Concept
Federal Defenses and Counterclaims
Removal
Federal Defenses and Counterclaims
Section 1441(a) lets a defendant remove only a state-court civil action of which the federal district courts have original jurisdiction, so removal on a federal-question ground works only if the case arises under federal law.1 The well-pleaded complaint rule answers that question: the federal issue must appear in the plaintiff’s own statement of the claim.2 In Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., the Supreme Court confirmed that the same rule governs whether a case is removable under § 1441(a).3
The rule suits removal because it leaves the choice of forum with the plaintiff. The plaintiff writes the complaint and so decides whether a federal claim appears in it: pleading only state-law claims keeps the case in state court, and pleading federal claims opens the federal forum.4 The defendant responds only after the complaint has been filed and served. If that response could turn the case into a federal one, the defendant could override the plaintiff’s choice of a state forum simply by choosing what to say in reply, and removal would no longer be limited to cases the plaintiff could have brought in federal court.
Two kinds of defendant-side material test the rule: a federal defense and a federal counterclaim. Both originate with the defendant, both appear in the answer outside the plaintiff’s claim, and both fail for the same reason. Defenses come first.
Federal Defenses Do Not Count
A defendant who answers a state-court complaint with a federal defense cannot remove on that ground. The defense appears only in the answer, after the plaintiff has framed the case, and the test looks to what necessarily appears in the plaintiff’s own statement of the claim.5 Because the federal issue does not appear on the face of the well-pleaded complaint, there is no original federal jurisdiction, and without original jurisdiction the case cannot be removed.6
The classic illustration is Louisville & Nashville Railroad Co. v. Mottley, where the Supreme Court dismissed for lack of subject-matter jurisdiction because the federal question arose only as a defense.7 Move that holding into a removal posture. Suppose a passenger sues a railroad in state court for breach of a contract to honor a lifetime pass, and both are citizens of the same state. The railroad answers that a federal statute forbids it to honor the pass, and it removes. Removal fails. The complaint states only a state-law contract claim between nondiverse parties, so the passenger could not have filed in federal court, and the answer cannot alter what the complaint pleaded.
A constitutional defense fares no better. A New York plaintiff sues a New York defendant in state court for libel under state law, and the defendant asserts the First Amendment as an affirmative defense. The defendant may not remove under § 1441(a), because the plaintiff could not have filed in federal court: § 1331 fails under the well-pleaded complaint rule when the only federal issue is a defense, and diversity fails because both parties are New Yorkers.8 Nor can the defendant repair the problem in the removal papers. If a case is not removable on the plaintiff’s allegations, no statement in the petition for removal or in the defendant’s later pleadings can make it removable.9
It is natural to protest that a pleaded federal defense shows the case really does involve federal law. Commentators have said as much, and the American Law Institute proposed legislation that would authorize removal in such cases, but Congress never enacted it.10 The rule stands because the plaintiff, as master of the complaint, controls the forum, and a defense written afterward cannot take that control away. The removal statute, read to permit removal only when the claim could have been brought in federal court in the first instance, works with this rule to keep defendants with federal defenses out of federal court.11 The master’s control has a limit, though: a plaintiff cannot avoid federal jurisdiction by “artfully pleading” a federal cause of action in state-law terms.12
A complaint that merely mentions federal law fails for the same reason a defense does. In Avitts v. Amoco Production Co., the plaintiffs referred to federal law in their pleadings but never asserted a cause of action under the federal statutes they mentioned. The court of appeals held that subject-matter jurisdiction “cannot be created by simple reference to federal law” and can be created only by pleading a cause of action within the district court’s original jurisdiction.13 The case echoes Mottley: the Mottleys referred to federal law in their complaint without asserting a right to relief under it, and the right to remove in Avitts likewise turned on whether the plaintiffs sought relief under federal law.14 Because the district court lacked subject-matter jurisdiction, it had no authority to enter its orders. The court of appeals vacated them and remanded with instructions to remand the action to the state court under § 1447(c).15
Removable federal-question cases are those in which the plaintiff’s own claim could have been filed in federal court. Suppose Oakley sues Cody, a fellow Kansan, in state court on a state-law contract claim. There is neither diversity nor a federal question, so she could not have sued in federal court, and Cody cannot remove. If she had sued Cody in state court under a federal age discrimination statute, or if they were citizens of different states, Cody could remove, because Oakley could have chosen to sue on that claim in federal court.16
