CASES ADJUDGED
IN THE
SUPREME COURT OF THE UNITED STATES
AT
OCTOBER TERM, 2002
Syllabus
BENEFICIAL NATIONAL BANK ET AL.
v. ANDERSON ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
ELEVENTH CIRCUIT
No. 02-306. Argued April 30, 2003-Decided June 2, 2003
Respondents, who secured loans from petitioner national bank,
filed a state-court suit against the bank and two other
petitioners, seeking damages on the theory, among others, that the
bank's interest rates violated "the common law usury doctrine" and
an Alabama usury statute. The complaint did not refer to any
federal law. Petitioners removed the case to Federal District
Court, asserting that the National Bank Act governs the interest
rate that a national bank may charge, see 12 U. S. C. § 85, that
the rates charged to respondents complied with § 85, that § 86
provides the exclusive remedies available against a national bank
charging excessive interest, and that respondents' action was
therefore one "arising under" federal law that could be removed
under 28 U. S. C. § 1441. The District Court denied respondents'
motion to remand the case to state court, but certified the
question whether it had jurisdiction to the Eleventh Circuit. In
reversing, the latter court held that under the ''well-pleaded
complaint" rule, removal is not permitted unless the complaint
expressly alleges a federal claim, and that the narrow exception
known as the complete pre-emption doctrine did not apply because
there was no evidence of clear congressional intent to permit
removal under §§85 and 86.
Held: Respondents' cause of action arose only under
federal law and could, therefore, be removed under § 1441. Pp.
6-11.
2
Syllabus
(a) As a general rule, absent diversity jurisdiction, a case is
not removable if the complaint does not affirmatively allege a
federal claim. Potential defenses, including a federal statute's
pre-emptive effect,
Franchise Tax Bd. of Cal. v.
Construction Laborers Vacation Trust for Southern Cal.,
463 U. S. 1, do not
provide a basis for removal. One exception to the general rule
occurs when a federal statute completely pre-empts a cause of
action. Where this Court has found such preemption, the federal
statutes at issue-the Labor Management Relations Act, 1947, see
Avco Corp. v.
Machinists, 390 U. S. 557, and the
Employee Retirement Income Security Act of 1974, see
Metropolitan Life Ins. Co. v.
Taylor, 481 U. S. 58-provided the
exclusive cause of action for the claim asserted and also set forth
procedures and remedies governing that cause of action. Pp.
6-8.
(b) Because respondents' complaint expressly charged petitioners
with usury,
Metropolitan Life, Avco, and
Franchise Tax
Bd. provide the framework for answering the question whether
the National Bank Act provides the exclusive cause of action for
usury claims against national banks. Section 85 sets substantive
limits on the interest rates that national banks may charge, while
§ 86 prescribes the remedies available to borrowers who are charged
higher rates and the procedures governing such claims. If the
interest charged here did not violate § 85 limits, the statute
pre-empts any common-law or Alabama statutory rule that would treat
those rates as usurious and would, thus, provide a federal defense.
That defense would not justify removal. Only if Congress intended §
86 to provide the exclusive cause of action for usury claims
against national banks would the statute be comparable to the
provisions construed in
Avco and
Metropolitan Life.
This Court has long construed the National Bank Act as providing
the exclusive federal cause of action for usury against national
banks. See,
e. g., Farmers' and Mechanics' Nat. Bank v.
Dearing, 91 U.
S. 29. The Court has also recognized the special nature of
federally chartered banks. Uniform rules limiting their liability
and prescribing exclusive remedies for their overcharges are an
integral part of a banking system that needed protection from
possible unfriendly state legislation. The same federal interest
supports the established interpretation of § § 85 and 86 that gives
those provisions the requisite pre-emptive force to provide removal
jurisdiction. Pp.9-11.
287 F.3d
1038, reversed.
STEVENS, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and O'CONNOR, KENNEDY, SOUTER, GINSBURG, and
BREYER, JJ., joined. SCALIA, J., filed a dissenting opinion, in
which THOMAS, J., joined,
post, p. 11.
3
Seth P. Waxman argued the cause for petitioners. With him on the
briefs were Dennis G. Lyons, Howard N. Cayne, Mary Gabrielle
Sprague, Brian C. Duffy, Christopher R. Lipsett, Russell J.
Bruemmer, Paul R. Q. Wolfson, Alan
Matthew D. Roberts argued the cause for the United States as
amicus curiae urging reversal. With him on the brief were Solicitor
General Olson, Assistant Attorney General McCallum, Deputy
Solicitor General Clement, Mark B. Stern, Julie L. Williams, Daniel
P. Stipano,
Brian M. Clark argued the cause for respondents. With him
on the brief was
Dennis G.
Pantazis. *
JUSTICE STEVENS delivered the opinion of the Court.
The question in this case is whether an action filed in a state
court to recover damages from a national bank for allegedly
charging excessive interest in violation of both "the common law
usury doctrine" and an Alabama usury statute
*
Drew S.
Days III, Beth S.
