Subject Matter Jurisdiction in Federal Court: Federal Question Jurisdiction
Federal courts are courts of “limited” jurisdiction. This means that federal judicial power extends only to specific and limited types of cases. This presentation will discuss federal courts’ subject matter jurisdiction.
Before a court can get to the merits of a case, it must have authority to decide the issue at hand. The authority of the court to render a decision on a type of case is called jurisdiction over the “subject matter.” While courts also require authority to determine the rights and liabilities of the parties before it, a concept known as “personal” jurisdiction, this discussion is limited to the types of cases federal courts may hear.
-The rules governing subject matter jurisdiction in federal courts are derived from two sources. First is Article III, Section 2 of the United States Constitution. Article III lists the types of cases that federal courts may hear. The categories allowed to federal courts under this provision are broad and encompassing.
However, authority to hear a case under the Constitution is insufficient to allow federal courts subject matter jurisdiction. Rather, since Congress sets up and establishes the rules for federal courts, there must also be statutory grounds for jurisdiction.
The United States Code, in Title 28, starting at section 1331, sets forth the types of cases that may be heard in federal court. The two most important federal statutes that grant jurisdiction to federal courts appear in sections 1331 and 1332. Section 1331’s grant of jurisdiction is sometimes known as “federal question” jurisdiction, while 1332 establishes federal jurisdiction based on “diversity of citizenship.” This presentation will focus on federal question jurisdiction.
Under Section 1331, federal courts have jurisdiction over civil actions that “arise under the Constitution, laws, or treaties of the United States.” Most cases brought in federal court rely on section 1331 for jurisdiction.
The most obvious case in which section 1331 applies is when federal law creates the cause of action. For example, a lawsuit brought by one company against another under a cause of action created by the Sherman Antitrust Act could clearly be brought in federal court because the claim “arises” under federal law.
Things become a bit murkier when the cause of action is not necessarily federal (it may, for example, be an ordinary tort cause of action, which is based on state law), but where there is some federal law involved in the case. For example, what if a victim of food poisoning sues a canned food manufacturer under a standard product liability theory - a state cause of action - but uses federal food safety regulations promulgated by the Food and Drug Administration to show negligence by the manufacturer? Is there federal subject matter jurisdiction because the complaint involves federal law or is there no federal jurisdiction because the complaint is fundamentally based on a state law cause of action?
To answer this question, the Supreme Court developed the “well pleaded complaint” rule. This rule dictates that if the “well pleaded” complaint (which means a complaint that properly alleges a cause of action) depends on a question of federal law, then federal courts have federal question jurisdiction even if the underlying cause of action is based on state law. 
For example, in Louisville & N. R. Co. v. Mottley, a couple had been injured in a train accident. As compensation for their injuries, the railroad agreed to provide them with free railroad passes for the rest of their lives. Twenty years later, a new federal law made the giving of certain types of free passes illegal, and the railroad company refused to honor the agreement with the Mottleys because it believed it violated the new federal law. The couple sued to enforce the original agreement in federal court, arguing that the agreement did not violate the new law.
The Mottleys alleged that there was federal jurisdiction because, even though their claim was a breach of contract claim which is based on state law, the issue in controversy was clearly going to be the application of this new federal law and whether it prohibited the continuation of the free passes.
The Supreme Court, though, held that there was no federal question jurisdiction. Although there was bound to be discussion of the federal law and while the case would ultimately turn on the interpretation of the federal law, the cause of action itself had nothing to do with federal law. The cause of action was based on breach of contract - the allegation was simply that the railroad failed to follow through with its agreement to allow the plaintiffs free railroad passes for life. Thus, the complaint did not depend on issues of federal law and so there was no federal subject matter jurisdiction. Anticipating that the opponent’s defense will be based on federal law is insufficient. The plaintiff must show that his original cause of action arises under, or at least depends on, federal law. 
The Supreme Court clarified and fine-tuned the well pleaded complaint rule in a series of cases over the century after Mottley was decided. In 1983, the Court explained that federal question jurisdiction applied where the basis of the lawsuit “necessarily turned” on a “construction of federal law.”
A few years later, in Merrell Dow Pharmaceuticals Inc. v. Thompson, the Court again weighed in on this question to add the requirement that, to establish federal question jurisdiction, a state cause of action must not only depend on federal law, but must depend on a “substantial” question of federal law. That case was a product liability action that, in part, alleged misbranding of the drug Bendectin, under the federal Food, Drug and Cosmetic Act. While conceding that the cause of action depended on interpretation of the Food, Drug and Cosmetic Act, the Court nevertheless denied federal question jurisdiction because the violations alleged here were not “substantial” enough and that the record indicated that Congress didn’t intend violations of the act to lead to federal cause of action.
The Merrell Dow test defined the issue as interpretation of congressional intent. If the question was important enough that Congress likely would have approved the issue being decided in federal court, that is sufficient. Twenty years later, the Supreme Court applied this in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing. There, the IRS had seized Grable’s property to satisfy a federal tax debt. Grable brought an action in state court to quiet title (which means to get a judgment that the property was his), arguing that the IRS had not satisfied certain notice requirements before seizing the property. Here the Court held that the state cause of action did depend on a substantial question of federal law because of the federal government’s strong interest in collecting delinquent taxes.
While applying the well pleaded complaint rule for federal subject matter jurisdiction is obviously a complex process, the rules seem clear that where federal law creates- a cause of action, federal courts automatically have subject matter jurisdiction to hear the case. Where the case is brought under state law, there is federal question jurisdiction where an important federal law is at issue and where the complaint requires application of that federal law to go forward.
In our continuation presentation, we will discuss other aspects of federal subject matter jurisdiction, including that based on diversity of citizenship.
 Jessica Berch, “Waiving Jurisdiction,” 36 Pace L. Rev. 853, (2016).
 Kolya Glick, “(A)rising Above the Well-Pleaded Complaint: A Proposal to Reconsider the Jurisdictional Analysis of the Federal Circuit After the America Invents Act,” 83 Geo. Wash. L. Rev. 686, (2015).
 Rhode Island v. Massachusetts, 37 U.S. 657, (1838).
 Lumen Mulligan, “A Unified Theory of 28 U.S.C. § 1331 Jurisdiction,” 61 Vand. L. Rev. 1667, (2008).
 Caterpillar, Inc. v. Williams, 482 U.S. 386, (1987).
 Louisville & N. R. Co. v. Mottley, 211 U.S. 149, (1908).
 Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983)
 Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804 (1986)
 545 U.S. 308 (2005)