Grable & Sons Metal Prods. v. Darue Eng'g & Mfg.

545 U.S. 308, 125 S. Ct. 2363 (2005)

 

RULE:

Judicial precedent does not state a single, precise, all-embracing test for jurisdiction over federal issues embedded in state-law claims between non-diverse parties. The case law does not keep cases out of federal court simply because they appear in state raiment, nor is "federal issue" as a password opening federal courts to any state action embracing a point of federal law. Instead, the question is, does a 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.

FACTS:

The Internal Revenue Service (IRS) seized real property owned by petitioner (hereinafter Grable) to satisfy a federal tax delinquency, and gave Grable notice by certified mail before selling the property to respondent (hereinafter Darue). Grable subsequently brought a quiet title action in state court, claiming that Darue's title was invalid because 26 U.S.C. § 6335 required the IRS to give Grable notice of the sale by personal service, not certified mail. Darue removed the case to Federal District Court as presenting a federal question because the title claim depended on an interpretation of federal tax law. The District Court declined to remand the case, finding that it posed a significant federal-law question, and it granted Darue summary judgment on the merits. The Sixth Circuit affirmed, and the Supreme Court granted certiorari on the jurisdictional question.

ISSUE:

Does want of a federal cause of action to try claims of title to land obtained at a federal tax sale preclude removal from the federal court of a state action with nondiverse parties raising a disputed issue of federal title law?

ANSWER:

No.

CONCLUSION:

The national interest in providing a federal forum for federal tax litigation is sufficiently substantial to support the exercise of federal-question jurisdiction over the disputed issue on removal, which would not distort any division of labor between the state and federal courts, provided or assumed by Congress.

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