Brinkmann, and
Seth M. Galanter filed a brief for the American Bankers
Association et al. as
amici curiae urging reversal.
Briefs of
amici curiae urging affirmance were filed for
the State of Arizona et al. by
Terry Goddard, Attorney
General of Arizona,
Mary O'Grady, Solicitor General,
Joseph A. Kanefield, Assistant Attorney General, and
Dan
Schweitzer, and by the Attorneys General for their respective
States as follows:
Gregg Renkes of Alaska,
Richard
Blumenthal of Connecticut,
Thurbert E. Baker of Georgia,
Mark J.
Bennett of Hawaii,
Lisa Madigan of
Illinois,
Thomas J.
Miller of Iowa, J.
Joseph
Curran, Jr., of Maryland,
Mike Hatch of Minnesota,
Jeremiah W (Jay) Nixon of Missouri,
Peter Heed of New
Hampshire,
Patricia A. Madrid of New Mexico,
Eliot
Spitzer of New York,
Jim Petro of Ohio,
Hardy
Myers of Oregon,
Henry McMaster of South Carolina,
Larry Long of South Dakota,
Greg Abbott of Texas, and
Christine O.
Gregoire of Washington; for AARP et al.
by
Deborah M. Zuckerman, Stacy J.
Canan, and
Michael R. Schuster; and for Consumer Attorneys of
California by
James C.
Sturdevant.
4
may be removed to a federal court because it actually arises
under federal law. We hold that it may.
I
Respondents are 26 individual taxpayers who made pledges of
their anticipated tax refunds to secure short-term loans obtained
from petitioner Beneficial National Bank, a national bank chartered
under the National Bank Act. Respondents brought suit in an Alabama
court against the bank and the two other petitioners that arranged
the loans, seeking compensatory and punitive damages on the theory,
among others, that the bank's interest rates were usurious. App.
18-30. Their complaint did not refer to any federal law.
Petitioners removed the case to the United States District Court
for the Middle District of Alabama. In their notice of removal they
asserted that the National Bank Act, Rev. Stat. § 5197, as amended,
12 U. S. C. § 85,1 is the exclusive provi-
1 Title 12 U. S. C. § 85 provides:
"Rate of interest on loans, discounts and purchases
"Any association may take, receive, reserve, and charge on any
loan or discount made, or upon any notes, bills of exchange, or
other evidences of debt, interest at the rate allowed by the laws
of the State, Territory, or District where the bank is located, or
at a rate of 1 per centum in excess of the discount rate on
ninety-day commercial paper in effect at the Federal reserve bank
in the Federal reserve district where the bank is located,
whichever may be the greater, and no more, except that where by the
laws of any State a different rate is limited for banks organized
under state laws, the rate so limited shall be allowed for
associations organized or existing in any such State under title 62
of the Revised Statutes. When no rate is fixed by the laws of the
State, or Territory, or District, the bank may take, receive,
reserve, or charge a rate not exceeding 7 per centum, or 1 per
centum in excess of the discount rate on ninety day commercial
paper in effect at the Federal reserve bank in the Federal reserve
district where the bank is located, whichever may be the greater,
and such interest may be taken in advance, reckoning the days for
which the note, bill, or other evidence of debt has to run. The
maximum amount of interest or discount to be charged at a branch of
an association located outside of the States of the United States
and the District of Columbia
5
sion governing the rate of interest that a national bank may
lawfully charge, that the rates charged to respondents complied
with that provision, that Rev. Stat. § 5198, 12 U. S. C. § 86,
provides the exclusive remedies available against a national bank
charging excessive interest,2 and that the removal statute, 28 U.
S. C. § 1441, therefore applied. App. 31-35. The District Court
denied respondents' motion to remand the case to state court but
certified the question whether it had jurisdiction to proceed with
the case to the Court of Appeals pursuant to 28 U. S. C. §
1292(b).
A divided panel of the Eleventh Circuit reversed.
Anderson v.
H&R Block, Inc., 287 F.3d
1038 (2002). The majority held that under our "well-pleaded
complaint" rule, removal is generally not permitted unless the
complaint expressly alleges a federal claim and that the narrow
exception from that rule known as the "complete preemption
doctrine" did not apply because it could "find no clear
congressional intent to permit removal under §§ 85 and 86."
Id., at 1048. Because this holding conflicted with an Eighth
Circuit decision,
Kris-
shall be at the rate allowed by the laws of the country,
territory, dependency, province, dominion, insular possession, or
other political subdivision where the branch is located. And the
purchase, discount, or sale of a bona fide bill of exchange,
payable at another place than the place of such purchase, discount,
or sale, at not more than the current rate of exchange for sight
drafts in addition to the interest, shall not be considered as
taking or receiving a greater rate of interest."
