Grable & Sons Metal Products v. Darue Engineering & Manufacturing

PETITIONER: Grable & Sons Metal Products, Inc.
RESPONDENT: Darue Engineering & Manufacturing
LOCATION: Texas State Capitol

DOCKET NO.: 04-603
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 545 US (2005)
GRANTED: Jan 07, 2005
ARGUED: Apr 18, 2005
DECIDED: Jun 13, 2005

ADVOCATES:
Eric H. Zagrans - argued the cause for Petitioner
Irving L. Gornstein - argued the cause for Respondent
Michael C. Walton - argued the cause for Respondent

Facts of the case

The IRS seized property owned by Grable and gave Grable notice by certified mail before selling the property to Darue. Grable sued in state court, claiming Darue's title was invalid because federal law required the IRS to give Grable notice of the sale by personal service, not certified mail. Darue removed the case to federal disctrict court, arguing that the case presented a federal question because Grable's claim depended on an interpretation of federal tax law. The district court agreed and ruled for Darue. The Sixth Circuit affirmed the decision.

Question

Did a case involving the interpretation of federal tax law belong in federal court and not the state court where it was filed?

Media for Grable & Sons Metal Products v. Darue Engineering & Manufacturing

Audio Transcription for Oral Argument - April 18, 2005 in Grable & Sons Metal Products v. Darue Engineering & Manufacturing

Audio Transcription for Opinion Announcement - June 13, 2005 in Grable & Sons Metal Products v. Darue Engineering & Manufacturing

David H. Souter:

The second opinion that I have to announce this morning is in the case of Grable v. Darue.

This case comes to us on writ of certiorari to the Court of Appeals for the Sixth Circuit.

The Internal Revenue Service seized real estate belonging to the petitioner, Grable for unpaid federal taxes and sold it to the respondent, Darue.

Grable brought a State Quiet Title Action in State Court against Darue claiming that Grable still had good title to its old property.

This claim of superior title turned however, on whether the Internal Revenue Service in seizing Grable's property and selling it to Darue had complied with all the requirements set out in the Federal Tax Law.

Darue removed the case to Federal Court because he said the case arose under federal law and for that reason could be in the Federal Court.

The District and Circuit Courts found that although state law provided the cause of action, Grable's claims still did arise under federal law because it turned on the meaning of the federal tax statute.

Because those courts held that the claim arose under federal law, they held that it could be removed from State Court to the Federal Court for trial.

We granted certiorari to resolve the question whether a state law claim can ever arise under federal law if as here Congress has not provided a federal cause of action.

In an opinion filed today with the Clerk of Court, we affirm the Court of Appeals and reaffirm the long established rule that a state law claim requiring the resolution of a disputed and substantial question of federal law can arise under federal law and be heard in a Federal Court as long as exercise in federal jurisdiction is consistent with congressional intent.

This claim which requires resolving an important issue of federal law passes the test.

The argument in this case has centered on our earlier decision in Merrell Dow v. Thompson where we held that there was no federal jurisdiction over a state negligence claim arising from the violation of a federal standard, and we stressed that Congress had no provided a federal cause of action to enforce this standard.

We reach that conclusion because the alternative would have led in a whole other state law claim into Federal Court even the widespread adoption of federal standards as evidence of negligence under state law.

That would have been a sweeping result inconsistent with Congress' failure to welcome those many claims with a private federal right of action.

While Grable also lacks a federal private right of action, jurisdiction here does not go further than Cogress' ambivalence allows.

Because it is the rare state quiet title action that involves a contested issue of federal law as a result and given the important federal issues that the case presents, there is no reason to share it from exercising federal jurisdiction.

Justice Thomas has filed a concurring opinion.