Plaintiff sued under state law for sale of their property using a federal notice statute to challenge the sale claiming that service of the notice was improper. Both parties are Michigan citizens so bringing the case to federal court through diversity jurisdiction is not an option. Defendant removes to federal court and federal question jurisdiction is found to be proper.
If the action has a substantial federal component in actual controversy, and federal jurisdiction would not cause a flood of cases into federal court, then a federal court may exercise jurisdiction over a state law claim.
The IRS seized property of Plaintiff Grable because he failed to pay federal back taxes. The IRS notified Plaintiff Grable using statutorily guaranteed notice through certified mail alerting him of the upcoming sale. The IRS sold Plaintiff Grable’s property to Defendant Darue. Five years later, Plaintiff Grable sued Defendant Darue in state court to quiet title alleging he did not receive proper notice under 26 U.S.C. § 6335 which required personal service, and that the IRS only used certified mail. Defendant Darue removed the case to federal court.
Does a state law claim give rise to federal question jurisdiction if the plaintiff’s right to relief depends on a substantial question of federal law, and therefore allow the case to be properly removed to federal court?
Yes. A state law claim gives rise to federal question jurisdiction if the plaintiff’s right to relief depends on a substantial disputed question of federal law, and the case may thus be brought in federal court.
Justice Justice Thomas
1. For a federal question jurisdiction to be proper the federal law must actually be in controversy, and the controversy must be substantial.
2. In taking the case the federal court should determine whether taking the case will cause an imbalance between state and federal courts.
3. While the cause of action is a state law suit to quiet title, federal question jurisdiction is proper because the issue is whether the IRS provided Grable with proper notice of the sale as defined by federal tax law.
4. Federal judges are more familiar with tax issues and both the government and individual parties will benefit from having a judge familiar with tax issues hear the case.
5. Very few state law quiet title cases are brought so allowing this case in federal court would not flood federal courts.
6.This holding does not contradict Merrell Dow (disallowing a case in federal court based on one federal law claim that did not allow a private right of action) because that case would have allowed a flood of cases into federal court, and this consideration is just as important in determining a case. Therefore federal question jurisdiction is proper here where private right of action is allowed.