2 Section 86 provides:
"U surious interest; penalty for taking; limitations
"The taking, receiving, reserving, or charging a rate of
interest greater than is allowed by section 85 of this title, when
knowingly done, shall be deemed a forfeiture of the entire interest
which the note, bill, or other evidence of debt carries with it, or
which has been agreed to be paid thereon. In case the greater rate
of interest has been paid, the person by whom it has been paid, or
his legal representatives, may recover back, in an action in the
nature of an action of debt, twice the amount of the interest thus
paid from the association taking or receiving the same:
Provided, That such action is commenced within two years
from the time the usurious transaction occurred."
6
pin v.
May Dept. Stores Co., 218
F.3d 919 (2000), we granted certiorari. 537 U. S. 1169
(2003).
II
A civil action filed in a state court may be removed to federal
court if the claim is one "arising under" federal law. § 1441(b).
To determine whether the claim arises under federal law, we examine
the "well pleaded" allegations of the complaint and ignore
potential defenses: "[A] suit arises under the Constitution and
laws of the United States only when the plaintiff's statement of
his own cause of action shows that it is based upon those laws or
that Constitution. It is not enough that the plaintiff alleges some
anticipated defense to his cause of action and asserts that the
defense is invalidated by some provision of the Constitution of the
United States."
Louisville &
Nashville R. Co. v.
Mottley, 211
U. S. 149, 152 (1908); see
Taylor v.
Anderson,
234 U. S. 74
(1914). Thus, a defense that relies on the preclusive effect of a
prior federal judgment,
Rivet v.
Regions Bank of La.,
522 U. S. 470
(1998), or the pre-emptive effect of a federal statute,
Franchise Tax Bd. of Cal. v.
Construction Laborers
Vacation Trust for Southern Cal., 463 U. S. 1 (1983), will
not provide a basis for removal. As a general rule, absent
diversity jurisdiction, a case will not be removable if the
complaint does not affirmatively allege a federal claim.
Congress has, however, created certain exceptions to that rule.
For example, the Price-Anderson Act contains an unusual pre-emption
provision, 42 U. S. C. § 2014(hh), that not only gives federal
courts jurisdiction over tort actions arising out of nuclear
accidents but also expressly provides for removal of such actions
brought in state court even when they assert only state-law claims.
See
El Paso Natural Gas Co. v.
Neztsosie, 526 U. S. 473, 484-485
(1999).
We have also construed § 301 of the Labor Management Relations
Act, 1947 (LMRA), 29 U. S. C. § 185, as not only pre-empting state
law but also authorizing removal of ac-
7
tions that sought relief only under state law.
Avco Corp.
v.
Machinists, 390 U. S. 557 (1968). We
later explained that holding as resting on the unusually "powerful"
pre-emptive force of § 301:
"The Court of Appeals held, 376 F. 2d, at 340, and we affirmed,
390 U. S., at 560, that the petitioner's action 'arose under' §
301, and thus could be removed to federal court, although the
petitioner had undoubtedly pleaded an adequate claim for relief
under the state law of contracts and had sought a remedy available
only under state law. The necessary ground of decision was
that the pre-emptive force of § 301 is so powerful as to displace
entirely any state cause of action 'for violation of contracts
between an employer and a labor organization.' Any such suit is
purely a creature of federal law, notwithstanding the fact that
state law would provide a cause of action in the absence of § 301.
Avco stands for the proposition that if a federal cause of
action completely pre-empts a state cause of action any complaint
that comes within the scope of the federal cause of action
necessarily 'arises under' federal law." Franchise Tax Bd.,
463 U. S., at 23-24 (footnote omitted).
Similarly, in
Metropolitan Life Ins. Co. v.
Taylor,
481 U. S. 58 (1987), we considered whether the "complete
preemption" approach adopted in
Avco also supported the
removal of state common-law causes of action asserting improper
processing of benefit claims under a plan regulated by the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U. S. C. § 1001
et seq. For two reasons, we held that removal was proper
even though the complaint purported to raise only state-law claims.
First, the statutory text in § 502(a), 29 U. S. C. § 1132, not only
provided an express federal remedy for the plaintiffs' claims, but
also in its jurisdiction subsection, § 502(f), used language
similar to the statutory language construed in
Avco, thereby
indicating
8
that the two statutes should be construed in the same way. 481
U. S., at 65. Second, the legislative history of ERISA
unambiguously described an intent to treat such actions "as arising
under the laws of the United States in similar fashion to those
brought under section 301 of the Labor-Management Relations Act of
1947."
Id., at 65-66 (internal quotation marks and emphasis
omitted).
Thus, a state claim may be removed to federal court in only two
circumstances-when Congress expressly so provides, such as in the
Price-Anderson Act,
supra, at 6, or when a federal statute
wholly displaces the state-law cause of action through complete
pre-emption.3 When the federal statute completely pre-empts the
state-law cause of action, a claim which comes within the scope of
that cause of action, even if pleaded in terms of state law, is in
reality based on federal law. This claim is then removable under 28
U. S. C. § 1441(b), which authorizes any claim that "arises under"
federallaw to be removed to federal court. In the two categories of
cases 4 where this Court has found complete preemption-certain
causes of action under the LMRA and ERISA-the federal statutes at
issue provided the exclusive cause of action for the claim asserted
and also set forth procedures and remedies governing that cause of
action. See 29 U. S. C. § 1132 (setting forth procedures and
remedies for civil claims under ERISA); § 185 (describing
procedures and remedies for suits under the LMRA).
