Concept
The Well-Pleaded Complaint Rule
Federal question jurisdiction
The Well-Pleaded Complaint Rule
Section 1331 gives the district courts original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States,” but it never says where a court should look to decide whether a given action qualifies.1 The Supreme Court supplied the answer in the well-pleaded complaint rule. Whether a suit arises under federal law “must be determined from what necessarily appears in the plaintiff’s statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.”2
The rule demands that federal law be part of the plaintiff’s own case. As the Court has put it, “[a] right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff’s cause of action.”3 A well-pleaded complaint must therefore raise a controlling issue of federal law, or the court has no federal-question jurisdiction over the lawsuit.4 A complaint that states a state-law cause of action but adds that federal law strips the defendant of a defense fails the test, because the federal issue belongs to the defendant’s side of the case.5
Removal follows the same reading of the complaint. Under the statutory scheme in place since 1887, a defendant may not remove a case to federal court unless the plaintiff’s complaint establishes that the case arises under federal law.6 One test therefore decides both where a plaintiff may file and whether a defendant may move the case.
The classic illustration is Louisville & Nashville Railroad v. Mottley, in which the plaintiffs tried to reach federal court by pleading the defense they expected. The sections below follow that case through its anticipated federal defenses, extend the rule to counterclaims, and then trace what became of the Mottleys after the federal courts dismissed their suit.
Anticipated Federal Defenses
The Mottleys, a Kentucky husband and wife, were injured in a railroad accident in 1871 and released their claim against the Louisville & Nashville Railroad in exchange for free passes for life.7 In 1906 Congress passed the Hepburn Act to end the widespread and corrupt practice of giving free passes to politicians and public officials.8 When the railroad stopped honoring the passes in 1907, the Mottleys sued in federal court for specific performance of the contract.9 The parties were not diverse, so the suit could reach federal court only if it arose under federal law.10
The complaint went beyond the contract. It predicted that the railroad would defend on the strength of the 1906 statute and answered that defense in advance: the statute did not reach passes issued before its enactment, and if it did, it violated the Fifth Amendment.11 The lower federal courts took jurisdiction and granted the Mottleys relief, but the Supreme Court reversed on jurisdictional grounds. It decided neither federal question, because in its view the court below had no jurisdiction over the cause.12
The Court’s reasoning is the core of the rule. A suit arises under federal law “only when the plaintiff’s statement of his own cause of action shows that it is based upon those laws or that Constitution,” and “[i]t 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.”13 The Mottleys’ forecast was accurate, but accuracy did not matter.14 A correct forecast shows that a federal question will very likely arise in the litigation; it does not show that the plaintiffs’ own cause of action rests on federal law, and the Mottleys’ case rested on Kentucky contract law.15
The result is striking because the case really did turn on federal law. The contract itself was unlikely to generate controversy in any court; the dispute rested entirely on the railroad’s federal justification for refusing to perform and on the Mottleys’ constitutional reply.16 The Court nonetheless held that § 1331 did not reach it.17 The rule thus separates cases that involve federal law from cases that arise under it. A dispute may be dominated by federal questions and still fall outside the statute, because the statute asks where the plaintiff’s right to relief comes from.
Mottley applied a principle the Court had already used. In Tennessee v. Union & Planters’ Bank, a state sued in federal court to collect taxes due under its own laws and alleged that the defendant would claim a charter immunity protected by the Contracts Clause; the Court held the suit outside federal jurisdiction, because suggesting that the other party will or may set up a federal claim does not make the suit one arising under federal law.18 In Boston & Montana Consolidated Copper & Silver Mining Co. v. Montana Ore Purchasing Co., a plaintiff sued for conversion of copper ore and for an injunction, alleged that the defendant would rely on federal laws in defense, and met the same result.19 Mottley borrowed that case’s explanation from the order of pleading: the complainant first confines itself to a statement of its own cause of action, and the defendant sets up any defense in its answer, bearing the burden of proving whatever goes beyond a denial.20 A state tax suit, a private suit over ore, and a contract suit over railroad passes have nothing else in common. Each failed because federal law entered the case on the defendant’s side.
