# Amicus Curiae Brief — Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 545 U.S. 308

## Text

MOTION FILED (5)

FEB 2? 200 No. 04-603

IN THE
Supreme Court of the Gnited States

GRABLE & SONS METAL PRODUCTS, INC..,
Petitioner,
Vv.

DARUE ENGINEERING & MANUFACTURING, INC.,
Respondent.

On Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit

MOTION FOR LEAVE TO FILE BRIEF AMICI
CURIAE AND BRIEF OF AMICI CURIAE JEROME R.
MIKULSKI ET UX. IN SUPPORT OF PETITIONER

ERIC H. ZAGRANS *

WOMBLE CARLYLE SANDRIDGE
& RICE PLLC

1401 Eye Street, N.W., 7th Floor

Washington, D.C. 20005-2225

(202) 857-4516

* Counsel of Record : Counsel for Amici Curiae

Additional counsel listed on inside cover

a oe a
WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D.C. 20001

THOMAS R. THEADO

GARY, NAEGELE & THEADO
446 Broadway

Lorain, Ohio 44052-1797
(440) 244-4809

DENNIS P. BARRON
P.O. Box 8190
Cincinnati, Ohio 45208
(513) 871-2369

EBEN O. MCNAIR IV

DANIEL S. WHITE
SCHWARZWALD & MCNAIR
616 Penton Media Building
1300 East Ninth Street
Cleveland, Ohio 44114-1503
(216) 566-1600

Counsel for Amici Curiae

MOTION OF JEROME R. MILUSKI ET UX.
FOR LEAVE TO FILE A BRIEF AS AMICI CURIAE
IN SUPPORT OF PETITIONER

Jerome R. Mikulski and Elzetta C. Mikulski hereby move
the Court, pursuant to Rule 37.2 of the Rules of this Court,
for leave to file the attached brief as amici curiae in support
of Petitioner. Petitioner has consented to the filing of this
brief; a copy of the written consent of its counsel has been
lodged with the Clerk of the Court. Respondent has failed to
grant consent, thereby necessitating this motion.

The resolution of this case is of great importance to the
Mikulskis who (as is more fully set forth in the section of the
proposed amici brief headed “Interest of Amici Curiae”) are
the named plaintiffs and class representatives in four consoli-
dated shareholder class action suits in which the proper scope
of the removal jurisdiction of the federal courts with respect
to claims seeking relief exclusively under state law, but for
which the violation of a federal statute is an important factual
element, has been placed squarely at issue. In their cases, as
in this case, Congress did not establish a federal cause of
action for violations of the relevant provision of the Internal
Revenue Code, nor does the federal statute itself create any
rights that corporations or corporate shareholders can enforce.
The lower courts’ refiisals to remand in this case and in
the Mikulskis’ cases (which are now pending on consolidated
appeal before the Sixth Circuit, Case No. 03-4486, and on
petition for writ of certiorari before judgment in this Court,
Case No. 04-1058) operate to expand significantly the limited
removal jurisdiction of the federal district courts in the
absence of diversity in ways contrary to the decisions of this
Court and the overwhelming majority of the Circuits, and that
usurp the authority of Congress to decide the contours of
federal question jurisdiction within constitutional limits. __

Specifically, Mr. and Mrs. Mikulski believe that their brief
as amici curiae will aid the Court by (i) illustrating the struc-

tural and conceptual framework and import of the last twenty
years of this Court's federe] question and removal jurispru-
dence from Merrell Dow Pharmaceuticals, Inc. v. Thompson
to Beneficial National Bank v. Anderson, establishing the
proposition that the presence of even a “substantial” federal
question in a state law cause of action ‘s not a sufficient basis
for federal removal jurisdiction absent a feders! pvivate right
of action, (ii) explaining why the decision beiow cannot be
reconciled with this Court’s “substantial federal question”
jurisprudence, and (iii) describing the errors committed by the
court below in misunderstanding the import and near unanim-
ity of the decisions in the other Circuits on this issue.

In order to provide the Court with such relevant informa-
tion not already brought to the Court's attention by the par-
ties, movants respectfully request the Court to grant them
leave to file their amici curiae brief submitted herewith.

Respectfully submitted,

ERIC H. ZAGRANS *

WOMBLE CARLYLE SANDRIDGE
& RICE PLLC

1401 Eye Street, N.W., 7th Floor

Washington, D.C. 20005-2225

(202) 857-4516

* Counsel of Record Counsel for Amici Curiae

TABLE OF CONTENTS

SUMMARY OF ARGUMENT ................cececsecerseseseseeses
FETUS cxsersssrsssseseneementeneimnmemnmnnmatts

THE FEDERAL DISTRICT COURTS MAY
NOT EXERCISE REMOVAL JURISDIC-
TION BASED SOLELY ON THE PRES-
ENCE OF A SUBSTANTIAL FEDERAL
QUESTION ASSERTED IN THE STATE
LAW CLAIM FOR RELIEF UNLESS
CONGRESS HAS CONFERRED A FED-
ERAL PRIVATE RIGHT OF ACTION.............

A. This Court’s Decision in Merrell Dow
Undermined the Continued Vitality of the

B. The Lower Federal Courts, Including the
Sixth Circuit in Other Cases, Have Con-
sistently Applied Merrell Dow to Require a
Federal Private Right of Action for Federal
Question Jurisdiction

C. This Cuinte Deatiten ta Benetiahdt the
tional Bank v. Anderson Removed Any
Doubt about the Elimination of the Sub-
stantial Federal Question Doctrine as a
Basis for Removal Jurisdiction by Holding
that, Absent Diversity, There Are Only
Two Ways a State Claim Can be Removed
to Federal Court—Where Congress Ex-
pressly Provides or Where Complete Pre-
emption is Present

(i)

TABLE OF CONTENTS—Continued

D. Grable’s Three-Part Analysis Contains

Two
CONCLUSION

More Fundamental Flaws ..................-.