3 Of course, a state claim can also be removed through the use
of the supplemental jurisdiction statute, 28 U. S. C. § 1367(a),
provided that another claim in the complaint is removable.
4 This Court has also held that federal courts have
subject-matter jurisdiction to hear posessory land claims under
state law brought by Indian tribes because of the uniquely federal
"nature and source of the possessory rights of Indian tribes."
Oneida Indian Nation of N Y. v.
County of Oneida,
414 U. S. 661,
667 (1974). Because that case turned on the special historical
relationship between Indian tribes and the Federal Government, it
does not assist the present analysis.
9
III
Count IV of respondents' complaint sought relief for "usury
violations" and claimed that petitioners "charged ... excessive
interest in violation of the common law usury doctrine" and
violated "Alabama Code § 8-8-1, et seq. by charging excessive
interest." App. 28. Respondents' complaint thus expressly charged
petitioners with usury.
Metropolitan Life, Avco, and
Franchise Tax Board provide the framework for answering the
dispositive question in this case:
Does the National Bank Act provide the exclusive cause of action
for usury claims against national banks? If so, then the cause of
action necessarily arises under federal law and the case is
removable. If not, then the complaint does not arise under federal
law and is not removable.
Sections 85 and 86 serve distinct purposes. The former sets
forth the substantive limits on the rates of interest that national
banks may charge. The latter sets forth the elements of a usury
claim against a national bank, provides for a 2-year statute of
limitations for such a claim, and prescribes the remedies available
to borrowers who are charged higher rates and the procedures
governing such a claim. If, as petitioners asserted in their notice
of removal, the interest that the bank charged to respondents did
not violate § 85 limits, the statute unquestionably pre-empts any
commonlaw or Alabama statutory rule that would treat those rates as
usurious. The section would therefore provide the petitioners with
a complete federal defense. Such a federal defense, however, would
not justify removal.
Caterpillar Inc. v.
Williams,
482 U. S. 386,
393 (1987). Only if Congress intended § 86 to provide the exclusive
cause of action for usury claims against national banks would the
statute be comparable to the provisions that we construed in the
Avco and
Metropolitan Life cases.5
5 Because the proper inquiry focuses on whether Congress
intended the federal cause of action to be exclusive rather than on
whether Congress intended that the cause of action be removable,
the fact that these sections
10
In a series of cases decided shortly after the Act was passed,
we endorsed that approach. In
Farmers' and Mechanics' Nat.
Bank v.
Dearing, 91 U. S. 29, 32-33 (1875),
we rejected the borrower's attempt to have an entire debt
forfeited, as authorized by New York law, stating that the various
provisions of §§ 85 and 86 "form a system of regulations ... [a]ll
the parts [of which] are in harmony with each other and cover the
entire subject," so that "the State law would have no bearing
whatever upon the case." We also observed that "[i]n any view that
can be taken of [§ 86], the power to supplement it by State
legislation is conferred neither expressly nor by implication."
Id., at 35. In
Evans v.
National Bank of
Savannah, 251 U.
S. 108, 114 (1919), we stated that "federal law ... completely
defines what constitutes the taking of usury by a national bank,
referring to the state law only to determine the maximum permitted
rate." See also
Barnet v.
National Bank, 98 U. S. 555, 558 (1879)
(The "statutes of Ohio and Indiana upon the subject of usury ...
cannot affect the case" because the Act "creates a new right" that
is "exclusive");
Haseltine v.
Central Bank of
Springfield, 183
U. S. 132, 134 (1901) ("[T]he definition of usury and the
penalties affixed thereto must be determined by the National
Banking Act and not by the law of the State").
In addition to this Court's longstanding and consistent
construction of the National Bank Act as providing an exclusive
federal cause of action for usury against national banks, this
Court has also recognized the special nature of federally chartered
banks. Uniform rules limiting the liability of national banks and
prescribing exclusive remedies for their overcharges are an
integral part of a banking system that needed protection from
"possible unfriendly State legislation."
Tiffany v.
National Bank of Mo., 18 Wall. 409, 412
of the National Bank Act were passed in 1864, 11 years prior to
the passage of the statute authorizing removal, is irrelevant,
contrary to respondents' assertions.
11
(1874). The same federal interest that protected national banks
from the state taxation that Chief Justice Marshall characterized
as the "power to destroy,"
McCulloch v.
Maryland, 4
Wheat. 316, 431 (1819), supports the established interpretation of
§§ 85 and 86 that gives those provisions the requisite pre-emptive
force to provide removal jurisdiction. In actions against national
banks for usury, these provisions supersede both the substantive
and the remedial provisions of state usury laws and create a
federal remedy for overcharges that is exclusive, even when a state
complainant, as here, relies entirely on state law. Because §§ 85
and 86 provide the exclusive cause of action for such claims, there
is, in short, no such thing as a state-law claim of usury against a
national bank. Even though the complaint makes no mention of
federal law, it unquestionably and unambiguously claims that
petitioners violated usury laws. This cause of action against
national banks only arises under federal law and could, therefore,
be removed under § 1441.
