In order to establish Federal Subject Matter Jurisdiction, a case must satisfy diversity jurisdiction or federal question jurisdiction.
The Well-Pleaded Complaint
It is extremely important to recognize that the federal question must arise out of the complaint. The seminal case deciding this was Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149 (1908), where the plaintiff did not assert a federal question but the defendant answered with a federal question and both parties agreed that the federal question is the only disputed issue in the case. This means that a case that raises a federal defense but no federal claim cannot be brought in federal district court.
The concept of the well-pleaded complaint was developed which required a court to evaluate whether a federal question exists based solely on examining everything that is necessary for the plaintiff’s claim (but nothing beyond that). The reason for this is that courts want to determine if a federal question exists at the outset so that time is not wasted in the wrong forum.
When is a federal question enough to justify federal question jurisdiction?
In many complaints, a plaintiff will assert that the defendant violated both state and federal law. Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804 (1986) determined that federal question jurisdiction would exist only if plaintiffs’ right to relief “depended necessarily on a substantial question of federal law.” To help determine this the court will weigh the centrality of the federal question and the importance of the federal question.
When a federal question is embedded in a state-law claim
What if the claim is based on state law but a federal question also exists in the claim? Here, a case can be within federal question jurisdiction if federal law is a “necessary element” of the claim for relief. Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 125 S. Ct. 2363 (2005). The “necessary element” test from Grable should only be applied in cases in which the federal question is embedded in a state-law claim.