In honor of Buddy Ryan, the legendary football coach who passed away last week, we will be especially crotchety in today’s case report.  It was while we were in law school in Chicago that Ryan was the coordinator of a Bears defense that was magnificently ferocious.  When the 1985 Bears won the Super Bowl, Ryan was carried off the field.  Never before or since has an assistant coach been so honored.  Ryan later went to Philadelphia, as did we.  (His arrival was slightly more ballyhooed.)  Ryan became the most beloved Eagles coach ever, though his teams never mustered a single playoff win.  Ryan is so revered here because he built a defense that fit the city’s self-image – blue collar and brutal.  It was fun watching Reggie White, Jerome Brown, Clyde Simmons, and Mike Golic maul quarterbacks.  It was fun watching Andre Waters and Wes Hopkins terrify opposing receivers.  It was fun watching linebacker Seth Joyner wreak havoc all over the field.  It was less fun watching an Eagles offense that defined the word erratic.  Aside from achievements on the field, Ryan cut the ultimate figure of pure orneriness.   He was a genuine hero in the Korean War (fighting alongside Dan Blocker, who later played Hoss in Bonanza).  Sports-and-war analogies are overused and overheated, but Ryan’s coaching style was undeniably bellicose.  He put a bounty on Dallas Cowboy players, rewarding his players for maiming America’s team.  Ryan once punched a fellow coach on the sidelines.  He had such contempt for a player that he offered to trade him for a six-pack, and the beer didn’t “even have to be cold.” Philly is a hard-core union town, and Ryan earned big-time props by refusing to coach scab players during a NFL labor dispute. Ryan guested on one of Philly’s notoriously hostile sports-talk shows and, after a caller criticized a trade, Ryan said something like, “Gee, I’m all broken-up about your opinion.”

We’re all broken up about the opinion in Oregon v. General Nutrition Corp., 2010 U.S. Dist. LEXIS 78038 (D. Oregon March 30, 2016).  It is not a drug or device case, but its treatment of removal and federal question is relevant for our work, and not in a good way.  The state of Oregon brought an action in Oregon state court (talk about home field advantage) alleging that the defendant had misrepresented that certain products were “lawful dietary supplements” when they actually contained substances forbidden (according to the state) by federal law.  While the claims were brought under Oregon law, those claims also referenced, indeed, completely turned on, an interpretation of the federal Food, Drug and Consumer Act.  The defendant removed the case to federal court.  Oregon moved to remand back to state court.  The issue was whether there was federal jurisdiction.  Both species of federal jurisdiction were in play here, federal question and diversity jurisdiction.   We will devote this piece to federal question jurisdiction, because the diversity issue is too squirrely. (In brief: a state as party cannot support diversity jurisdiction, so the defendant needed to show that the state was not the true plaintiff.  The court did not buy this argument.)

It sure seems like Oregon was raising a federal question.  Were the substances at issue permitted or forbidden by federal law?  You’ll never learn the answer to that question from this opinion.  Presumably (but, as you’ll see, we’re against presuming), that intricate issue of regulatory construction will be entrusted to good and true jurors. The court began its jurisdictional analysis with an extended riff on the “strong presumption” against finding removal jurisdiction.  We get loads about how the “burden of establishing federal subject-matter jurisdiction for purposes of removal is on the party seeking removal.”  We’ve heard all this before.  But why is there a presumption against removal jurisdiction?  It is hardly self-evident. Why is the burden on the poor defendant, who never asked to be sued?  Shouldn’t the burden be on the plaintiff, as most burdens are?  You can say that federal courts are courts of limited jurisdiction, but what court isn’t?  When we prosecuted misdemeanor cases in California state courts, we were required to prove that the crime was committed in the court’s county.  Not every case could be brought into that court.  So enough with the limited jurisdiction rationale. Isn’t the discussion of presumptions and burdens nothing more than a judicial fig leaf?  Whenever courts spill ink on presumptions and burdens, they inevitably follow-up with an analysis that claims the issue isn’t even close.  The presumption was not necessary at all, was it?

