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SYLGAB STEEL & WIRE CORP. v. STRICKLAND TRANSP. CO

June 28, 1967

SYLGAB STEEL & WIRE CORP., Plaintiff,
v.
STRICKLAND TRANSPORTATION COMPANY, INC., Defendant



The opinion of the court was delivered by: WEINSTEIN

OPINION AND ORDER

 JACK B. WEINSTEIN, UNITED STATES DISTRICT JUDGE

 The issue posed by this motion to remand (section 1447 of title 28 of the United States Code) is whether this Court has jurisdiction over an action for damages to machinery shipped by motor carrier in interstate commerce because it is one "arising under" federal law. 28 U.S.C. sections 1337, 1441, 1445. Armed with equally impressive strings of citations, the parties dispute over whether the action necessarily is based upon the 1906 Carmack amendment to the Interstate Commerce Act. 49 U.S.C. section 20(11). It seems surprising to find this question so earnestly argued more than sixty years and hundreds of millions of shipments after the statute was adopted.

 The complaint alleges that the plaintiff delivered in New York a number of machines in good condition to the defendant, "a common carrier of goods for hire," and paid "its full charges" for transportation to New Orleans. A "uniform straight bill of lading" was issued. Damaged machinery was delivered. Defendant, after inspection, "specifically authorized and directed the plaintiff to repair" the machinery and "bill the defendant for its expenses." Although some $ 1,900.00 was spent on repairs, one of the machines "cannot be restored." In view of the "negligence, carelessness and improper conduct of defendant, " plaintiff claims damages in the total sum of $ 7,290.84 together with costs and disbursements.

 The action was begun in the Supreme Court, Queens County, and removed to this Court. Plaintiff's moving papers state that "the cause of action alleged in the complaint is one for a breach of a common law contract for the carryage of goods . . . and no provision of any statute, federal or state, is involved." It indicates that "in this action, the issues are only issues of fact."

 Subdivision (b) of section 1441 of title 28 permits removal of any "civil action in which the District Courts have original jurisdiction founded on a claim or right arising under the . . . laws of the United States". Section 1337 of title 28 grants the District Courts "original jurisdiction of any civil action or proceeding arising under any act of Congress regulating commerce." As pointed out by Professor Moore, the problem in relation to 1337--the commerce section--is essentially the same as the general federal question section, 1331. See 1 Moore's Federal Practice, par. 0.60 [8.-3]. Subdivision (b) of section 1445 of title 28 makes non-removable a "civil action in any State court against a common carrier . . . to recover damages for . . . injury of shipments, arising under section 20 of Title 49 . . . unless the matter in controversy exceeds $ 3,000.00, exclusive of interest and costs." Concededly, the amount claimed is over $ 3,000.00 so that the question is whether the claim is one "arising under" federal law.

 It is elementary that the plaintiff has the perogative of determining the theory of his action. See, e.g., Bell v. Hood, 327 U.S. 678, 681, 90 L. Ed. 939, 66 S. Ct. 773 (1945). "[T]he party who brings a suit is master to decide what law he will rely upon, and . . . does determine whether he will bring a 'suit arising under' the . . . [laws] of the United States by his complaint. The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 57 L. Ed. 716, 33 S. Ct. 410 (1912). In "the absence of a fraudulent purpose to defeat removal, the plaintiff may by the allegations of his complaint determine the status with respect to removability of a case arising under a law of the United States." Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 282, 62 L. Ed. 713, 38 S. Ct. 237 (1918).

 Given the flexibility of federal rules of procedure allowing wide ranges of proof and recovery on sparsely pleaded and inherently ambiguous complaints (Federal Rules of Procedure 8(a), 15(b), 54(c)), and the hazards of predicting at the pleading stage what, if any, substantive right of plaintiff will be found to have been violated, it is difficult to gainsay a plaintiff. He presumably knows better than anyone else what the theory of his complaint was when he drafted it. Where plaintiff strenuously argues that he is not relying on any federal substantive right and no reference to federal provision is made in his complaint, defendant has a substantial burden of persuading the court that the plaintiff mistakes the gravamen of his complaint. The question of whether, were we to remand on the ground that plaintiff is not relying on any federal substantive right, he could modify his position and recover on a federal theory raises hypothetical questions of estoppel not presently before us. The mere fact, however, that plaintiff makes no specific reference to federal law in his pleading, and strenuously objects to the inference that his cause of action is so based, cannot be decisive in determining jurisdiction.

