Commercial Litigation and Arbitration

Grable — State RICO Claim with Federal Predicates

The plaintiff in Fairfax Fin. Holdings Ltd. v. S.A.C. Capital Mgmt., LLC, 2007 U.S. Dist. LEXIS 39214 (D. N.J. May 15, 2007), filed a state RICO action with federal predicates. The defendants removed, arguing that ‛arising under“ jurisdiction existed under Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005), due to the plaintiff’s inclusion of federal criminal laws as predicate acts in the state-created RICO claim. Held, ‛adopting Defendants’ argument would have the effect of vesting state legislatures with the power to ‘confer federal question jurisdiction upon a federal court’ — simply an ‘untenable position.’“ Accordingly, District Judge Dennis Cavanaugh remanded the case to state court.

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