal law.”

Question 31

Franchise Tax Board - “Turns On” Test

Answer 31

• is federal cause of action the exclusive test? -> Brenan says no, he likes the “turns on” test, but notices that there’s a well-pleaded complaint problem with it + therefore there’s really not anything in it – he says this is a benefit, because otherwise there’d be lots of fed cases (Prof says this is weird, because its reducing fed juris on cases that turn on federal law)
• acknowledges well-pleaded complaint rule may produce awkward results, especially in cases where both parties admit that the only question for decision is raised by federal law

Question 32

Edelmann Rule

Answer 32

• “Federal courts have regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant brought a coercive action to enforce its rights, that suit would necessarily present a federal question.”
• BUT Brennan says this doesn’t apply in Franchise Tax Board for reasons of “practicality and necessity”