One of the most important battles in some cases is fought at the outsetover whether the case will be litigated in a state or federal forum. State-court defendants often scour state-law claims for a federal question supporting removal under 28 U.S.C. §1331. They have been aided to a limited extent by the Supreme Court’s 2005 decision in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing,1 which propped open the door to removal under Section 1331 for a “special and small”2 category of state-law claims brought by non-diverse parties in which important federal issues are embedded. Courts have emphasized that this category of removable cases is “slim.”3 But, as demonstrated by Southern District Judge Paul Gardephe’s recent decision permitting removal of legal malpractice claims in Reserve Management Company, Inc. v. Willkie Farr & Gallagher LLP,4 the opening identified in Grable provides room for creative lawyers to squeeze through the federal courthouse door in some cases traditionally thought to be within the exclusive province of state courts.
Embedded Federal Issue
In Grable, the Supreme Court considered when a federal court has subject matter jurisdiction over “federal issues embedded in state-law claims between non-diverse parties.”5 In that case, the Internal Revenue Service had seized and auctioned to defendant Darue a piece of real property belonging to petitioner Grable in order to satisfy Grable’s tax delinquency. Under the relevant tax provision requiring the IRS to give Grable notice of the seizure, the IRS notified Grable by certified mail before the property was sold. Arguing that the federal notice statute required personal service, rather than service by mail, Grable brought a quiet title action in state court five years after the sale, claiming that Darue’s title was invalid because the IRS had not complied with the notice statute. Darue then removed the case to federal court.