 Posed by the motion are three questions. If plaintiff is correct in his answers to any of them, the motion to remand must be granted. First, what does "arising under" mean? Plaintiff says it means only that the interpretation of a federal statute is involved and not that the substantive right is provided by federal law. Second, what is the scope of the federal law? Plaintiff argues that it covers only those matters specifically dealt with in the Carmack amendment--limitations on liability and responsibility or originating carrier for connecting carrier delicts--and not all aspects of liability for damage to goods carried under an interstate bill of lading. Third, does federal substantive law cover agreements with respect to repair of damaged goods after arrival? Plaintiff's position is that promises for payment for damages and arrangements for repairs made subsequent to delivery, whether on a theory of novation or otherwise, are governed by state common law.

 WHAT DOES "ARISING UNDER" MEAN?

 Citing volume and page, plaintiff urges that "in all cases decided by, or approved by, the Supreme Court of the United States . . . [holding that the district court has federal question jurisdiction] the action must be one in which the recovery would be defeated by one construction of the statute or sustained by a contrary construction of the statute." Since there are, according to plaintiff, only issues of fact, there is no need to construe a federal law and thus no jurisdiction. This is a mistaken reading of cases such as Gully v. First National Bank, 299 U.S. 109, 112, 81 L. Ed. 70, 57 S. Ct. 96 (1936). As Hart and Wechsler succinctly put the matter: "That an action arises under federal law if the plaintiff asserts a federally-created cause of action seems plain. The problem of jurisdiction when the controversy in such a case relates solely to questions of fact has bemused some commentators but few courts." The Federal Courts and the Federal System, 763 (1953). What is usually meant by language such as relied upon by plaintiff is that for a case to be one which "arises under federal law," the federal substantive element must be at least sufficiently central to the dispute so that it will have some impact on its outcome. If, no matter what interpretation is given to the federal law, it can have no effect on the lawsuit then it cannot be "an essential" element of the plaintiff's cause of action.

 At one end of the spectrum of litigation in this country is a relatively small number of instances--including the case before us--where federal law has pre-empted the field and federal question jurisdiction is clear. At the other end are cases where the federal content is so miniscule as to require us to ignore that ingredient for jurisdictional purposes if we are to maintain the approximate current "distribution of power between national and state governments" and in the "daily workings" of federal and state courts. Mishkin, The Variousness of "Federal Law": Competence and Discretion in the Choice of National and State Rules for Decision, 105 U. of Pa. L. Rev. 797, 812 (1957).

 In between lie the less clear areas--not involved in the present case--where sophisticated federal question tests are sometimes applied. It has been suggested that in this middle ground a cause of action be found to arise under federal law in order for the federal courts to decisively address themselves to a difficult issue of law of first importance; the "major questions of construction" having been decided (T. B. Harms Co. v. Eliscu, 339 F.2d 823, 827 (2d Cir. 1964)), future litigations involving only factual disputes might, it has been intimated, then be relegated to state issue status. Cf., Bell v. Hood, 327 U.S. 678, 684, 90 L. Ed. 939, 66 S. Ct. 773 (1946). Whether such an approach reflects a confusion with substantial question tests more appropriate for appellate and three judge jurisdiction questions than for federal question district court jurisdiction matters is not here a matter of concern.

 Subtle language and techniques for probing the heart of complex federal issue questions are confusing when applied to legal abrasions such as the one before us. This action is but one of the bulk of federal question litigations which turn not on interpretations of law but on issues of fact. As the Court of Appeals for the Second Circuit recently pointed out, the many infringement suits that depend only on some point of fact and require no construction of federal law, still arise out of that law. T. B. Harms Company v. Eliscu, 339 F.2d 823, 826 (2d Cir. 1964). Even, therefore, if plaintiff is correct in predicting that there will be no dispute about the law but only about the facts in this case, this does not mean its claim does not arise out of federal law. Hartford Fire Ins. Co. v. Kansas City, M. & O. Ry. Co., 251 F. 332, 333-334 (N.D. Tex. 1918) (specifically rejecting contention in cases involving damage to interstate shipments that there must be a dispute as to statute's construction for a suit to "arise under"); McGoon v. Northern Pacific Railway Co., 204 F. 998, ...


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