Term: 2004
Docket: 04-603
Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing
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04-603 GRABLE & SONS METAL PRODUCTS V. DARUE ENGINEEERING DECISION BELOW: 377 F3d 592 LIMITED TO QUESTION 1 PRESENTED BY THE PETITION. CERT. GRANTED 1/7/2005 QUESTION PRESENTED: 1. Substantial federal question and original jurisdiction prereqisites for removal to federal district court. 28 U.S.C. §1441(b) allows removal of any state civil action in which the district courts have original jurisdiction wherein the claim is founded on a right arising under the Constitution, treaties or laws of the United States. This Court has routinely held that such removal requires both a substantial federal question and the district court must have original jurisdiction over the action. The question raised is, when there is a violation by the IRS of 26 U.S.C. §6335(a) by intentionally ignoring the prerequisite provision requiring personal service of notice of seizure before obtaining service by certified mail, whether the defendant in a state quiet title action can remove the action by claiming that the necessary interpretation of 26 U.S.C. §6335(a) as to whether strict compliance or substantial compliance with the statute constitutes a substantial federal question and creates original jurisdiction in the district court. 2. Personal notice provisions in 26 U.S.C. §6335(A) requires strict compliance as opposed to substantial compliance. The courts from virtually the beginning of our country's history have maintained that governmental agents are required to strictly comply with the law when confiscating the property of citizens. A long line of cases have indicated that that IRS agents must strictly comply with the personal service of notice of seizure required by 26 U.S.C. §6335(a). Several Circuit Courts of Appeals have recently chosen to allow violations of said section when the IRS substantially complies with the provision. The question presented is whether the IRS is required to strictly comply with the personal service provisions of 26 U.S.C. §6335(a), which requires attempted personal service of notice of seizure before the IRS can obtain service through certified mail or, is the IRS allowed to substantially comply with the provisions, especially when the IRS admittedly fails to even attempt to comply with personal service before obtaining service by certified mail. LOWER COURT CASE NUMBER: 02-1678
In the case of Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing (2004), the U.S Supreme Court examined whether federal courts have jurisdiction over state law claims that involve federal issues. The dispute began when Darue Engineering purchased a property at a tax sale after the Internal Revenue Service seized it from Grable for unpaid taxes and sold it without providing proper notice to Grable as required by federal law. When Darue sought to quiet title in state court, Grable claimed that its right to due process was violated because they were not given adequate notice of the seizure or sale, which is mandated under Federal Tax Law. The Supreme Court ruled in favor of Darue stating that even though there was a question about how federal statutes should be interpreted regarding notification requirements during asset seizures by IRS, this did not automatically qualify for "arising under" jurisdiction since it wasn't substantial enough nor contested seriously by both parties involved; hence didn't establish any significant legal precedent on interpretation of those laws.
In the dissenting opinion for Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, Justice Thomas argued that federal jurisdiction should not have been exercised in this case because it did not involve a substantial federal interest. He contended that the majority's decision expanded the scope of federal jurisdiction beyond its constitutional and statutory limits by allowing state law claims to be heard in federal court simply because they implicate a question of federal law. According to him, such an approach undermines principles of comity and respect for state courts' competence to interpret and apply federal laws when necessary to resolve state-law disputes.
