In the 1982 case Franchise Tax Board of California v. Construction Laborers Vacation Trust for Southern California, the Supreme Court ruled on whether a state agency could bring suit in federal court under federal common law or Employee Retirement Income Security Act (ERISA). The Franchise Tax Board (FTB) had issued levies against funds held by the trust to satisfy delinquent taxes owed by some trust beneficiaries. When FTB sued in state court to establish its right to collect these funds, the Trust removed it to federal court arguing that ERISA preempted any state laws regarding collection from such trusts. The Supreme Court held that neither ERISA nor federal common law created a cause of action in favor of FTB and thus there was no basis for removal jurisdiction because FTB's complaint did not present a federal question. Furthermore, they clarified that only defendants can remove cases from state courts based on diversity or subject matter jurisdiction and affirmed remand back to state court.

In the dissenting opinion for Franchise Tax Board of California v. Construction Laborers Vacation Trust for Southern California, Justice Brennan disagreed with the majority's interpretation of federal jurisdiction under 28 U.S.C §1331. He argued that a state agency should be able to bring an action in state court against a federally created entity without being removed to federal court just because it involves a question of federal law. According to him, this would not infringe on any constitutional rights or principles and would allow states more control over their own affairs. He also pointed out that there was no evidence Congress intended such broad pre-emptive power when they enacted ERISA (Employee Retirement Income Security Act). Therefore, he believed the case should have remained within the jurisdiction of California’s courts rather than being moved into Federal Court as per majority decision.