Federal Jurisdiction — What Does Grable Mean?

The defendant in Singh v. Duane Morris LLP, 2008 U.S. App. LEXIS 16191 (5th Cir. July 30, 2008), had unsuccessfully represented the plaintiff in a trademark action. The plaintiff, in this action, sued in Texas state court for malpractice, alleging that the defendant was negligent in failing to offer available proof of secondary meaning, leading to the loss in the trademark action. The defendant removed and won. On appeal, the plaintiff claimed the federal district court did not have jurisdiction because there was no diversity and the requirements of Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005), were not satisfied. From Judge Jerry Smith’s opinion:

The fact that a substantial federal question is necessary to the resolution of a state-law claim is not sufficient to permit federal jurisdiction: "Franchise Tax Board . . . did not purport to disturb the long-settled understanding that the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 813 (1986). Likewise, "the presence of a disputed federal issue . . . [is] never necessarily dispositive." Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005). Instead, "[f]ar from creating some kind of automatic test, Franchise Tax Board thus candidly recognized the need for careful judgments about the exercise of federal judicial power in an area of uncertain jurisdiction." Merrell Dow, 478 U.S. at 814.

If, however, the standard for federal question jurisdiction is no "automatic test," what sort of test is it? Although the Court's answer has at times been less than pellucid, it recently summed up the requisite inquiry: "[T]he 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, 545 U.S. at 314. In other words, federal question jurisdiction exists where (1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities. ***T]his case involves no important issue of federal law. Instead, the federal issue is predominantly one of fact — whether Singh had sufficient evidence that his trademark had acquired secondary meaning. 5 Though obviously significant to Singh's claim, that issue does not require "resort to the experience, solicitude, and hope of uniformity that a federal forum offers." *** It is possible that the federal interest in patent cases is sufficiently more substantial, such that it might justify federal jurisdiction. But we need not decide the question before the Federal Circuit, because it is not before us. We conclude only that jurisdiction does not extend to malpractice claims involving trademark suits like this one.

Vacated for lack of subject matter jurisdiction.

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