EEE E EEE EEE EEE EEE SESE SEES OSES ESTEE THEE EOE ES

Page

TABLE OF AUTHORITIES
CASES Page
Amsouth Bank v. Dale, 386 F.3d 763 (6th Cir.
EE 6,7
Barbara v. New York Stock Exchange, Inc., 99
Fae Sy GI Ga Fei scnssrenasessunnsecssrsenmeennees 8

Bellsouth Telecomm., Inc. v. MCImetro Access
Transmission Serv., Inc., 278 F.3d 1223 (11th

RR, SED cnnnsccsnssnsrenenseccnsnmnemesentetmmmemenmnnens 8
Beneficial National Bank v. Andersen, 539 U.S

9 Gee renemsssenensnmmenemmtennanunn 3, 4, 8, 11-15
Bhagwanani v. Howard University, 2005 U.S.

Dist. LEXIS 775 (D.D.C. 1-17-05)...........cccceeeee 8,9
Board of Trustees of Painesville Township v. City

of Painesville, 200 F.3d 396 (6th Cir. 1999)......6, 7, 14
Bourke v. Carnahan, 2003 U.S. Dist. LEXIS

133599 (S.D. OR60 7-1-3) ....ccccccccccecscccesecessceses 8, 12, 13
Burton v. Southwood Door Company, 305 F.

Supp.2d 629 (S.D. Miss. 2003)............cccccceeeeees 13
Butts v. Guardian Industries Corp., 981 F. Supp.

SE GG GERD FD ccnnnecnsssnsessenenienssscnsesemnes 8
Campbell v. SmithKline Beecham, 919 F. Supp.

Ue 9
Care Choices HMO y. Engstrom, 330 F.3d 786

Oe —— 6,7
Casey v. Goulian, 273 F. Supp.2d 136 (D. Mass.

nn 9
Caterpillar Inc. v. Williams, 482 U.S. 386

(a 4
City of Huntsville v. City of Madison, 24 F.3d

169 (11th Cir. 1994)....... . - 8

City of Rome, N.Y. v. Verizon Communications,

Inc., 362 F.3d 168 (2nd Cir. 2004) — 7, 12
Dixon v. Coburg Dairy, Inc., 369 F.3d 811 (4th

Cir. 2004) (en banc).......... - . 7,11

iV

TABLE OF AUTHORITIES—Continued

Page
Dunlap v. G&L Holdings Group, Inc., 38\ F.3d
1285 (1 lth Cir. 2004)............csssrssesrsssseesseeeees 8
Franchise Tax Board of Calif. v. Construction
Laborers Vacation Trust for Southern Calif,
4B3 UZ. 1 (9DG 5) ncccccccccccccsesscsssescsssssesesessssossssess 5, 6
Grable & Sons Metal Products, Inc. v. Darue
Engineering & Manufacturing, Inc., 377 F.3d
592 (6th Cir. 2004).....cccccceceeeeeeeeenes 5, 6,7, 13, 14, 15
Handyman Network, Inc. v. Westinghouse
Savannah River Co., 868 F. Supp. 151 (D.S.C.
9
Heydon v. MediaOne of Southeast Michigan,
Inc., 327 F.3d 466 (6th Cir. 2003) ......cccccceceeeees 5,7
Horowitz v. Marlton, 116 F. Supp.2d 551 (D.N.J.
DIP D nccccssnccssssersssnsenssssnssnnsscnssesssntocssscssessessnanesats 9
Hoskins v. Bekins Van Lines, 343 F.3d 769 (Sth
Clie. BBGB) .cccscccccscscsssccscesssccssssssssssssssssnessssonssssoses 14
Howery v. Allstate Insurance Co., 243 F.3d 912
Le Ry) 8, 13, 14
Hunter v. Ohio Veterans Home, 272 F. Supp.2d
692 (N.D. Ohi0 2003) .......cccccccecseereseresenresensenees 8
In re Wireless Telephone Federal Cost Recovery
Fees Litig., 343 F. Supp.2d 838 (W.D. Mo.
TID) cccccscscecsesssenscssssscsssnssnsnpecssssenesscossusnsssnoseosene 9
In re Wireless Telephone Radio Frequency Emis-
sions Products Liab. Litig., 327 F. Supp.2d
554 (D. Md. 2004) ........ccccccsecssssersssersseerssserssenes 9
Jackson v. Purdue Pharma. Co., 2003 U.S. Dist.
LEXIS 6998 (M.D. Fla. 4-11-03) ......ccccccccceeseees 9
Jacoboni v. KPMG LLP, 314 F. Supp.2d 1172
(WD. Pla. 2OD6) .nccccccoccccccccscocscsssscscsssssssosssoceses 10
Jairath v. Dyer, 154 F.3d 1280 (11th Cir. 1998)... 8, 11

Vv

TABLE OF AUTHORITIES—Continued

Page
Long v. Bando Manufacturing of America, Inc.,

201 F.3d 754 (6th Cir. 2000) ...........:000000 5, 6,7, 12, 13
Loussides v. America Online, Inc., 175 F. Supp.

26 SEE GD. Camm, BEBE) nccccccccccccscsssscscecsscssensecses 9
Meinders v. Refco Securities, Inc., 865 F. Supp.

Fare Gs GI Fae ccrecnnsrenenasenssiereennraminneneess 8
Merrell Dow Pharmaceuticals, Inc. v. Thompson,

SOD es Gi erenrevenemesesturctntensesnenteenenen passim
Mulcahy v. Columbia Organic Chem. Co., Inc.,

29 F.3d 148 (4th Cir. 1994) ooo ccccesseeseeeeennees 7,11
Musson Theatrical, Inc. v. Federal Express

Corp., 89-F.3d 1244 (6th Cir. 1996) ...........00000 14
Neel v. Pippy, 247 F. Supp.2d 707 (E.D. Pa.

