An action may be removed to federal court if it is "founded on a claim or right arising under the Constitution, treaties, or laws of the United States." 28 U.S.C. § 1441(b). In determining whether the action arises under federal law, the court ordinarily looks only at the issues raised in the complaint. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55 (1987).
But if by "artful pleading" a plaintiff has disguised as a state claim one whose "'real nature . . . is federal,'" the court may look behind plaintiff's characterization. Travelers Indemnity Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir.), cert. denied, 479 U.S. 885, 107 S. Ct. 277, 93 L. Ed. 2d 253 (1986) (quoting 14A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure, § 3722, at 270 (2d ed. 1985)).
Although this ruling is most commonly made when federal law has preempted plaintiff's state claims, a case is removable whenever "the only remedy available to plaintiff is federal, because of preemption or otherwise, and the state court necessarily must look to federal law in passing on this claim. . . ." Nordlicht v. New York Tel. Co., 799 F.2d 859, 862 (2d Cir. 1986), cert. denied, 479 U.S. 1055, 107 S. Ct. 929, 93 L. Ed. 2d 981 (1987) (citations omitted).
On a motion for remand the court may look more skeptically at a plaintiff's characterization of the law where the plaintiff may be seeking to avoid the federal forum to which defendant is entitled. See Wright, Miller, & Cooper, supra, § 3722, at 279.
Kahn argues that this case should be remanded because the complaint raises only a state tort claim and could not state a federal claim because the federal Treasury rules that defendants violated do not support a federal right of action.
Salomon and Discount assert that they properly removed the present action because federal law is a necessary element of Kahn's tort claim. Alternatively, Salomon and Discount argue that Kahn's artfully pled state claim is a federal claim in disguise. They contend that because the complaint alleges conduct that violates federal antitrust or securities laws the court should treat the complaint as raising these federal claims.
Both parties agree that the federal Treasury rules limiting the maximum tender and purchase to thirty-percent of Treasuries offered at a given auction do not provide a private right of action. These limits were promulgated by the Treasury Department through press releases issued on July 12, 1990 and September 8, 1981 pursuant to 31 C.F.R. §§ 306-91. Treasury Sets Bid Limits on Marketable Security Auctions, Public Debt News, Dep't of Treasury, 1990 SEC LEXIS 3926, July 12, 1990 (limiting maximum bid to 35%); Treasury Announces Weekly Bill Offering and Increases Maximum Award Limitation, Treasury News, Dep't of Treasury, 1981 SEC LEXIS 2375, Sept. 8, 1981 (setting maximum purchase at 35%).
These releases do not suggest a purpose of Congress to establish a private claim to enforce the thirty-five percent limits. See, Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 104 S. Ct. 831, 78 L. Ed. 2d 645 (1984) (finding no private right of action under Investment Company Act).
Enforcement of these limits is apparently left to the discretion of the Treasury Department or other federal agencies. Counsel for Salomon notes that the Securities and Exchange Commission (SEC), the Department of Justice's Antitrust Division (Antitrust) and the United States Attorney's Office for the Southern District have all investigated Salomon's bidding at Treasury auctions. The SEC and Antitrust brought civil suits against Salomon and the United States Attorney brought a criminal suit, since discontinued.
Asserting the lack of a federal claim and saying that the rules stating the thirty-five percent limit lack the formality to constitute a "law," Kahn nevertheless says he has a state claim under these rules.
Kahn describes only minimally his state claim for interference with business relations, citing one case in his brief, Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183, 428 N.Y.S.2d 628, 406 N.E.2d 445 (1980).
The court in Guard-Life refers to the Restatement (Second) of Torts § 766B (1977), which describes the elements of intentional interference with prospective contractual relations as follows:
One who intentionally and improperly interferes with another's prospective contractual relation . . . is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of
(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or