Federal Questions Embedded in a State Statutes

     What happens when a state statute references and thereby incorporates a federal law? Does federal question jurisdiction exist (albeit created by a state and imposed on the federal courts) or is it just a state statute providing no direct access to federal court (albeit one that will require courts to build precedent interpreting a federal statute)?

     In these cases, it can be argued, resolving the federal question is essential for imposing liability. At the same time, the law at base is a state law, created by a state government, and one may ask whether a state government should have the power to throw open the doors to federal courthouses. In addition, in some cases bringing such cases into federal court could federalize issues that traditionally have been resolved by state courts, potentially burdening the federal courts. We've run out of hands, but if we had one more we would note that in some cases the federal question involved is quite important, and perhaps one that deserves uniform federal resolution, rather than resolution by the various state courts. When can we say that such claims 'arise under' federal law so as to satisfy § 1331?

     One straightforward answer was given in a case authored by Justice Oliver Wendell Holmes in Americal Well Works Co. v. Layne & Bowler Co., 242 U.S. 257 (1916). American Well Works claimed that Layne & Bowler had interfered maliciously with their business by falsely claiming that their pump violated a patent held by Layne & Bowler. The trade libel statute was created under state law but the case would require a determination as to whether American Well Works' pump did in fact violate the patent held by Layne & Bowler, which would require interpreting federal law. (Can you see how this is different from Mottley? In Mottley, did the plaintiffs' theory of the case necessarily require an interpretation of federal law?). Justice Holmes wrote:

A suit arises under the law that creates the cause of action. The fact that the justification may involve the validity and infringement of a patent is no more material to the question under what law the suit is brought than it would be in an action of contract.

     Five years later, the Court went in a different direction. In Smith v. Kansas City Title & Trust Co., 255 U.S. 180 (1921), the plaintiff claimed under a state law prohibiting corporations from investing in unlawfully issued investments that the corporation was buying bonds unconstitutionally issued under the Federal Farm Loan Act. In examining this seemingly similar case, the Court put forth a different standard:

The general rule is that, where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the United States, and that such federal claim is not merely colorable, and rests upon a reasonable foundation, the District Court has jurisdiction under this provision.

    The Court zigged back 13 years later in deciding Moore v. Chesapeake & Ohio Railway, 291 U.S., 205 (1934). In that case the suit was brought under a state employer's liability law; because contributory negligence could not be asserted if the employer had violated a law enacted for "the safety of employees" the case would turn on whether the employer had violated the Federal Safety Appliance Act. The court held no federal jurisdiction existed.

     Similarly, in Gully v., First National Bank in Meridian, 299 U.S. 109 (1936), a state wanted to tax a national bank. While a federal statute ultimately controlled whether a national bank could be taxed, the Court rejected federal jurisdiction on the grounds that the federal issue was not central to the case but was only "lurking" and might not be reached.

     More recently, in Merrell Dow Pharmaceuticals, Inc., v. Thompson, 478 U.S. 804 (1986), the plaintiffs argued that a violation of the Federal Food, Drug, and Cosmetic Act established negligence under state law. The claim, similar to the cases above, was that even though the cause of action was created by a state the interpretation of federal law would prove essential to the relevant count of the complaint based on the FDCA violation. An important issue in the case was that Congress did not create an explicit private right of action under the FDCA, and the parties agreed that there was not an implied one. That means, if the case was treated as federal law, a federal forum for violations of the FDCA would be provided in federal court where Congress had not explicitly provided one and courts had not found one implied. The practical impact would be to open the federal courts to a large number of tort claims that otherwise would be in state court. Relying heavily on the lack of federal private right of action, the Court concluded, "We conclude that a complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim 'arising under the Constitution, laws, or treaties of the United States.'" A forceful dissent by Justice Brennan argued, in part, that it would be better to have federal courts engaged in defining and applying the important federal statute involved.

      This set the stage for the case that follows.