SIE casnsnscnenaseesensnsenenapuneeniensansenpantensntecmntnmseties 9
Nicodemus v. Union Pacific Corp., 318 F.3d

Cae Cea Ga, Bit Pessenesscscccccesscsnsestesenssscsneenees 7,14
PCS 2000 LP v. Romulus Telecomms., Inc., 148

Fee Ges CRUE Ge Diep ccnsecssecsccssencenscsessnessecssenses 7
Quintal v. New England Regional Council of

Carpenters, 2003 U.S. Dist. LEXIS 16386 (D.

SERIA, GGT cccnenemnersnensencensscsemenspocusenneunenatentes 10
Rogers v. Platt, 814 F.2d 683 (D.C. Cir. 1987)..... 8
Savalle v. Nestle Waters North America, Inc.,

289 F. Supp.2d 31 (D. Conn. 2003).........cc0s0e0 9
Seinfeld v. Austen, 39 F.3d 761 (7th Cir. 1994),

cert. denied sub nom. Abbott Lab. v. Seinfeld,

FOO Gili DUE cnnensrescccscesmsecssenemenmenentann 7, 11, 13, 14
Smith v. Industrial Valley Title Insurance Co.,

957 F.2d 90 (31d Cir. 1992) ........cecccecerserssesserees 10
State of Montana v. Abbot Laboratories, 266 F.

Supp.2d 250 (D. Mass. 2003) ..........cccceeseeseeeeees 9

TCG Detroit v. City of Dearborn, 206 F.3d 618

vi
TABLE OF AUTHORITIES—Continued

Page
Tempelman vy. Colsia, 2002 U.S. Dist. LEXIS
IGG T CIEE. DoF GB) cccccocsccscccensssscssmssnsessvecs 10
Terrebonne Homecare, Inc. v. SMA Health Plan,
Inc., 271 F.3d 186 (Sth Cir. 2001) ........ccccceeeeeees 14
Utley v. Varian Assoc., Inc., 811 F.2d 1279 (9th
Cite SEF cccescaresenteseneececenssnsanssinesinmninniannieninnin 7
Wagner vy. Regent Inv., Inc., 903 F. Supp. 966
GBD. Veo, CGT D eccccccscerescsssnsccsnsstensnnscemmmsemesssrsn 9
Wander v. Kaus, 304 F.3d 856 (9th Cir. 2002)...... 7
Waste Control Specialists, LLC v. Envirocare of
Texas, Inc., 199 F.3d 781 (Sth Cir. 2000).......... 14
Willy v. Coastal Corp., 855 F.2d 1160 (Sth Cir.
DED cccsccnsscsnenisesnepsstanmacinesianeatinnintiiiaeeniiecmeeets 7
Zubi v. AT&T Corp., 219 F.3d 220 (3rd Cir.
IED cxcccsnscenssnseensnsnesnsnssansseneannenasossninninnsieniansinien 7
JUDICIAL CODE
Be UK. © CSB G cccecessscenssccsesesecsmnsemsenincsssnenanmanets 1]
rE a 4
INTERNAL REVENUE CODE
BO USL. § SIDES) ccccccccsssecccssscssssscessvsnsssesseseese 2
2B USL. § GOESO NS) cccccccceccccsecscccccsscessccsssssssssoees 1~)
SUPREME COURT RULES
Bf ee Se |
OTHER AUTHORITIES
E. Chemerinsky, FEDERAL JURISDICTION 284-85
CBB 6B. FOB BP ccreccccssccqesescscscccsesssnsenmmnansnevesseessene 9

IN THE

Supreme Court of the Anited States

No. 04-603

GRABLE & SONS METAL PRODUCTS, INC.,
Petitioner,
Vv.

DARUE ENGINEERING & MANUFACTURING, INC.,
Respondent.

On Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit

BRIEF OF AMICI CURIAE JEROME R. MIKULSKI
ET UX. IN SUPPORT OF PETITIONER

INTEREST OF AMICI CURIAE'

Jerome R. Mikulski and Elzetta C. Mikulski are California
taxpayers who have been shareholders of Centerior Energy
Corp. and its successor, FirstEnergy Corporation (collectively
“Centerior’”), continuously since 1985. They are plaintiffs
and named class representatives in four consolidated share-
holder class action suits against Centerior arising from its
fraudulent accounting practices which misinformed share-
holders over the course of many years that they had received
taxable dividends instead of tax-free returns of capital and

' Pursuant to Rule 37.6, no counsel for either party authored this brief
in whole or in part, nor did any party make a monetary contribution to the
preparation or submission of this brief.