The judgment of the Court of Appeals is reversed.
It is so ordered.
JUSTICE SCALIA, with whom JUSTICE THOMAS joins, dissenting.
Today's opinion takes the view that because the National Bank
Act, 12 U. S. C. §§ 85, 86, provides the exclusive cause of action
for claims of usury against a national bank, all such claims-even
if explicitly pleaded under state law-are to be construed as
"aris[ing] under" federal law for purposes of our jurisdictional
statutes.
Ante this page. This view finds scant support in
our precedents and no support whatever in the National Bank Act or
any other Act of Congress. I respectfully dissent.
Unless Congress expressly provides otherwise, the federal courts
may exercise removal jurisdiction over state-court actions "of
which the district courts of the United States
12
have original jurisdiction." 28 U. S. C. § 1441(a). In this
case, petitioners invoked as the predicate for removal the district
courts' original jurisdiction over "all civil actions arising under
the Constitution, laws, or treaties of the United States." §
1331.
This so-called "arising under" or "federal question"
jurisdiction has long been governed by the well-pleadedcomplaint
rule, which provides that "federal jurisdiction exists only when a
federal question is presented on the face of the plaintiff's
properly pleaded complaint."
Caterpillar Inc. v.
Williams, 482
U. S. 386, 392 (1987). A federal question "is presented" when
the complaint invokes federal law as the basis for relief. It does
not suffice that the facts alleged in support of an asserted
state-law claim would
also support a federal claim. "The
[well-pleaded-complaint] rule makes the plaintiff the master of the
claim; he or she may avoid federal jurisdiction by exclusive
reliance on state law."
Ibid. See also
The Fair v.
Kohler Die &
Specialty Co., 228 U. S. 22, 25
(1913) ("Of course the party who brings a suit is master to decide
what law he will rely upon"). Nor does it even suffice that the
facts alleged in support of an asserted state-law claim
do not
support a state-law claim and would
only support a
federal claim. "Jurisdiction may not be sustained on a theory that
the plaintiff has not advanced."
Merrell Dow Pharmaceuticals
Inc. v.
Thompson, 478 U. S. 804, 809, n. 6
(1986).
Under the well-pleaded-complaint rule, "a federal court does not
have original jurisdiction over a case in which the complaint
presents a state-law cause of action, but also asserts that federal
law deprives the defendant of a defense he may raise, ... or that a
federal defense the defendant may raise is not sufficient to defeat
the claim."
Franchise Tax Bd. of Cal. v.
Construction
Laborers Vacation Trust for Southern Cal., 463 U. S. 1, 10 (1983). Of
critical importance here, the rejection of a federal defense as the
basis for original federal-question jurisdiction applies with equal
force
13
when the defense is one of federal pre-emption. "By
unimpeachable authority, a suit brought upon a state statute does
not arise under an act of Congress or the Constitution of the
United States because prohibited thereby."
Gully v.
First
Nat. Bank in Meridian, 299 U. S. 109, 116
(1936). "[A] case may
not be removed to federal court on the
basis of ... the defense of pre-emption .... "
Caterpillar,
supra, at 393. To be sure, pre-emption requires a state court
to
dismiss a particular claim that is filed under state law,
but it does not, as a general matter, provide grounds for
removal.
This Court has twice recognized exceptions to the
wellpleaded-complaint rule, upholding removal jurisdiction
notwithstanding the absence of a federal question on the face of
the plaintiff's complaint. First, in
Avco Corp. v.
Machinists, 390 U. S. 557 (1968), we
allowed removal of a state-court action to enforce a no-strike
clause in a collective-bargaining agreement. The complaint
concededly did not advance a federal claim, but was subject to a
defense of pre-emption under § 301 of the Labor Management
Relations Act, 1947 (LMRA), 29 U. S. C. § 185. The
well-pleaded-complaint rule notwithstanding, we treated the
plaintiff's state-law contract claim as one arising under § 301,
and held that the case could be removed to federal court.
Avco,
supra, at 560.
The only support mustered by the
Avco Court for its
conclusion was a statement wrenched out of context from our
decision in
Textile Workers v.
Lincoln Mills of Ala.,
353 U. S. 448, 457 (1957), that "[a]ny state law applied [in a
§ 301 case] will be absorbed as federal law and will not be an
independent source of private rights." To begin with, this
statement is entirely unnecessary to the landmark holding in
Lincoln Mills-that § 301 not only gives federal courts
jurisdiction to decide labor relations cases but also supplies them
with authority to create the governing substantive law.