Declaratory-judgment complaints raise a wrinkle that a later section addresses. The Mottleys sought specific performance, so the steps fit them directly. Boiled down, their complaint alleged a contract in which they agreed not to sue and the railroad promised them passes for life, their forbearance, and the railroad’s refusal to honor the passes, and those allegations entitle them to relief.23 Striking the allegations about the 1906 statute, the reply that it did not reach earlier passes, and the Fifth Amendment reply leaves the same allegations, which still state a complete claim for breach of contract.24 The struck paragraphs would have driven the outcome of the case, yet the Mottleys did not need them, and an allegation the pleader does not need is not well pleaded. When an exam complaint includes a paragraph announcing what the defendant will argue under federal law, strike that paragraph before deciding jurisdiction.
No redrafting could have rescued the Mottleys. Pleading more detail about why the railroad would invoke the 1906 statute would still anticipate a defense, because added detail does not change what the allegation is. The only source of their right against the railroad was the contract, and a case resting on Kentucky contract law does not support federal-question jurisdiction.25
The same steps give the opposite answer when the plaintiff sues on a federal right.
The pass holder and the Mottleys differ in one respect: where the right to relief originates. The Mottleys held a contract right and met a federal obstacle, while the hypothetical holder has a federal right and no other.
The rule offers a practical advantage: a court can decide whether it has federal-question jurisdiction from the complaint alone, without regard to defenses the defendant might raise. A defendant may not answer for a considerable time, perhaps moving to dismiss on other grounds first, yet the court must know whether it has power to proceed. The rule lets the court answer that question without demanding an immediate answer to the complaint or relying on the plaintiff’s forecast of likely defenses.26 The rule also has a cost. It can lock into state court a dispute that turns entirely on federal law, which is what happened to the Mottleys’ case, and one can easily argue that Mottley deserved an original federal forum.27
Neither party had questioned the trial court’s jurisdiction, yet the Supreme Court raised the defect on its own. It explained that the circuit court’s jurisdiction is defined and limited by statute, and that the Court must see to it that the limit is not exceeded.29 Rule 12(h)(3) now states the duty directly: if the court determines at any time that it lacks subject-matter jurisdiction, it must dismiss the action.30 Rule 12(b)(1) also lists lack of subject-matter jurisdiction among the defenses a party may assert,31 but a party’s silence forecloses nothing, because subject-matter jurisdiction may not be waived.32 The Court therefore reversed the judgment the Mottleys had won and remitted the case with instructions to dismiss.33
Removal runs on the same reading of the complaint. Section 1441(a) lets a defendant remove a civil action from state court only when the district courts would have had original jurisdiction over it, so the section creates a procedure for invoking jurisdiction Congress has already conferred and is not itself a source of jurisdiction.34 The test is whether the federal court would have had jurisdiction had the plaintiff chosen to begin there, and that is why a federal question in the defendant’s answer cannot support removal.35 Take a New York plaintiff who sues a New York defendant in state court for libel under state law, and suppose the defendant pleads the First Amendment as an affirmative defense. The defendant cannot remove, because the plaintiff could not have filed in federal court: § 1331 fails because the only federal issue is a defense, and diversity fails because both parties are New Yorkers.36
The Mottleys’ own suit would come out the same way if they had filed in state court. The only difference is that the railroad’s reliance on the federal statute would be known when it sought removal, but the statute would still be a defense, the case would still lack original jurisdiction, and so it could not be removed.37
Commentators have objected that the rule makes little sense, because a federal defense plainly shows that the case involves federal issues, and the American Law Institute proposed legislation to authorize removal in such cases; Congress never enacted it.38 Absent such legislation, the rule that decides original filing also decides removal, and a federal counterclaim in the answer fares no better than a federal defense, as the next subsection shows.39
Counterclaims and Answers
