Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing
162 L. Ed. 2d 257 · Supreme Court of the United States · 2005
Facts
In 1994, the Internal Revenue Service (IRS) seized real property belonging to Grable & Sons Metal Products, Inc. in Michigan to satisfy Grable’s federal tax delinquency. The IRS sold the property to Darue Engineering & Manufacturing. Grable received actual notice of the seizure by certified mail and notice of the sale, but did not exercise its right to redeem the property. After the redemption period passed, the Government gave Darue a quitclaim deed. Five years later, Grable brought a quiet title action in state court, claiming Darue’s title was invalid because the IRS had failed to notify Grable of the seizure in the exact manner required by federal tax law, arguing personal service was required, not certified mail.
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 Grable's lack of a federal right of action did not bar jurisdiction. The District Court granted summary judgment to Darue on the merits. The Court of Appeals for the Sixth Circuit affirmed, and the Supreme Court granted certiorari on the jurisdictional question alone.
Issue
Does the absence of a federal cause of action to challenge title to land obtained at a federal tax sale preclude removal to federal court of a state quiet title action between nondiverse parties, when the state claim raises a disputed issue of federal tax law?
Holding
No, the lack of a federal cause of action does not preclude removal. Federal-question jurisdiction is proper because the national interest in providing a federal forum for federal tax litigation is sufficiently substantial, and exercising jurisdiction would not distort the division of labor between state and federal courts.
Rule
Federal-question jurisdiction under 28 U.S.C. § 1331 extends to state-law claims that necessarily raise a stated federal issue that is actually disputed and substantial, provided that a federal forum may entertain the issue without disturbing any congressionally approved balance of federal and state judicial responsibilities. The absence of a federal private right of action is relevant evidence in assessing congressional intent and the substantiality of the federal interest, but it is not a dispositive requirement for federal jurisdiction. Jurisdiction is appropriate when the federal issue is important, the federal government has a direct interest, and the exercise of jurisdiction would have only a microscopic effect on the federal-state division of labor.
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