Id.,
at 456. More importantly, understood in the context of that
holding, the quoted passage in no way supports the proposition for
which it is relied upon in
Avco-that state-
14
law claims relating to labor relations necessarily
arise
under § 301. If one reads
Lincoln Mills with any care,
it is clear beyond doubt that the relevant passage merely confirms
that when, in deciding cases arising under § 301, courts employ
legal rules that overlap with, or are even explicitly borrowed
from, state law, such rules are nevertheless rules of federal law.
It is in this sense that "[a]ny state law applied [in a § 301 case]
will be absorbed as federal law"-in the sense that federally
adopted state rules become federal rules, not in the sense that a
state-law claim becomes a federal claim.
Other than its entirely misguided reliance on
Lincoln
Mills, the opinion in
Avco failed to clarify the
analytic basis for its unprecedented act of jurisdictional alchemy.
The Court neglected to explain
why state-law claims that are
pre-empted by § 301 of the LMRA are exempt from the strictures of
the well-pleaded-complaint rule, nor did it explain
how such
a state-law claim can plausibly be said to "arise under" federal
law. Our subsequent opinion in
Franchise Tax Board struggled
to prop up
Avco's puzzling holding:
"The necessary ground of decision [in Avco] was that the
pre-emptive force of § 301 is so powerful as to displace entirely
any state cause of action 'for violation of contracts between an
employer and a labor organization.' Any such suit is purely a
creature of federal law, notwithstanding the fact that state law
would provide a cause of action in the absence of § 301.
Avco stands for the proposition that if a federal cause of
action completely pre-empts a state cause of action any complaint
that comes within the scope of the federal cause of action
necessarily 'arises under' federal law." 463 U. S., at 23-24
(footnote omitted).
This passage has repeatedly been relied upon by the Court as an
explanation for its decision in
Avco. See,
e. g.,
ante, at
7, Caterpillar, supra, at 394;
Metropolitan
Life Ins. Co. v.
Taylor, 481 U. S. 58, 64 (1987).
Of course it is not an expla-
15
nation at all. It provides nothing more than an account of what
Avco accomplishes, rather than a justification (unless
ipse dixit is to count as justification) for the radical
departure from the well-pleaded-complaint rule, which demands
rejection of the defense of federal pre-emption as a basis for
federal jurisdiction.
Gully, supra, at 116. Neither the
excerpt quoted above, nor any other fragment of the decision in
Franchise Tax Board, explains how or why the nonviability
(due to pre-emption) of the state-law contract claim in
Avco
magically transformed that claim into one "arising under" federal
law.
Metropolitan Life Ins. Co. v.
Taylor, supra, was
our second departure from the prohibition against resting federal
"arising under" jurisdiction upon the existence of a federal
defense. In that case, Taylor sued his former employer and its
insurer, alleging breach of contract and seeking,
inter
alia, reinstatement of certain disability benefits and
insurance coverages.
Id., at 61. Though Taylor invoked no
federal law in his complaint, we treated his case as one arising
under § 502 of the Employee Retirement Income Security Act of 1974
(ERISA), 29 U. S. C. § 1132, and upheld the District Court's
exercise of removal jurisdiction. 481 U. S., at 66-67.
In reaching this conclusion, the
Taylor Court broke no
new analytic ground; its opinion follows the exception established
in
Avco and described in
Franchise Tax Board, but
says nothing to commend that exception to logic or reason. Instead,
Taylor simply relies on the "clos[e] parallels," 481 U. S.,
at 65, between the language of the pre-emptive provision in ERISA
and the language of the LMRA provision deemed in
Avco to be
so dramatically pre-emptive as to summon forth a federal claim
where none had been asserted. "No more specific reference to the
Avco rule can be expected," we said, than what was found in
§ 502(a); and we accordingly concluded that "Congress has clearly
manifested an intent to make causes of action within the scope of
the civil enforcement provisions of § 502(a) removable to
federal
16
court." 481 U. S., at 66. As in
Avco and
Franchise Tax
Board, no explanation was provided for
Avco's abrogation
of the rule that "[f]ederal pre-emption is ordinarily a federal
defense to the plaintiff's suite, and as such] it does not appear
on the face of a well-pleaded complaint, [nor does it] authorize
removal to federal court." 1 481 U. S., at 63.
It is noteworthy that the straightforward (though similarly
unsupported) rule announced in to day's opinion-under which (1)
removal is permitted "[w]hen [a] federal statute completely
pre-empts a state-law cause of action,"
ante, at 8, and (2)
a federal statute is completely pre-emptive when it "provide[s] the
exclusive cause of action for the claim asserted,"
ibid.-is
nowhere to be found in either
Avco or
Taylor. To the
contrary, the analysis in today's opinion implicitly contradicts
(by rendering inexplicable)
Taylor's discussion of
pre-emption and removal.