A defendant who answers a complaint may also plead a claim of its own, called a counterclaim, and sometimes that claim rests on federal law. The question is whether a federal counterclaim can supply the arising-under jurisdiction that a federal defense cannot. In Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc. the Supreme Court held that it cannot: a counterclaim appears in the defendant’s answer rather than in the plaintiff’s complaint, so it cannot be the basis for arising-under jurisdiction.41
The dispute began over the grill design of fans and heaters. Vornado accused The Holmes Group of infringing its trade dress and took that accusation to the International Trade Commission. Several weeks later Holmes sued Vornado in the federal district court in Kansas, seeking a declaratory judgment that its products did not infringe Vornado’s trade dress and an injunction against Vornado’s accusing it of trade-dress infringement in promotional materials.42 Vornado’s answer asserted a compulsory counterclaim for patent infringement, meaning a claim that grew out of the same dispute. The district court gave Holmes the declaration and the injunction, and Vornado appealed to the Federal Circuit, which asserted jurisdiction over the appeal.43
A question about which court of appeals hears a case bears on § 1331 because Congress tied the two together. The Federal Circuit has exclusive jurisdiction over an appeal from a final district court decision when the district court’s jurisdiction rested in whole or in part on § 1338, and § 1338(a) gives the district courts original jurisdiction over any civil action arising under an Act of Congress relating to patents.44 Whether the Federal Circuit could hear Vornado’s appeal therefore depended on whether Holmes’s action arose under patent law. Section 1338(a) uses the same operative words as § 1331, and the Court gave them the same test: the plaintiff’s well-pleaded complaint must establish either that patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolving a substantial question of patent law.45 The second alternative is the embedded-federal-issue doctrine, which a later section develops. Holmes’s complaint pleaded no patent claim. The only patent claim in the case was Vornado’s, and it sat in the answer.
Vornado argued that a counterclaim should be able to carry a case into the arising-under category. The Court conceded that its earlier cases had addressed only federal defenses, but it explained that those cases rested on a broader principle: federal jurisdiction generally exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint.46 Long before, the Court had said that whether a case arises under patent law “cannot depend upon the answer,” and it had declined to consult the answer along with the complaint.47 A counterclaim sits in the answer, so it falls on the wrong side of that principle exactly as a defense does. Calling the counterclaim compulsory does not move it into the complaint.
Three policies behind the well-pleaded complaint rule would suffer if a counterclaim could count. The first is the plaintiff’s control of the forum. Because the plaintiff is “the master of the complaint,” a plaintiff with both state and federal theories may rely on state law alone and so, “by eschewing claims based on federal law,” have the cause heard in state court.48 A counterclaim rule would hand that choice to the master of the counterclaim: the plaintiff would sue in state court on a state-law claim, the defendant would answer with a federal counterclaim, and the defendant could then remove, because § 1441(a) allows removal of any action over which the district courts would have had original jurisdiction.49
The second policy is respect for state courts. A counterclaim rule would radically expand the class of removable cases, and removal puts a federal court in the position of taking a case away from a state court at one party’s request, which raises serious federalism concerns.50
The third is administrability. The well-pleaded complaint rule works as a “quick rule of thumb” for resolving jurisdictional conflicts, because a court applies it by reading one document that exists when the case begins.51 If responsive pleadings counted, the court’s power would stay uncertain until the defendant answered, and it would turn on what the answer happened to contain.
A genuine federal claim still does not count when the defendant pleads it second, as this variation shows.
Removal cannot rest on a federal question in the defendant’s answer or on a federal counterclaim, and the hypothetical shows the rule operating in that setting.52 The same age-discrimination claim produces the opposite result when it comes first. A worker who sues an employer under the federal statute pleads a claim that federal law creates, so § 1331 applies even though both parties are citizens of one state.53 The claim is identical in both situations, and its position in the pleadings is the only variable: a claim in the complaint can establish jurisdiction, and a claim in the answer is never consulted.
