John Marshall, Oliver Wendell Holmes, and Benjamin Cardozo are among the Supreme Court justices who have grappled with how to interpret the jurisdictional phrase “arising under.” The Constitution and a number of federal statutes employ this phrase to authorize a party to assert a claim based upon federal law in federal court—and also, in limited circumstances, when a claim is based upon state law but cannot be decided without determining an issue of federal law.
It is this latter situation that has bedeviled some of our greatest justices. And despite their best efforts, lawyers and judges are still occasionally unable to agree on what the phrase “arising under” means in particular contexts, as is demonstrated by a case recently argued before the United States Supreme Court involving a claim of malpractice in connection with the assertion of a patent law claim.
This article discusses that case, known as Gunn v. Minton. It summarizes the history of the case, in which the conflicting opinions of the Texas Court of Appeals and Texas Supreme Court illustrate the difficulties involved with determining “arising under” jurisdiction. It also describes the oral argument—in which the Supreme Court seemingly signaled its disagreement with the Texas Supreme Court’s view—and predicts that the Court will reverse the Texas Supreme Court.
Vernon F. Minton’s Lawsuits
In a sense, Gunn involves two cases. In the first case, Vernon F. Minton sued—unsuccessfully—the National Association of Securities Dealers, Inc. (“NASD”) for patent infringement. In the second case, Minton sued the attorneys who had initially represented him in the NASD litigation for malpractice. In that case as well, Minton was unsuccessful.
Gunn, the malpractice case, is now pending before the Supreme Court. Minton initially brought his malpractice claims in state court in Texas. After losing in the trial court on the merits, Minton argued—primarily on the basis of two Federal Circuit Court of Appeals decisions issued while his appeal of the trial court’s decision was pending—that, in fact, the state court did not have jurisdiction over his malpractice claims. (The Federal Circuit has exclusive appellate jurisdiction over claims arising under federal patent law.)
On the basis of those Federal Circuit decisions, Minton essentially argued that because federal courts have exclusive jurisdiction over patent cases, only a federal court could hear the malpractice claim related to his failed patent case. (In contrast to patent claims, malpractice claims arise under state law—that is, they are authorized by state law—and therefore may be, and often are, brought in state courts.)
The Texas Court of Appeals did not agree with Minton’s jurisdictional argument and upheld the judgment entered against him by the trial court. However, the Texas Supreme Court agreed with Minton’s jurisdictional argument and therefore reversed the court of appeals.
The Disputed Scope of the Phrase “Arising Under”
The disagreement between the two Texas appellate courts reflects the difficulty associated with understanding the phrase “arising under” in connection with federal jurisdictional statutes. Here is a bit of background on jurisdiction that may be helpful in understanding the dispute: In the United States, state courts are courts of general subject matter jurisdiction—or, put another way, essentially any type of case may be filed in state court.
Federal courts, however, are courts of limited subject matter jurisdiction. That means only certain types of claims may be brought in federal court; such claims must be authorized by the Constitution and, typically, by a federal statute as well. The Constitution and a number of federal statutes authorize lawsuits to be filed in federal court if the claims asserted arise under federal law.
One such federal statute is 28 U.S.C. § 1338, which gives federal courts exclusive jurisdiction over patent claims. (Section 1338(a) provides: “The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents” and that “[s]uch jurisdiction shall be exclusive of the courts of the states in patent . . . cases.”).
Clearly, when a plaintiff claims that his rights under federal patent law have been violated—as Minton did in his initial lawsuit against the NASD—that case can be brought only in federal court, pursuant to section 1338(a). But what is the jurisdictional rule when a case arises under state law but involves a question of federal patent law? That is the question that is presented by Minton’s second lawsuit, now pending before the Supreme Court.
The Guidance Provided by the Supreme Court’s Decision in Grable
The jurisdictional question raised by Minton’s lawsuit has been debated for more than a century. In 2005, the Supreme Court provided guidance for answering this question in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing. Writing for the Court, Justice David Souter stated that “the question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities[?]”
Grable is a typical Souter opinion—sophisticated, nuanced, and elegant. In certain areas of the law, Souter’s decisions actually suffer from these qualities. In United States v. Mead Corp., for example, his opinion articulated a number of factors to consider when determining the deference due an administrative agency’s interpretation of a statute it administers—thereby limiting the reach of the Court’s more straightforward (and therefore easier to apply) holding in Chevron USA, Inc. v. Natural Resources Defense Council, Inc.