(Avco, as I observed earlier, has
no discussion to be contradicted.) Had it thought that to day's
decision was the law, the
Taylor Court need not have taken
pains to emphasize the "clos[e] parallels" between § 502(a)(1)(B)
of ERISA and § 301 of the LMRA and need not have pored over the
legislative history of § 502(a) to show that Congress expected
ERISA to be treated like the LMRA. See
Taylor, supra, at
65-66 (citing H. R. Conf. Rep. No. 93-1280, p. 327 (1974); 120
Congo Rec. 29933 (1974) (remarks of Sen. Williams); id., at 29942
(remarks of Sen. Javits)). Instead, it could have rested after
noting the "unique pre-emptive force of ERISA,"
Taylor,
supra, at 65. Indeed, it could even have spared itself the
trouble of add-
IThis is not to say that
Taylor was wrongly decided.
Having been informed through the
Avco Corp. v.
Machinists, 390 U. S. 557 (1968),
decision that the language of § 301 triggered "arising under"
jurisdiction even with respect to certain state-law claims,
Congress' subsequent decision to insert language into ERISA that
"closely parallels" the text of § 301 can be viewed to be, as we
said, a "specific reference to the
Avco rule." 481 U. S., at
65-66.
Taylor, in other words, rests upon a sort of
statutory incorporation of
Avco. Avco itself, on the other
hand, continues to rest upon nothing.
17
ing the adjective "unique." While there is something unique
about statutes whose pre-emptive force is closely patterned after
that of the LMRA (which we had held to support removal), there is
nothing whatever unique about a federal cause of action that
displaces state causes of action. Displacement alone, if to day's
opinion is to be believed, would have sufficed to establish the
existence of removal jurisdiction.
The best that can be said, from a precedential perspective, for
the rule of law announced by the Court today is that variations on
it have twice appeared in our cases in the purest dicta.
Rivet v.
Regions Bank of La., 522 U. S. 470, 476 (1998)
("[O]nce an area of state law has been completely preempted, any
claim purportedly based on that pre-empted state-law claim is
considered, from its inception, a federal claim, and therefore
arises under federal law" (internal quotation marks omitted));
Caterpillar, 482 U. S., at 393 ("[I]f a federal cause of
action completely pre-empts a state cause of action any complaint
that comes within the scope of the federal cause of action
necessarily 'arises under' federal law" (some internal quotation
marks omitted)). Dicta of course have no precedential value, see
U. S.
Bancorp Mortgage Co. v.
Bonner Mall
Partnership, 513
U. S. 18, 24 (1994), even when they do not contradict, as they
do here, prior holdings of the Court.
The difficulty with to day's holding, moreover, is not limited
to the flimsiness of its precedential roots. As has been noted
already, the holding cannot be squared with bedrock principles of
removal jurisdiction. One or another of two of those principles
must be ignored: Either (1) the principle that merely setting forth
in state court facts that would support a federal cause of
action-indeed, even facts that would support a federal cause of
action and would
not support the claimed state cause of
action-does not produce a federal question supporting removal,
Caterpillar, 482 U. S., at 391, or (2) the principle that a
federal defense to a state
18
cause of action does not support federal-question jurisdiction,
see id., at 393. Relatedly, today's holding also represents a sharp
break from our long tradition of respect for the autonomy and
authority of state courts. For example, in
Healy v.
Ratta, 292 U.
S. 263, 270 (1934), we explained that "[d]ue regard for the
rightful independence of state governments, which should actuate
federal courts, requires that they scrupulously confine their own
jurisdiction to the precise limits which the statute has defined."
And in
Shamrock Oil &
Gas Corp. v.
Sheets,
313 U. S. 100,
108 (1941), we insisted on a "strict construction" of the federal
removal statutes.2 Today's decision ignores these venerable
principles and effectuates a significant shift in decisional
authority from state to federal courts.
In an effort to justify this shift, the Court explains that
"[b]ecause [12 U. S. C.] §§ 85 and 86 provide the exclusive cause
of action for such claims, there is ... no such thing as a
state-law claim of usury against a national bank."
Ante, at
11. But the mere fact that a state-law claim is invalid no more
deprives it of its character as a state-law claim which does not
raise a federal question, than does the fact that a federal claim
is invalid deprive it of its character as a federal claim which
does raise a federal question. The proper response to the
presentation of a nonexistent claim to a state court is
dismissal, not the "federalize-and-remove" dance authorized
by to day's opinion. For even if the Court is correct that the
National Bank Act obliterates entirely any state-created right to
relief for usury against a national bank, that does not explain how
or why the claim of
2 Our traditional regard for the role played by state courts in
interpreting and enforcing federal law has other doctrinal
manifestations. We indulge, for example, a "presumption of
concurrent [state and federal] jurisdiction," which can be rebutted
only "by an explicit statutory directive, by unmistakable
implication from legislative history, or by a clear incompatibility
between state-court jurisdiction and federal interests."
Gulf Offshore Co. v.
Mobil Oil Corp., 453 U. S. 473, 478
(1981).
19
such a right is transmogrified into the claim of a federal
right. Congress's mere act of creating a federal right and
eliminating all state-created rights
in no way suggests an
expansion of federal jurisdiction so as to wrest from state courts
the authority to decide questions of pre-emption under the National
Bank Act.