Or was it?  We all know that burdens and presumptions are big deals (we are looking at you, preemption), and any lawyer worth his or her salt will begin any brief beating to death every favorable presumption and gleefully heaping onto the opposing party every burden in sight.  Burdens and presumptions manage to be dispositive, but too often in an unthinking, falsely modest manner.  We say phooey on the presumption against removal.  And we say that because we want to be in federal court.  Why?  Let’s count the ways.  We like judges who are assigned to the case once and for all purposes, as opposed to the practice in too many state courts of passing cases from law-and-motion judges and then around and around.  We like federal juries. We like the Federal Rules of Civil Procedure and the Federal Rules of Evidence.  Boy, do we ever like Daubert.  So there it is.  We said it.  We like federal court.  Sue us.  (Oh, that’s right – you did.)   At least we are honest about our preference.  We’re not dancing behind veils of presumptions and burdens.

What does the Oregon court do after foreshadowing its result with the burden/presumption overture?  Remember the “well-pleaded complaint rule” that you learned about in your first year of law school?  Didn’t it seem silly then?  Doesn’t it still?  That old chestnut provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint.  Even if 95% of the issues in the case end up depending on interpretations of federal law, the well-pleaded complaint rule – a misnomer if ever there was one – means that a clever plaintiff has successfully hidden the ball and trapped you in state court.

Surely, there is a limit to the law’s perversity, is there not?  Maybe.  The Supreme Court has announced that “a case may arise under federal law ‘where the vindication of a right under state law necessarily turn[s] on some construction of federal law.”  Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808-809 (1986).  That sounds fine, doesn’t it?  Unfortunately, we now run into yet another application of the Holmes Rule. That rule means that almost everything ever written by Oliver Wendell Holmes, no matter how splendid the prose, was utterly wrong.  Wrong about the first amendment, wrong about economic regulation, and wrong about three generations of imbeciles being enough.  Sadly, courts have quoted with approval Holmes’s observation that in “[t]he vast majority of cases of federal-question jurisdiction, a suit arises under the law that creates the cause of action.” That is a quote from American Well Works Co. v. Layne & Bowler Co.,  241 U.S. 252, 260 (1916).  How many things from 100 years ago are still in use today?  You wouldn’t drive a 1916 Biddle Motor Car on I-95 today.  But here is this rotten 1916 case still driving cases into corporation killing-grounds masquerading as state courtrooms.

How does the Holmesian nonsense play out in current doctrine?  In the Merrell Dow case cited above, a mere 70 years after Holmes’s unhelpful dicta, the Supreme Court  held that “when Congress has determined that there should be no private, federal cause of action for the violation” of a federal statute, “a complaint alleging a violation of [that] federal statute as an element of a state cause of action … does not state a claim arising under the Constitution, laws, or treaties of the United States.”  So if Congress did not provide for a private right of action under the FDCA – and, as we have discussed many times before, it did not —  then a state-created cause of action that rests wholly upon that selfsame federal statute does not raise a federal question – so the reasoning goes.  Does that make sense to you?  No?  Not to us, either.

Then the Oregon case treats us to a quote from our least favorite preemption case, Wyeth v. Levine:  “Congress did not provide a federal remedy for consumers harmed by unsafe or ineffective drugs in the 1938 statute or in any subsequent amendment.  Evidently, it determined that widely available state rights of action provided appropriate relief for injured consumers.  It may also have recognized that state-law remedies further consumer protection by motivating manufacturers to produce safe and effective drugs and to give adequate warnings.”  555 U.S. at 574.  Of course, Wyeth v. Levine was about preemption, not federal jurisdiction.  The tests are not nearly identical.  But never mind.