One narrow exception treats a complaint written in state-law terms as a federal claim. Some federal regimes exert so strong a preemptive force that they transform a nominally state-law claim into a federal claim for removal purposes, and in such a field the only well-pleaded complaint possible is one that asserts a federal claim.17 The task is to distinguish defensive preemption, which is a defense and does not transform the state-law action, from complete preemption, which does.18 Under complete preemption, federal law has taken over the subject and replaced the state right of action with a federal one, so the plaintiff necessarily states a federal claim whatever the complaint’s label.19 Section 301 of the Taft-Hartley Act, which governs suits on collective-bargaining agreements, and ERISA § 502(a)(1)(B) are the standard examples.20
Federal Counterclaims Do Not Count
A federal counterclaim fares no better than a federal defense. In Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., the Supreme Court held that a counterclaim cannot be the basis for arising-under jurisdiction.22 Holmes had filed suit in federal district court seeking a declaratory judgment that its products did not infringe Vornado’s trade dress, and Vornado’s answer asserted a compulsory counterclaim for patent infringement.23 The dispute reached the Supreme Court as a question of appellate jurisdiction: Vornado argued that §§ 1295(a)(1) and 1338(a) gave the Federal Circuit exclusive appellate jurisdiction whenever a patent-law counterclaim is raised.24 The complaint pleaded no patent claim, so the Federal Circuit erred in taking the appeal.25 The reasoning reaches removal as well, because the Court noted that the same rule governs whether a case is removable under § 1441(a).26
The step from defenses to counterclaims is short. A counterclaim appears in the defendant’s answer, not in the plaintiff’s complaint, so it lands on the same side of the line as a defense. The Court declined to transform the longstanding well-pleaded-complaint rule into a “well-pleaded-complaint-or-counterclaim rule.”27
The Court gave three reasons, each guarding against a different harm. A counterclaim rule would leave acceptance or rejection of a state forum to the master of the counterclaim, so a defendant could remove any state-law case, defeating the plaintiff’s choice of forum, simply by raising a federal counterclaim. It would radically expand the class of removable cases, contrary to the due regard for the rightful independence of state governments that the removal cases require. And it would undermine the clarity and ease of administration of the well-pleaded-complaint doctrine, which serves as a “quick rule of thumb” for resolving jurisdictional conflicts.28
Suppose Officer Hatfield sues Malloy in state court for battery arising from a scuffle during an arrest, and Malloy answers with a counterclaim alleging that Hatfield used excessive force in violation of the Fourth Amendment. Both are citizens of the same state. Hatfield’s complaint states only a state-law claim, so Hatfield could not have filed in federal court, and Malloy’s constitutional counterclaim cannot change that: removal cannot rest on a federal question in the answer or on a federal counterclaim.29 The case stays in state court, which ordinarily shares jurisdiction over claims arising under federal law and can decide the counterclaim along with the battery claim.30
Malloy’s counterclaim grows out of the same arrest, so it is compulsory: Malloy must raise it in this action or lose it. A student might reason that a claim the defendant is forced to raise belongs to the case for jurisdictional purposes. That reasoning fails. The patent counterclaim in Holmes Group was also compulsory, and the Court’s reasoning applied to it all the same, so a defendant with a compulsory federal counterclaim is as barred from removing as one with a federal defense.31
One statute reverses the result for particular subjects, and it exists because of a problem the general rule created. The patent statute has long provided for exclusive federal jurisdiction over patent claims (28 U.S.C. § 1338(a)). Under Holmes Group, a defendant who asserted a patent counterclaim in state court had to litigate it there, a Catch-22 for a claim that only a federal court may hear.32 Congress closed the gap with 28 U.S.C. § 1454(a), which provides that “[a] civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights may be removed to the district court of the United States for the district and division embracing the place where the action is pending.”33
The words “any party” carry the statute. Dillon sues Greeley in state court on a state-law claim, and Greeley counterclaims for patent infringement. Because a party has asserted a patent claim, the action is removable, and either Greeley or Dillon may remove it.34 Hatfield’s case and Dillon’s differ in one respect: the subject of the counterclaim. Malloy’s constitutional claim has no statute like § 1454 behind it, so that case stays where Hatfield filed it, while Dillon’s case moves to federal court. Section 1454 reaches only patent, plant variety protection, and copyright claims, and the Holmes Group rule continues to govern counterclaims under every other federal law.35