2

improperly instructed them to overpay their respective federal
and state income taxes, thereby passing off approximately
$500 million of Centerior’s own tax liability onto its share-
holders. The Mikulskis’ state law claims for fraud and breach
of contract on behalf of the shareholder class allege that this
fraud had its origins in Centerior’s violation of the effective
date provisions of Section 312(n)(1) of the Internal Revenue
Code, 26 U.S.C. § 312(n)(1). However, Congress did not
provide a federal cause of action for violations of Section
312(n)(1), nor does the federal statute itself create any rights
that corporate shareholders can enforce. Centerior removed
the cases to federal district court which ruled that it had valid
removal jurisdiction due to the presence of a substantial
federal question based on the federal tax laws. The
Mikulskis’ appeal is pending before the Sixth Circuit, Case
No. 03-4486, and their petition for writ of certiorari before
judgment is pending before this Court, Case No. 04-1058.

Similarly, in this case, the Sixth Circuit held that Grable’s
state law claim to quiet title was deemed to be a federal
question because it required the interpretation of a provision
of the Internal Revenue Code. These refusals to remand in
Grable and Mikulski significantly expand the limited
jurisdiction of the federal district courts in removal situations
and transform a simple violation of federal law as an element
of a state law cause of action into a substantial federal
question, contrary to the holdings of this Court and in conflict
with the decisions of several other Circuits. Allowing these
decisions to stand constitutes an open invitation for all
litigants to remove a state law claim that includes a federal
question, or merely alleges a violation of federal law, without
having to show original jurisdiction in the district court. Such
an open invitation will clog an already overburdened federal
judicial system and is contrary to the guidance given by this
Court's earlier decisions.

3

Mr. and Mis. Mikulski have a strong interest in seeking
reversal of the erroneous decision of the Court of Appeals for
the Sixth Circuit in this case and asking the Court to
announce explicitly that the conceptual framework and
import of its prior holdings in Merrell Dow Pharmaceuticals,
Inc. v. Thompson and Beneficial National Bank v. Anderson
mean that the presence of a substantial federal question in a
state law cause of action is not a sufficient basis for federal
removal jurisdiction absent a federal private right of action.
Their amici brief is submitted in the hope that it will be of
assistance to the Court in analyzing the issues presented.

SUMMARY OF THE ARGUMENT

In Beneficial National Bank v. Anderson, 539 U.S. |
(2003), this Court reaffirmed the principle that the mere
presence of_a federal statute in an action that seeks relief
solely under state law (i.e., where a violation or interpretation
of federal law is asserted as a factual or legal element of a
state claim), even one that “preempts” state law, will not
automatically provide a basis for removal jurisdiction, thus
completing the structural framework for federal question
jurisdiction that it began in Merrell Dow Pharmaceuticals,
Inc. v. Thompson, 478 U.S. 804 (1986). The Court eliminated
the “substantial federal question” doctrine as a sufficient basis
for removal jurisdiction in Beneficial National Bank, just as it
had for original jurisdiction in Merrell Dow, where Congress
has not provided a federal private right of action for violation
of the particular federal statute.

\

4
ARGUMENT

I. THE FEDERAL DISTRICT COURTS MAY NOT
EXERCISE REMOVAL JURISDICTION BASED
SOLELY ON THE PRESENCE OF A _ SUB-
STANTIAL FEDERAL QUESTION ASSERTED
IN THE STATE LAW CLAIM FOR RELIEF
UNLESS CONGRESS HAS CONFERRED A
FEDERAL PRIVATE RIGHT OF ACTION.

In the absence of diversity, a civil action filed in a state
court may be removed to federal court only if the claim is one
“arising under” federal law. Beneficial National Bank v.
Anderson, 539 U.S. 1 (2003), citing 28 U.S.C. § 1441(b).
Whether a claim arising under federal law must be deter-
mined by applying the “well-pleaded complaint” rule.
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Thus,
a claim “arises under” federal law for jurisdictional purposes
only if the plaintiff's statement of his own cause of action on
the face of his properly pleaded complaint affirmatively
shows that it is based upon federal law. Beneficial National
Bank, supra, at 7; Caterpillar, supra, at 392. As this Court
has recently reaffirmed:

As a general rule, absent diversity jurisdiction, a case
will not be removable if the complaint does not affirm-
atively allege a federal claim.

Beneficial National Bank, supra, at 7.

A. This Court’s Decision in Merrell Dow Under-
mined the Continued Vitality of the “Sub-
stantial Federal Question” Doctrine.

This Court began the erosion of the “substantial federal
question” doctrine as a valid exception to the well-pleaded
complaint rule in Merrell Dow Pharmaceuticals, Inc. v.
Thompson, 478 U.S. 804 (1986). In the context of a district
court’s original jurisdiction, this Court held in Merrell Dow

5

that, absent a federal private right of action or remedy, federal
courts could not exercise “arising under” jurisdiction where
violation of a federal statute was an element of a state law
claim. The linchpin of the Merrell Dow holding is the
absence of a private federal cause of action for the violation
of the federal law involved; in such circumstances, the
violation of a federal statute, pleaded as an element of a state
law cause of action, does not state a claim “arising under”
federal law—“|[t}]he mere presence of a federal issue in a state
cause of action does not automatically confer federal-question
jurisdiction.” /d. at 813. This Court noted that the con-
gressional determination not to provide a private federal
remedy for violation of a federal statute is “tantamount to a
congressional conclusion that the presence of a claimed
violation of the statute as an element of a state cause of action
is insufficiently ‘substantial’ to confer federal question juris-
diction.” /d. at 814.

B. The Lower Federal Courts, Including the Sixth
Circuit in Other Cases, Have Consistently
Applied Merrell Dow to Require a Federal
Private Right of Action for Federal Question
Jurisdiction.