Petitioners seek to justify their end run around the
wellpleaded-complaint rule by insisting that, in determining
whether federal jurisdiction exists, we are required to " 'look
beyond the pleadings.'" Brief for Petitioners 18 (quoting
Indianapolis v.
Chase Nat. Bank, 314 U. S. 63, 69 (1941)).
They point out:
"[A] long line of cases disallow[s] manipulations by plaintiffs
designed to create or avoid diversity jurisdiction, such as
misaligning the interests of the parties, naming parties (whether
plaintiffs or defendants) who have no real interest in or
relationship to the controversy, misstating the citizenship of a
party (whether plaintiffs or defendants), or misstating the amount
in controversy." Brief for Petitioners 17-18.
Petitioners insist that, like the "manipulative" complaints in
these diversity cases, "[r]espondents' complaint is disingenuously
pleaded, not 'well pleaded' in any respect, for it purports to
raise a state law claim that does not exist."
Id., at 16.
Accordingly, the argument continues, just as federal courts may
assert jurisdiction where a plaintiff seeks to hide the true
citizenship of the parties, so too they may assert jurisdiction
where a plaintiff cloaks a necessarily federal claim in state-law
garb.
To begin with, the cases involving diversity jurisdiction are
probably distinguishable on the ground that there is a crucial
difference between, on the one hand, "looking beyond the pleadings"
to determine whether a factual assertion is true, and, on the other
hand, doing so in order to determine whether the plaintiff has
proceeded on the basis of the "cor-
20
rect" legal theory. But even assuming that the analogy to the
diversity cases is apt, petitioners can derive no support from it
in this case. Their argument proceeds from the faulty premise that
if one looks behind the pleadings in this case, one discovers that
the plaintiffs have, in fact, presented a federal claim. But that
begs the question-that is, it assumes the answer to the very
question presented. It assumes that whenever a claim of usury is
brought against a national bank, that claim is a federal one. As I
have discussed above, neither logic nor precedent supports that
conclusion; they support, at best, the proposition that the only
viable claim against a national bank for usury is a federal
one. Federal jurisdiction is ordinarily determined-invariably
determined, except for
Avco and
Tay lor-on the basis
of what claim is pleaded, rather than on the basis of what claim
can prevail.
There may well be good reasons to favor the expansion of removal
jurisdiction that petitioners urge and that the Court adopts today.
As the United States explains in its
amicus brief:
"Absent removal, the state court would have only two legitimate
options-to recharacterize the claim in federal-law terms or to
dismiss the claim altogether. Any plaintiff who truly seeks
recovery on that claim would prefer the first option, which would
make the propriety of removal crystal clear. A third possibility,
however, is that the state court would err and allow the claim to
proceed under state law notwithstanding Congress's decision to make
the federal cause of action exclusive. The complete pre-emption
rule avoids that potential error." Brief for United States as
Amicus Curiae 17-18.
True enough, but inadequate to render to day's decision either
rational or properly within the authority of this Court. Inadequate
for rationality, because there is no more reason
21
to fear state-court error with respect to federal pre-emption
accompanied by creation of a federal cause of action than there is
with respect to federal pre-emption unaccompanied by creation of a
federal cause of action-or, for that matter, than there is with
respect to
any federal defense to a statelaw claim. The
rational response to the United States' concern is to eliminate the
well-pleaded-complaint rule entirely. And inadequate for judicial
authority, because it is up to Congress, not the federal courts, to
decide when the risk of state-court error with respect to a matter
of federal law becomes so unbearable as to justify divesting the
state courts of authority to decide the federal matter. Unless and
until we receive instruction from Congress that claims preempted
under the National Bank Act-in contrast to almost all other claims
that are subject to federal pre-emption"arise under" federal law,
we simply lack authority to "avoi[d]. potential errors," id., at
18, by permitting removal.
***
Today's opinion has succeeded in giving to our
Avco
decision a theoretical foundation that neither
Avco itself
nor
Taylor provided. Regrettably, that theoretical
foundation is itself without theoretical foundation. That is to
say, the more general proposition that (1) the existence of a
pre-emptive federal cause of action causes the invalid assertion of
a state cause of action to raise a federal question, has no more
logic or precedent to support it than the very narrow proposition
that (2) the LMRA
(Avco) and statutes modeled after the LMRA
(Taylor) cause invalid assertions of state causes of action
pre-empted by those particular statutes to raise federal questions.
Since I believe that, as between an inexplicable narrow holding and
an inexplicable broad one, the former is the lesser evil, I would
adhere to the approach taken by
Tay lor and on the basis of
stare decisis simply affirm, without any real explanation,
that the LMRA and statutes modeled after it have a "unique
pre-emptive force" that
22
(quite illogically) suspends the normal rules of removal
jurisdiction. Since no one asserts that the National Bank Act is
modeled after the LMRA, the state-law claim pleaded here cannot be
removed, and it is left to the state courts to dismiss it. From the
Court's judgment to the contrary, I respectfully dissent.
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