Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg.
545 U.S. 308 (2005)

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certiorari to the united states court of appeals for the sixth circuit

No. 04–603.Argued April 18, 2005—Decided June 13, 2005

The Internal Revenue Service seized real property owned by petitioner (hereinafter Grable) to satisfy a federal tax delinquency, and gave Grable notice by certified mail before selling the property to respondent (hereinafter Darue). Grable subsequently brought a quiet title action in state court, claiming that Darue’s title was invalid because 26 U. S. C. §6335 required the IRS to give Grable notice of the sale by personal service, not certified mail. Darue removed the case to Federal District Court as presenting a federal question because the title claim depended on an interpretation of federal tax law. The District Court declined to remand the case, finding that it posed a significant federal-law question, and it granted Darue summary judgment on the merits. The Sixth Circuit affirmed, and this Court granted certiorari on the jurisdictional question.

Held: The national interest in providing a federal forum for federal tax litigation is sufficiently substantial to support the exercise of federal-question jurisdiction over the disputed issue on removal. Pp. 3–11.

   (a) Darue was entitled to remove the quiet title action if Grable could have brought it in federal court originally, as a civil action “arising under the … laws … of the United States,” 28 U. S. C. §1331. Federal-question jurisdiction is usually invoked by plaintiffs pleading a cause of action created by federal law, but this Court has also long recognized that such jurisdiction will lie over some state-law claims that implicate significant federal issues, see, e.g., Smith v. Kansas City Title & Trust Co., 255 U. S. 180. Such federal jurisdiction demands not only a contested federal issue, but a substantial one. And the jurisdiction must be consistent with congressional judgment about the sound division of labor between state and federal courts governing §1331’s application. These considerations have kept the Court from adopting a single test for jurisdiction over federal issues embedded in state-law claims between nondiverse parties. Instead, the question is whether the state-law claim necessarily stated a federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing a congressionally approved balance of federal and state judicial responsibilities. Pp. 3–6.

   (b) This case warrants federal jurisdiction. Grable premised its superior title claim on the IRS’s failure to give adequate notice, as defined by federal law. Whether Grable received notice is an essential element of its quiet title claim, and the federal statute’s meaning is actually disputed. The meaning of a federal tax provision is an important federal-law issue that belongs in federal court. The Government has a strong interest in promptly collecting delinquent taxes, and the IRS’s ability to satisfy its claims from delinquents’ property requires clear terms of notice to assure buyers like Darue that the IRS has good title. Finally, because it will be the rare state title case that raises a federal-law issue, federal jurisdiction to resolve genuine disagreement over federal tax title provisions will portend only a microscopic effect on the federal-state division of labor. This conclusion puts the Court in venerable company, quiet title actions having been the subject of some of the earliest exercises of federal-question jurisdiction over state-law claims. E.g., Hopkins v. Walker, 244 U. S. 486, 490–491. Pp. 6–7.

   (c) Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U. S. 804, is not to the contrary. There, in finding federal jurisdiction unavailable for a state tort claim resting in part on an allegation that the defendant drug company had violated a federal branding law, the Court noted that Congress had not provided a private federal cause of action for such violations. Merrell Dow cannot be read to make a federal cause of action a necessary condition for federal-question jurisdiction. It disclaimed the adoption of any bright-line rule and expressly approved the exercise of jurisdiction in Smith, where there was no federal cause of action. Accordingly, Merrell Dow should be read in its entirety as treating the absence of such cause as evidence relevant to, but not dispositive of, the “sensitive judgments about congressional intent,” required by §1331. Id., at 810. In Merrell Dow, the principal significance of this absence was its bearing on the consequences to the federal system. If the federal labeling standard without a cause of action could get a state claim into federal court, so could any other federal standards without causes of action. And that would mean an enormous number of cases. A comparable analysis yields a different jurisdictional conclusion here, because state quiet title actions rarely involve contested federal-law issues. Pp. 7–11.

377 F. 3d 592, affirmed.

   Souter, J., delivered the opinion for a unanimous Court. Thomas, J., filed a concurring opinion.

Primary Holding
The interpretation of federal tax law is a proper reason to remove a case from state court to federal court.
Grable & Sons Metal Products, Inc. owed a tax debt to the IRS. In order to satisfy the debt, the IRS seized property that Grable owned and provided notice to Grable by certified mail. The IRS then sold the property to Darue Engineering & Manufacturing. Although it received the notice, Grable brought a claim in state court on the grounds that the IRS should have provided notice through personal service rather than certified mail. It alleged that this violation of federal law meant that Darue's title to the property was invalid. Darue removed the case to federal court on the basis that it presented a federal question related to the interpretation of federal tax law.



  • David H. Souter (Author)
  • William Hubbs Rehnquist
  • John Paul Stevens
  • Sandra Day O'Connor
  • Antonin Scalia
  • Anthony M. Kennedy
  • Ruth Bader Ginsburg
  • Clarence Thomas
  • Stephen G. Breyer

The interpretation of federal tax law is a serious federal issue that supports federal question jurisdiction. This system of courts is the appropriate setting for federal tax litigation because there is a strong national interest in the proper interpretation of these laws.


  • Clarence Thomas (Author)

There may be situations in which 28 U.S.C. Section 1331 should be applied only to cases in which the plaintiff's cause of action is created by federal law.

Case Commentary

Federal question jurisdiction was appropriate here because the interests of the federal government are implicated by the federal tax law, and there should be a federal form for this type of litigation.

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