Although the Sixth Circuit’s decision below significantly
relies on its previous ruling in Long v. Bando Manufacturing
of America, Inc., 201 F.3d 754 (6th Cir. 2000), five other
contrary decisions by the Sixth Circuit (three of them
subsequent to Long and before Grable) indicate that the Sixth
Circuit properly understands Merrell Dow to limii this
Court’s prior decision in Franchise Tax Board of Calif. v.
Construction Laborers Vacation Trust for Southern Calif.,
463 U.S. 1 (1983), by requiring a federal private right of
action to confer federal question jurisdiction.

In Heydon v. MediaOne of Southeast Michigan, Inc., 327
F.3d 466, 471-72 (6th Cir. 2003), the Sixth Circuit explicitly

6

concluded that Merrell Dow had limited the application of
the substantial federal question exception announced in Fran-
chise Tax Board, and held that “[b]ecause the Cable [Commu-
nications Policy] Act does not provide the »ain-tiffs] with a
private cause of action, no federal question jurisdiction exists.”
In TCG Detroit v. City of Dearborn, 206 F.3d 618, 622-24 (6th
Cir. 2000), the Sixth Circuit affirmed the existence of valid
federal question jurisdiction over the plaintiff's claim only
because it held that 47 U.S.C. § 253(c) authorizes a private right
of action in federal court for claims by telecommunications
providers of “barrier-to-entry” injuries:

the Supreme Court held in Merrill [sic] Dow . . . that
“when Congress has determined that there should be no
private federal cause of action . . . [a claimed] violation
does not state a [federal question].”

TCG Detroit, 206 F.3d at 622 n.2, quoting Merrell Dow,
supra, 478 U.S. at 817. Similarly, in Care Choices HMO y.
Engstrom, 330 F.3d 786, 791 (6th Cir. 2003), federal juris-
diction was found to be lacking explicitly because Section
1395mm(e)(4) of the Medicare Act did not contain a private
right of action.”

In a fifth case decided after Grable, Amsouth Bank v. Dale,
386 F.3d 763 (6th Cir. 2004), the Sixth Circuit confirmed its
correct understanding that Merrell Dow limits the prior
holding of Franchise Tax Board by requiring a federal private
right of action to support removal jurisdiction:

Because the Bank Secrecy Act does not create a private
right of action, the Receivers’ incorporation of its standards

* The fourth case was decided by the Sixth Circuit prior to Long. In
Board of Trustees of Painesville Township v. City of Painesville, 200 F.3d
396, 399-400 (6th Cir. 1999), the Sixth Circuit affirmed the district
court's dismissal, in part, for lack of federal question jurisdiction because
Sections 1255, 1282 and 1284 of the Clean Water Act did not provide
plaintiffs with a private right of action.

7

into a state-law cause of action cannot transform their
complaint into one that raises a federal question.

Id. at 777.

Thus, in five cases decided since 1999—Amsouth Bank,
Heydon, Engstrom, TCG Detroit and City of Painesville—the
Sixth Circuit has clearly recognized the- requirement of a
private right of action as a prerequisite to the existence of
federal question jurisdiction. To the extent that Long and
Grable did not require a federal private right of action, they
constitute departures from established law and ignore the
limitations imposed by Merrell Dow.

The Courts of Appeals in ten other circuits’ have joined the
Sixth Circuit in holding that, where violation of a federal
statute is a necessary element of a state law claim, the federal
statute must provide a private remedy for its violation in order
for federal question jurisdiction to exist.

* See, e.g., PCS 2000 LP v. Romulus Telecomms., Inc., 148 F.3d 32, 35
(Ist Cir. 1998) (“{uJnless a federal statute bestows a private right of
action, courts ought to presume that Congress did not intend the statute to
confer federal jurisdiction”); City of Rome, N.Y. v. Verizon Commu-
nications, Inc., 362 F.3d 168, 176 (2nd Cir. 2004); Zubi v. AT&T Corp.,
219 F.3d 220, 223 n.5 (3rd Cir. 2000); Dixon v. Coburg Dairy, Inc., 369
F.3d 811 (4th Cir. 2004) (en banc); Mulcahy v. Columbia Organic Chem.
Co., Inc., 29 F.3d 148, 152 (4th Cir. 1994) (“[ujnder Merrell Dow, if a
federal law does not provide a private right of action, a state law action
based on its violation does not raise a ‘substantial’ federal question’);
Willy v. Coastal Corp., 855 F.2d 1160, 1168 (Sth Cir. 1988) (“Merrell
Dow held that a private federal remedy was a necessary predicate to
determining whether the presence of a federal element in a state-created
cause of action resulted in that cause of action being one which arose
under federal law”); Seinfeld v. Austen, 39 F.3d 761, 764 (7th Cir.
1994)(“[uJnder Merrell Dow, therefore, ‘if federal law does not provide a
private right of action, then a state law action based on its violation
perforce does not raise a “substantial” federal question’”), quoting Utley v.
Varian Assoc., Inc., 811 F.2d 1279, 1283 (9th Cir. 1987); Wander v. Kaus,
304 F.3d 856, 859 (9th Cir. 2002); Nicodemus v. Union Pacific Corp.,
318 F.3d 1231, 1238 (10th Cir. 2003) (since Congress did not intend to