Vornado fell back on the argument that “arising under” should mean something different when it decides which court of appeals hears a case, because Congress wanted uniformity in patent law. The Court answered that its task was to determine what the statutory words fairly mean, and uniformity could not rewrite them. Section 1295(a)(1) refers to jurisdiction under § 1338, where the phrase has long invoked the well-pleaded complaint rule, and reading it one way in § 1338(a) and another when § 1295(a)(1) borrows it would defy ordinary interpretation. Because Holmes’s complaint contained no patent claim, the Court vacated the Federal Circuit’s judgment and remanded with instructions to transfer the case to the Tenth Circuit.54
Two concurrences addressed the appellate-forum question. Justice Stevens would limit the Federal Circuit’s exclusive jurisdiction to cases in which the patent claim appears in the original complaint or in an amended pleading filed by the plaintiff, reasoning that each of the three policies behind the well-pleaded complaint rule points the same way for appellate jurisdiction.55 Justice Ginsburg, joined by Justice O’Connor, would give the Federal Circuit exclusive appellate jurisdiction when a compulsory patent counterclaim has been adjudicated on the merits, and she concurred only in the judgment because no patent claim was adjudicated here.56 Both opinions concern which appellate court hears a patent counterclaim. The holding that a counterclaim cannot create original jurisdiction comes from the Court’s opinion.
After Dismissal: Mottley Round Two
A court that determines at any time that it lacks subject-matter jurisdiction must dismiss, so the federal courts had to end the first Mottley suit.58 The dismissal ended that suit without deciding the Mottleys’ contract claim. A dismissal for want of jurisdiction differs from a dismissal on the merits, which comes only after a court has assumed jurisdiction and found that the complaint states no ground for relief.59 The Mottleys could therefore litigate their claim where a court had power over it, and they brought it again in Kentucky’s courts on the same breach of contract theory. The railroad raised the same two federal defenses.60
The state trial court again ruled for the Mottleys, and the Kentucky Court of Appeals, the state’s highest court, affirmed, holding that the federal statute did not apply to passes issued before it was enacted.61 The railroad then went to the Supreme Court a second time, and this time the Court reached the federal questions and decided both, the statutory one and the constitutional one, in the railroad’s favor.62 The sequence looks paradoxical. The parties, the contract, and the federal defenses were the same, and the Court had declined to decide those defenses the first time. The explanation is that two different jurisdictional grants were involved.
The lower federal courts have only the jurisdiction Congress gives them. The first decision read the statute that preceded § 1331 to reach cases in which the plaintiff’s own claim arises under federal law, and because the Mottleys sued for breach of contract, the statute gave the federal trial court no power over their case.63
The second appeal came from a state court, so the question was whether the Supreme Court could review that judgment. The review statute, now 28 U.S.C. § 1257, reaches a state judgment where the validity of a federal statute is “drawn in question” or where a right, privilege, or immunity is “specially set up or claimed” under federal law. Nothing in that broad language limits the Court’s appellate jurisdiction to cases in which the plaintiff raises the federal issue. The railroad claimed an immunity under the federal statute barring free passes, so its appeal was authorized, and under Osborn v. Bank of the United States the case fell within the constitutional scope of federal-question jurisdiction, because the railroad’s defense injected a “federal ingredient” into it.64 A federal defense that cannot open the door of a district court can therefore open the door of the Supreme Court, because different statutes control the two doors. That is the gap between Article III and § 1331 that the constitutional-ceiling discussion identified.
The arrangement has a logic. By denying original jurisdiction, the Court chose to treat federal defenses as matters for its own appellate review rather than for a lower federal court in the first instance.65 Justice Johnson had drawn the same line in his Osborn dissent: rights of action that were not themselves creatures of federal law belonged in state court at the start, and dispositive federal questions that entered the litigation after the complaint were proper subjects for appellate, not original, jurisdiction.66
The arrangement works less reliably today. Parties no longer have a right to appellate review of state-court decisions; the Court controls its own docket and often turns away petitions seeking review of them. With that change, the Mottley rule no longer simply shifts the first-instance determination to a state court for ultimate review in the Supreme Court. In virtually all cases it forecloses federal jurisdiction altogether.67 A defendant who raises a federal defense in state court cannot count on a federal court ever deciding it.