Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing
162 L. Ed. 2d 257 · Supreme Court of the United States · 2005
Facts
The IRS seized Grable's Michigan property for tax delinquency and sold it to Darue. Grable filed a state quiet title action, arguing Darue's title was invalid because the IRS failed to provide notice of seizure in the exact manner required by federal tax law, § 6335(a). Darue removed the case to federal court, asserting federal question jurisdiction.
Procedural history
Grable brought a quiet title action in state court. Darue removed the case to Federal District Court, which declined to remand, finding a significant federal question and ruling that the lack of a federal right of action did not bar jurisdiction. The District Court then granted summary judgment to Darue on the merits. The Court of Appeals for the Sixth Circuit affirmed the District Court's judgment, including its jurisdictional finding. The Supreme Court granted certiorari on the jurisdictional question alone.
Issue
Does the absence of a federal cause of action for a state quiet title claim, which depends on the interpretation of a federal tax notice statute, preclude federal question jurisdiction upon removal?
Holding
No, the lack of a federal cause of action does not preclude federal question jurisdiction. The Court affirmed federal jurisdiction, finding a substantial federal interest in the interpretation of federal tax law without disrupting the federal-state balance.
Rule
Federal courts have "arising under" jurisdiction over state-law claims that necessarily raise a disputed and substantial federal issue, provided that exercising jurisdiction is consistent with the congressionally approved balance of federal and state judicial responsibilities. The absence of a federal cause of action is relevant but not dispositive.
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