Furthermore, numerous district court decisions within the
Sixth Circuit’ and around the country’ have similarly held

confer federal question jurisdiction over the construction of federal land
grants, “[ujnder Merrell Dow, this absence is fatal”); Dunlap v. G&L
Holdings Group, Inc., 381 F.3d 1285, 1292 (Lith Cir. 2004) (“it is now
well established that federal jurisdiction is not created by the mere fact
that proof of violation of a federal statute is an element of a plaintiff's
state-law cause of action”), citing Merrell Dow, 478 U.S. at 814; Jairath
v. Dver, 154 F.3d 1280, 1284 (11th Cir. 1998); Rogers v. Platt, 814
F.2d 683, 688 (D.C. Cir. 1987). But see Bellsouth Telecomm., Inc. v.
MCI metro Access Transmission Serv., Inc., 278 F.3d 1223, 1234 (11th
Cir. 2002) (interpreting Merre/l Dow to allow for the possibility that there
could be an “exceptional federal statute that does not provide for a private
remedy but still raises a federal question substantial enough to confer
federal jurisdiction when it is an element of a state cause of action”),
quoting City of Huntsville v. City of Madison, 24 F.3d 169, 174 (11th Cir.
1994), Barbara v. New York Stock Exchange, Inc., 99 F.3d 49, 54 (2nd
Cir. 1996) (“the existence vel non of such a private right of action is the
Starting point for our inquiry into the substantiality of the federal
questions involved in a lawsuit”); Howery v. Allstate Insurance Co., 243
F.3d 912, 918 (Sth Cir. 2001).

* See. e.g., Bourke v. Carnahan, 2003 U.S. Dist. LEXIS 13399 at *16
(S.D. Ohio 7-1-03) (if the substantial federal question exception to the
well-pleaded complaint rule survives after Merrell Dow and Beneficial
National Bank v. Anderson, the mere construction of federal statutes as
part of a state law claim, as opposed to an inquiry into the constitu-
tionality of such statutes, “is of insufficient substances to create arising
under, or federal question, jurisdiction warranting removal”); Hunter v.
Ohio Veterans Home, 272 F. Supp.2d 692, 695 (N.D. Ohio 2003) (state
cause of action for breach of contract should be handled by the state
courts of Ohio because the “mere presence of a federal issue in a state
cause of action does not automatically confer federal-question juris-
diction”), quoting Merrell Dow, supra, 478 U.S. at 813; Butts v.
Guardian Industries Corp., 98\ F. Supp. 1062, 1064-65 (N.D. Ohio 1997)
(mere reference to federal statutes in state law claims for relief does not
create federal question jurisdiction).

* Meinders v. Refco Securities, Inc., 865 F. Supp. 721, 723 (D. Colo.
1994) (“Merrell Dow simply stands for the proposition that in the absence
of a federal private right of action, the presence of federal law in a state
law claim is insufficient to establish federal jurisdiction”); Bhagwanani v.

9

that violations of federal law may underlie many state law
causes of action, but will not confer federal jurisdiction if
there is no federal private right of action under the federal
statute at issue. .

Expert commentators have also recognized the vital
importance of a private federal cause of action follow-
ing Merrell Dow. See, e.g., E. Chemerinsky, FEDERAL
JURISDICTION 284-85 (3d ed. 1999) (“without a federal cause
of action, a federal law cannot be the basis for federal
question jurisdiction. ... A great many federal laws do not
create private causes of action.... After Merrell Dow, none
of these statutes can be the basis for federal question
jurisdiction”).

Where defendants have attempted to remove state law
claims arguing that violations of federal tax statutes trans-
formed plaintiffs’ claims into federal ones, courts have
consistently held that no substantial federal question existed
to support removal jurisdiction and have remanded such cases

Howard University, 2005 U.S. Dist. LEXIS 775 at *14 (D.D.C. 1-17-05)
(“{uJnder Merrell Dow, a complaint alleging a violation of federal law as
an element of a state cause of action does not raise a substantial question
of federal law when ‘Congress has determined that there should be no
private, federal cause of action for the violation”), quoting Merrell Dow,
478 U.S. at 818; Loussides v. America Online, Inc., 175 F. Supp.2d 211,
214 (D. Conn. 2001); Neel v. Pippy, 247 F. Supp.2d 707 (E.D. Pa. 2003);
State of Montana v. Abbot Laboratories, 266 F. Supp.2d 250 (D. Mass.
2003); Horowitz v. Marlton, 116 F. Supp.2d 551, 554-55 (D.N.J. 1999),
Savalle v. Nestle Waters North America, Inc., 289 F. Supp.2d 31 (D.
Conn. 2003); Campbell v. SmithKline Beecham, 919 F. Supp. 173, 176
(E.D. Pa. 1996); Jackson v. Purdue Pharma. Co., 2003 U.S. Dist. LEXIS
6998 at 19-20 (M.D. Fla.); Wagner v. Regent Inv., Inc., 903 F. Supp. 966,
969-70 (E.D. Va. 1995); Handyman Network, Inc. v. Westinghouse
Savannah River Co., 868 F. Supp. 151, 154 (D.S.C. 1994); Casey v.
Goulian, 273 F. Supp.2d 136, 138 (D. Mass. 2003); In re Wireless
Telephone Radio Frequency Emissions Products Liab. Litig., 327 F.
Supp.2d 554, 558-59 (D. Md. 2004); In re Wireless Telephone Federal
Cost Recovery Fees Litig.; 343 F. Supp.2d 838, 854 (W.D. Mo. 2004).

