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.
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.
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?
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.