These notes summarize three points to discuss following Mottley. The cases mentioned are also provided on the playlist but can be skimmed quite quickly or skipped altogether, as this note summarizes them.
Should a federal forum be available for defendants who wish to raise a federal issue as a defense or counterclaim? What would the advantages and disadvantages provided by such a system?
In Holmes Groups, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826 (2002), the Supreme Court held that the Federal Circuit Court, which has exclusive appellate jurisdiction over patent claims, lacked jurisdiction to hear a case in which the patent issue was raised by the defendant. So it has to be the main claim and not the counterclaim that gives rise to federal SMJ.
The Declaratory Judgment Act, 28 U.S.C. §§ 2201-02 empowers a federal court to issue a declaration of “rights and other legal relations” to an “interested party” in a “case of actual controversy within its jurisdiction.” What do you think the likely outcome in Mottley would have been if the railroad had sought a judicial declaration that the 1906 Act invalidated the passes under the Declaratory Judgment Act?
In Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 673-74 (1950), the Supreme Court considered a suit brought under the Declaratory Judgment Act in which plaintiffs sought a declaration that certain contracts had not been terminated. If the plaintiff had merely sued to enforce the contract, there would have been no federal question. The Court denied jurisdiction, writing “[t]o sanction suits for declaratory relief merely because, as in this case, artful pleading anticipates a defense based on federal law would contravene the whole trend of jurisdictional legislation by Congress, disregard the effective functioning of the federal judicial system and distort the limited procedural purposes of the Declaratory Judgment Act.” The Court says you are supposed to imagine the non-declaratory judgment case as it would have otherwise been, and look to whether that case would merit federal question jurisdiction.
“Artful pleading,” as the Court discusses in the excerpt from Skelly above, describes an attempt by the plaintiff to shape her claim so that federal question jurisdiction is proper, often through anticipating a federal defense. In Bright v. Bechtel Petroleum, Inc., 780 F.2d 766 (9th Cir. 1986), plaintiff brought suit against his employer in state court, arguing that the employer breached his employment contract by underpaying him. The employer removed to federal court, arguing that the underpayment alleged was really a question of federal and state income tax withholding. The Ninth Circuit allowed the claim to go forward in federal court, noting an exception to the well-pleaded complaint rule: “[a] plaintiff will not be allowed to conceal the true nature of a complaint through ‘artful pleading.’” Id. at 769.