10

to state court. For example, in Smith v. Industrial Valley Title
Insurance Co., 957 F.2d 90, 93-94 (3 Cir. 1992), the
plaintiffs filed state law claims alleging violations of Section
6045(e)(3) of the Code. Following Merrell Dow, the Third
Circuit remanded the case to state court because there was no
federal private right of action for a violation of Section
6045(e)(3). Similarly, in Quintal v. New England Regional
Council of Carpenters, 2003 U.S. Dist. LEXIS 16386 (D.
Mass. 9-18-03), the plaintiff sued his former employer in
state court for over-withholding his federal and state income
taxes, and the defendant removed the action to federal district
court. Following Merrell Dow, the district court remanded
the case to state court because the relevant federal tax statutes
did not provide a private right of action against an employer
for wrongfully withholding too much tax. /d. at *4.

In Tempelman vy. Colsia, 2002 U.S. Dist. LEXIS 19037
(D.N.H. 9-26-02), the defendant even attempted to re-
characterize plaintiff's state law quiet title claim as really
being a tax refund suit. The district court disagreed and
remanded the case to state court for lack of federal question
jurisdiction.

Finally, in another recent decision, the Middle District of
Florida likewise held it did not have valid original federal
question jurisdiction where the plaintiff's state law claims
implicated federal tax issues. Jacoboni v. KPMG LLP, 314 F.
Supp.2d 1172, 1181 n.11 (M.D. Fla. 2004) (“[{t}he Court is
unpersuaded that it should allow the state law claims to
remain here [under supplemental jurisdiction] on the asserted
basis that they involve some issues of federal tax law. This
Court is no tax.court. Any such issues can be handled equally
well by a judge of the state court bench. In any event, any
marginally greater familiarity this Court might have with tax
issues is overbalanced by a state court judge’s familiarity
with predominant issues of state law’’).

Therefore, after Merrell Dow as properly understood and
applied, where Congress has not provided a federal private
right of action for the violation of a federal statute, a
complaint alleging such a violation as an element of a state
law cause of action no longer states a claim “arising under”
federal law pursuant to 28 U.S.C. § 1331.°

C. This Court’s Decision in Beneficial National
Bank v. Anderson Removed Any Doubt about
the Elimination of the Substantial Federal
Question Doctrine as a Basis for Removal
Jurisdiction by Holding that, Absent Diversity,
There Are Only Two Ways a State Claim Can
be Removed to Federal Court—Where Con-
gress Expressly Provides or Where Complete
Preemption is Present.

In Beneficial National Bank, this Court reaffirmed the
principle that the mere presence of a federal statute in an
action that seeks relief solely under state law, even one that
“preempts” state law, will mot provide a basis for removal
jurisdiction. 539 U.S. at 7. This Court explicitly held that “a

° Indeed, even when Congress does create a private cause of action for
the violation of a federal law, the lower courts have consistently held that,
“(if a] particular plaintiff is barred from bringing the private, federal cause
of action, either substantively or procedurally, no federal subject matter
jurisdiction exists over that plaintiff's state cause of action predicated on
the violation of the same federal law.” Dixon v. Coburg Dairy, 369 F.3d
at 818; see also Jairath v. Dyer, 154 F.3d at 1283 & n.9 (finding no
federal removal jurisdiction where “a private cause of action under the
|federal statute] is available as an abstract matter,” but “this particular
plaintiff . . . has no standing to pursue the only federal private cause of
action available”); Seinfeld v. Austen, 39 F.3d at 764 n.3 (rejecting
defendant's argument “that federal law need not specifically grant these
plaintiffs a private right of action as long as someone has been granted
such a right in the statute”); Mulcahy v. Columbia Organic Chem. Co., 29
F.3d at 152 (“because the [federal] remedy sought is unavailable here, a
private cause of action under Merrell Dow does not, in truth, exist”).

12

State claim may be removed to federal court in only two
circumstances—when Congress expressly so provides, as in
the Price-Anderson Act, or when a federal statute wholly
displaces the state-law cause of action through complete
preemption.” /d. at 8 (citation and footnote omitted) (em-
phasis supplied).

By emphasizing that, in the absence of diversity, a state
claim may be removed to federal court in only two cir-
cumstances, Beneficial National Bank does for removal
jurisdiction what Merrell Dow effectively accomplished for
original jurisdiction—it eliminates the use of a substantial
federal question, without more, as a basis for federal removal
jurisdiction of a state law claim.

A number of lower courts have similarly understood this
Court’s decision in Beneficial National Bank, but are
obviously seeking explicit guidance from this Court on the
issue. For instance, in the wake of the Beneficial National
Bank decision, the Second Circuit has refused to apply the
substantial federal question doctrine to support removal
jurisdiction. See City of Rome, N.Y. v. Verizon Communi-
cations, Inc., 362 F.3d 168, 176 (2nd Cir. 2004). In Bourke vy.
Carnahan, supra, after canvassing the pre-Beneficial Na-
tional Bank case law and trying to reconcile the Sixth
Circuit’s application of the “uncertain” substantial federal
question exception in Long v. Bando with Merrell Dow and
cases decided by other federal courts, District Judge Frost
concluded that:

Beneficial National Bank apparently resolves much of
the [former] uncertainty that has surrounded the validity
of the substantial federal question exception. Although
only the dissent targeted this point, the Beneficial
National Bank majority effectively reconsidered removal
jurisprudence. By recognizing removal only in cases

13

involving a congressional mandate or complete pre-
emption, the Court arguably eliminated the substantial
federal question exception.