Let’s cut to the inevitable multi-part test.  But hold up; why do we need a multi-part test if it is as simple as the Oregon court says – no federal private right of action, no federal question?  Because it is not so simple.  Anyway, since the Supreme Court so thoughtfully laid out a four-part test, let’s all enjoy it together:  “[F]ederal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.  Where all four of these requirements are met, we held, jurisdiction is proper because there is a serious federal interest in claiming the advantages thought to be inherent in a federal forum, which can be vindicated without disrupting Congress’s intended division of labor between state and federal courts.”  Gunn v. Minton, 133 S. Ct. 1059 (2013), quoting Grable & Sons Metal Prods. V. Dante Engineering & Mfg., 545 U.S. 308, 313-14 (2005).

The Oregon court agreed with the defendant that the first two elements of the Gunn/Grable framework were satisfied.  How could it be otherwise?  Though couched as an action in state law, Oregon’s claim relied on the proposition that the controversial ingredients are not lawful dietary supplements under 21 U.S.C, § 321(d).  Because the state relied on the federal definition to establish the ‘unlawfulness’ element of its state law claims, those claims “cannot be resolved without consideration of the federal definition, such that the definition is necessarily raised.”  Thus, “there is a controversy regarding both the construction and the effect of the federal definition, such that the necessarily raised federal issue is also actually disputed.“

So far so good.  But it is about to turn very bad.  The Oregon court concluded that the federal issue was not “substantial” because there was no serious federal interest in claiming the advantages inherent in a federal forum, such as “the experience, solicitude, and hope of uniformity that a federal forum offers.”  Really?  There is no interest in ensuring that an ingredient deemed federally legal in some parts of the country not be deemed illegal in others?  Doesn’t a company hoping to do business throughout the nation need to have uniformity in terms of what it can put into its products and what it can say about them?  Or must a company be regulated by the most restrictive babblings of the craziest or angriest local jury?  Or must a company simply consign itself to chaos and/or the occasional extortion?  Isn’t interstate commerce an important interest?  One would think so, since the listing of that interest in Article I of the Constitution has supported some of the most comprehensive, intrusive acts of Congress.

According to the Oregon court, the issue of what is and is not a safe ingredient under federal always cannot be “substantial” because Congress’ failure to create a private right of action means that “there can be no cognizable serious federal interest in claiming the advantages thought to be inherent in a federal forum nor can it seriously be argued that permitting this case to go forward in state court would in any sense disrupt the balance between federal and state courts.”  That conclusion is even less self-evident than the presumption against federal jurisdiction.  We’re not even sure we know what it means.  It really does seem to come down to the notion that no federal private right of action means no federal question.   But it is called “federal question” jurisdiction, not “federal private right of action” jurisdiction.  The Oregon court has taken the rather complex notion of what is a “substantial” federal interest and reduced it to a proxy – whether or not there is a federal private right of action – that is neither supported nor workable.

Look, we get it.  Not every case involving a glance at federal law raises a federal question.  If a client sues its lawyer for legal malpractice in handling a patent dispute, the case will probably involve at least some excursion into patent law, which is federal.  But the outcome of such a malpractice case would have zero effect on patent law.  There would be no substantial federal interest.  But, by contrast, if the outcome of a claim ostensibly under state law would have the effect of undoing a federal scheme’s effort at creating uniformity and facilitating interstate commerce, then the federal interest is “substantial” and there is a federal question.  In other words, determining what is a “substantial” federal interest is not the simple, binary approach – whether or not there is a federal private right of action – employed by the Oregon court.

Here’s something else we get: the Oregon court was not making up the sources for its crabbed reasoning.  There is a lot of incoherent, inconsistent case law out there on subject matter jurisdiction.  Holmes lateralled his dopey doctrinal ball to future courts, who took it and ran with it.  The state of the law in this area is a mess.  We do not like that mess, or this Oregon decision, one bit.  But then, like Coach Ryan, we favor the defense.