Similarly, in United States v. Winstar Corp., Souter wrote a lengthy plurality opinion that was unnecessarily broad and arguably incorrect in its analysis of the economics of the savings and loan industry crises of the 1980s in the context of claims by S & L institutions for breach of contract. Rather than providing guidance for the lower courts to resolve more than 100 such cases pending after remand, Souter’s extensive discussion instead created more areas of dispute between the S & Ls and the government.
In Grable, however, Souter developed a four-part test that provided clarity on how to determine whether federal jurisdiction is appropriate when the plaintiff’s claim arises under state law that involves a federal issue. (As noted above, the factors are whether the federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) whether federal court jurisdiction will disturb the balance of federal and state judicial responsibilities.) Furthermore, Souter defined each factor with specificity and consistently indicated that the availability of a federal forum in such cases should be limited, even sparing.
Which Texas Appellate Court Properly Applied Grable?
In Gunn, the parties—and the Texas appellate courts—disagreed about how to apply the Grable factors to Minton’s malpractice claim. In arguing that he erroneously brought his malpractice claim in state court, Minton contended that his (state law) malpractice claim could not be decided without deciding issues of (federal) patent law. Specifically, in order to prevail on his malpractice claim, Minton would have to prove that his attorneys were negligent in their understanding and application of patent law—thereby satisfying the first three factors with respect to an issue of federal law.
In addition, Minton argued that because Congress gave federal courts exclusive jurisdiction over patent claims, the balance of federal and state judicial responsibilities would not be disturbed—as Congress already has decided that patent issues should be decided only in federal court. Moreover, Minton noted the importance of uniformity in the development of patent law, a goal that would be promoted (as the Federal Circuit recognized) in requiring malpractice claims in patent cases to be heard in federal court.
Gunn and the other defendants responded that Minton’s interpretation of “arising under” was too broad and was inconsistent with the Supreme Court’s reasoning in Grable. They contended that a claim authorized by state law isn’t permitted (or required) to be heard in federal court simply because it involves a dispute over a patent issue.
At a minimum, they argued, there must be embedded in the state law claim an important issue of federal patent law that requires resolution or clarification—and Minton’s malpractice claim did not present such an issue. Minton’s case did not present a disagreement over the applicable patent law; the parties merely disagreed on the facts, and such a dispute could, and should, be resolved by a state court.
Furthermore, the defendants asserted that the issue of attorney malpractice is the province of state courts and state law, which has primary responsibility for regulating attorney conduct. Therefore, they contended, accepting Minton’s interpretation of “arising under”—as the Texas Supreme Court did—would disturb the balance of judicial responsibilities between state and federal courts.
As the parties appealing the Texas Supreme Court’s decision, the lawyer defendants presented their argument first before the Supreme Court—and their attorney wasn’t pressed very hard. Jane Webre, the defendants’ attorney, often was able to reiterate the points made in her brief and seemed to answer the justices’ questions to their satisfaction.
Thomas Michel, arguing for Minton, encountered more skepticism from the Court. At one point, Justice Antonin Scalia asked for case law supporting one of Michel’s arguments—which Michel acknowledged did not “expressly” exist—and added that such a case would be “extraordinary” if it had. At another point, in a colloquy about issue preclusion, Scalia resisted Michel’s response, saying that if he were correct, that would be “a rather weird, weird situation.”
Justices Elena Kagan, Sonia Sotomayor, and Ruth Bader Ginsburg also asked pointed questions and did not seem to indicate that they accepted Michel’s responses. In such a situation, when one party’s presentation is received with much greater skepticism than his adversary’s, the conventional wisdom is that the Court is likely to rule against that party.
That certainly is my view here—and not only because of the oral argument. The Texas Court of Appeals interpreted Grable properly in holding that Minton’s malpractice claims did not satisfy the requirements for federal jurisdiction. The Texas Supreme Court’s decision did not, and therefore is likely to be reversed.
The more interesting question, I believe, is whether the Court will revisit and perhaps revise its approach to “arising under” jurisdiction as set out in Grable. In my view, that is unlikely. As Justice Anthony Kennedy noted at oral argument, Justice Souter’s decision has been well-received, and the Court could do worse than leaving Grable alone.
Note: On the same day that Professor Citron’s article was posted about the oral argument in Gunn v. Minton, the Supreme Court decided the case. In a unanimous decision, the Court reversed the Texas Supreme Court and held that the plaintiff’s claim of legal malpractice in connection with the assertion of a patent claim did not arise under federal law and therefore was properly brought in state court.
Professor Citron worked as a trial attorney in the Department of Justice from 1996 through 2000 on a number of “Winstar” cases and has written law review articles about the issues in those cases, including the Supreme Court’s decision in United States v. Winstar Corp.