Bourke v. Carnahan, 2003 U.S. Dist. LEXIS 13399 at *10
(S.D. Ohio) (first emphasis in original; second emphasis
supplied). See also Burton v. Southwood Door Company, 305
F. Supp.2d 629, 633 n.4 (S.D. Miss. 2003) (“[wJhether the
presence of a ‘substantial federal question’ in a given case
remains a proper basis for removal would seem somewhat in
doubt in light of the Supreme Court’s declaration in
Beneficial National Bank v. Anderson that ‘a state claim may
be removed to federal court in only two circumstances —
when Congress expressly so provides . . . [or] through
complete preemption’”) (citation omitted).

D. Grable’s Three-Part Analysis Contains Two
More Fundamental Flaws.

Grable sets forth a unique tripartite analysis for federal
question jurisdiction over state law claims: “a federal ques-
tion may arise out of a state law case or controversy if the
plaintiff asserts a federal right that 1) involves a substantial
question of federal law; 2) is framed in terms of state law;
and 3) requires interpretation of federal law to resolve the
case.” Grable, 377 F.3d at 595, citing Long v. Bando, 201
F.3d 754, 759 (6th Cir. 2000); Howery v. Allstate Insurance
Co., 243 F.3d 912, 918 (Sth Cir.), cert. denied, 534 U.S. 993
(2001); and Seinfeld v. Austen, 39 F.3d 761, 763 (7th Cir.
1994), cert. denied sub nom. Abbott Lab. v. Seinfeld, 514 U.S.
1126. The Court in Grable proceeded to conclude that
whether a “substantial question of federal law” is presented in
a state law claim functionally turns on identifying a “sub-
stantial federal interest.” 377 F.3d at 596. As the Sixth
Circuit concluded: “In sum, Grable’s quiet title action
presents a federal question because it is rooted in the Internal
Revenue Code, the correct interpretation of which represents
a substantial federal interest.” /d.

14

There are two additional errors in the Sixth Circuit's
flawed three-part analysis. First, the Seventh Circuit in
Seinfeld v. Austen does not support the holding in Grable; in
fact, on the page following the page cited by the Sixth Circuit
in Grable, the Seventh Circuit in Seinfeld requires, consistent
with the analytical framewerk for which amici argue, the
presence of a federal private right of action in order to find
federal question jurisdiction. See 39 F.3d at 764. Further-
more, although the Howery case is cited correctly, it has been
contradicted by three other Fifth Circuit decisions, two of
which were decided since Howery. See Hoskins v. Bekins
Van Lines, 343 F.3d 769, 772-73 (Sth Cir. 2003); Terrebonne
Homecare, Inc. v. SMA Health Plan, Inc., 271 F.3d 186, 188-
89 (Sth Cir. 2001); Waste Control Specialists, LLC vy.
Envirocare of Texas, Inc., 199 F.3d 781, 784 (Sth Cir. 2000).
All three recent Fifth Circuit decisions hold, consistent with
Beneficial National Bank, that the complete preemption
doctrine is the only exception to the well-pleaded complaint
rule. In Grable, however, the Sixth Circuit apparently labors
under the mistaken belief that the Fifth Circuit accords
continuing vitality to a “substaritial federal question” ex-
ception to the well-pleaded complaint rule.

Second, Grable’s holding that a “substantial federal inter-
est” is sufficient to trigger federal question jurisdiction even
in the absence of a private right cf action has been explicitly
rejected by both the Tenth Circuit and, significantly, an
earlier Sixth Circuit decision. See Nicodemus v. Union
Pacific Corp., 318 F.3d 123i, 1236-38 (10th Cir. 2003)
(although there is substantial federal interest in railroad
rights-of-way, there is no federal jurisdiction without federal
private right of action); Board of Trustees of Painesville
Township v. City of Painesville, 200 F.3d 396, 400 (6th Cir.
1999), citing Musson Theatrical, Inc. v. Federal Express
Corp., 89 F.3d 1244, 1250 (6th Cir. 1996).

15

Inasmuch as the Sixth Circuit in Grable has apparently
misunderstood the import of this Court’s decisions in Merrell
Dow and Beneficial National Bank and stands in conflict with
the overwhelming majority of decisions in eleven federal
appellate circuits, including the Sixth Circuit, further
guidance from this Court as to the correct interpretation and
proper scope of federal “arising under” jurisdiction would be
beneficial, particularly as it relates to removal jurisdiction. If
this Court finds the decision by the Sixth Circuit in this case
to misapprehend or misapply the teachings of Merrell Dow
and Beneficial National Bank undermining the continuing
vitality of the substantial federal question doctrine, and if this
Court concludes that the violation of a federal statute as an
element of a state law cause of action does not support federal
question jurisdiction where Congress has not created a
corresponding federal private right of action, amici respect-
fully submit that the lower courts would benefit from this
Court's further elucidation of the subject.

16
CONCLUSION

The judgment of the Court of Appeals for the Sixth Circuit —
should be reversed.

' Respectfully submitted,

ERIC H. ZAGRANS *

WOMBLE CARLYLE SANDRIDGE
& RICE PLLC

1401 Eye Street, N.W.

Washington, D.C. 20005-2225

(202) 857-4400

THOMAS R. THEADO

GARY, NAEGELE & THEADO
ag 446 Broadway

Lorain, Ohio 44052-1797

(440) 244-4809

DENNIS P. BARRON
P.O. Box 8190
Cincinnati, Ohio 45208
(513) 871-2369

EBEN O. MCNAIR IV

DANIEL S. WHITE
SCHWARZWALD & MCNAIR
616 Penton Media Building
1300 East Ninth Street
Cleveland, Ohio 44114-1503
(216) 566-1600

* Counsel of Record Counsel for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0049%3A09. Public record. Not legal advice.