Suggested steps in analyzing federal question jurisdiction

The Two-Step Method to analyzing federal question jurisdiction.

This handout embodies an approach to learning federal question subject matter jurisdiction (“FQ SMJ”) that I’ve used for many years and which I’ve recently used in a CALI lesson entitled Mastering Federal Question Jurisdiction in Two Steps. I suggest you use this handout, and then do the CALI lesson.

This handout uses color codes to help you:

  • Green means continue the analysis.
  • Red means “stop,” there is no FQ SMJ
  • Blue means that there is FQ SMJ.

Second, after the order of analysis, this handout explains the differences between “rules” and “standards.”

Read all materials and answer the questions that follow.

Step 1: Does Article III of the Constitution permit FQ SMJ? 

This is easy. Apply the Osborn “federal ingredient” test, which is easy. Article III’s federal-question language is satisfied by any federal ingredient found anywhere in the original action, regardless of whether it’s a claim, a defense, or an issue, and regardless of whether it’s found in the P’s complaint or in the D’s answer.

If you do not find a federal ingredient anywhere in the civil action, then there cannot be federal question jurisdiction.

If you do find a federal ingredient somewhere in the civil action, then continue and move on to step 2 below.

Step 2: Does 28 U.S.C. § 1331 permit FQ SMJ?

As you realize by now, this is the more difficult part of the analysis. But it’s not really that hard once you understand the flow of analysis.

First, apply Mottley: i.e., do the WPC test. This is nothing more than a filtering step. All you need to determine is what the P’s cause of action is. Ignore any counterclaims or defenses. Declaratory judgments are a little more complex, and we’ll talk about those in class. Then continue.

Second, once you determine what the P’s cause of action is, ask whether the P’s cause of action contains some federal ingredient. If there is a federal ingredient, the federal ingredient might be the plaintiff’s entire cause of action, or an element of the plaintiff’s cause of action, or an issue within an element of the plaintiff’s cause of action. 

If you find no federal ingredient at all in the plaintiff’s cause of action, then section 1331 federal question jurisdiction does not exist (as was the case in Mottley!)

If you do find a federal ingredient in the plaintiff’s cause of action, then continue the analysis.

Initially, try the American Well Works test (i.e., Justice Holmes’ “creation test”), which asks whether the plaintiff’s cause of action was created by federal law (such as a private cause of action created by the U.S. Congress, such as a federal trademark cause of action).

If the plaintiff’s entire cause of action was created by federal law, then section 1331 federal question jurisdiction exists over the plaintiff’s claim.

If the plaintiff’s entire cause of action (such as a federal trademark claim) was not created by federal law, don’t stop. Continue.

Moving on, since the plaintiff’s cause of action was created by state law (failing the American Well Works test), but does contain a federal ingredient, you need to do the Grable/Gunn test, which asks: does the “state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities”? Some commentators call this the “embedded federal question” or the “federal ingredient in a state law cause of action.”

Thus, for there to be FQ SMJ under Grable/Gunn, the plaintiff’s state-law claim must contain a federal ingredient and satisfy the four elements contained within the quoted language. Put differently, federal jurisdiction over a state law claim will exist if a federal issue is:

1. Necessarily raised,

2. Actually disputed,

3. Substantial, and

4. Capable of resolution in federal court without disrupting the federal-state balance approved by Congress.

The first two elements are easily answered by looking at the parties’ court submissions (particularly the plaintiff’s complaint).

The final two elements may require analysis and counter-analysis and require an essay answer. The third element, substantiality, looks not to the importance of the issue to the parties, but “looks instead to the importance of the issue to the federal system as a whole.” The final element is at its core a policy “guess” as to whether the U.S. Congress would be happy about cases of this and similar types being heard in federal court rather than state court. This element is less about “substantiality” and more about pragmatism, asking whether state law claims of this type might flood the federal courts with claims that ought to be heard in state court instead.

If the court concludes all four elements are a “yes,” then there is FQ SMJ over the state law claim with a federal ingredient (that was the result in Grable).

However, it would appear that if any of the four elements is a “no,” then there is not FQ SMJ over the state law claim with a federal ingredient (that was the result in Gunn). 

Note on rules and standards

In a law review article, Professor Richard Freer says the following about the distinction between “rules” and “standards”:

In my opinion, the Court does this by recognizing-implicitly, I admit-the difference between a rule and a standard. A rule affords the decisionmaker no discretion, but cabins its inquiry to whether a given set of facts exists. A standard, in contrast, affords the decisionmaker greater discretion by prescribing a series of relevant factors to be weighed in view of a policy goal. In illuminating the difference, we benefit by juxtaposing the centrality requirement with the well-pleaded complaint rule. The latter performs a task well-suited to a rule-it asks a question that can be answered yes or no. The centrality requirement, however, asks a fundamentally different kind of question-how much federal content is required to invoke jurisdiction. This sort of question is best addressed by a less determinate standard, which requires the court to balance federal and state interests and to consider, among other things, what I will call “litigation reality”-that is, what issues must be resolved if the underlying dispute is adjudicated.

Richard D. Freer, Of Rules and Standards: Reconciling Statutory Limitations on “Arising Under” Jurisdiction, 82 IND. L.J. 309, 311-12 (2007).

Note that lawyers use the word “rule” to mean many things:

  1. A “rule” of law, i.e., the law that determines the outcome of a legal question. Here, a “rule” could mean the Constitution, a statute passed by Congress, a regulation, or a common law rule made by a court.
  2. A “rule” of the Federal Rules of Civil Procedure, such as Rule 4.
  3. A “rule” in the sense of “rules” versus “standards” as discussed above by Professor Freer.

Questions about rules and standards:

  1. In your own words, what is a “rule”? Give an example from your own experience.
  2. In your own words, what is a “standard”? Give an example from your own experience.
  3. How would you describe the following? Rule? Standard? A combination?
    1. The Mottley “well-pleaded complaint” test
    2. The American Well Works “creation” test (Justice Holmes’ test)
    3. The Gunn/Grable test
  4. Which test is easier to apply? American Well Works or Gunn/Grable? Why?
  5. Which do you prefer? Rules? Standards? Does it depend? If your answer is “it depends,” then under what circumstances are rules better than standards, and vice-versa?

Revised Aug. 28, 2018 (minor changes primarily to formatting); Sept. 25, 2018 (“easily”)