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Source: pp 229-230, Thinking Like a Lawyer: An Introduction to Legal Reasoning (2010, 2 ed) by Kenneth J. Vandevelde.

  The statute granting federal question jurisdiction to the district courts has been limited by a judicially created rule known as the “well-pleaded complaint” rule.19 Under this rule, the federal question must be a necessary part of the plaintiff ’s complaint. That is, a federal question raised by a defense does not bring the case within federal subject matter jurisdiction.
  For example, assume that a retail store sues a manufacturer for breach of contract because the manufacturer failed to ship some toys that the retail store had ordered. The manufacturer raises as its sole defense the fact that after the order was placed, the federal government issued regulations banning this type of toy. Although the result in the case may well depend on an interpretation or application of the federal toy regulation, that federal law was raised as part of a defense and not as a necessary part of the plaintiff ’s claim. The plaintiff ’s claim was for breach of contract and could be set forth in its entirety without ever mentioning the toy regulation. Thus, under the well-pleaded complaint rule, the court probably would not have federal question jurisdiction over the retailer’s claim.

19 See Louisville & Nashville Railroad Company v. Mottley, 211 U.S. 149 (1908). [OP: I have already read this case.]

How is the bolded possible and realistic? Surely the plaintiff's counsel would expect and then anticipate the defendant's attempt to exculpate the defendant by deflecting all liability onto the federal government's law that bans the toys? Then:

  1. The plaintiff would have engaged federal law in his cause of action.

  2. The plaintiff’s claim for breach of contract needs to mention the toy regulation.

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    I wish that any downvoters would leave a comment indicting what they think is wrong with this question. In the absence of a comment, the poster cannot improve the post, others cannot edit it to fix the issue, and readers have no idea why someone objects to the post. Such a downvote seems pointless. Dec 27, 2021 at 6:34

4 Answers 4

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In simple terms, the only basis for the complaint is that the defendant did not ship the toys, not that the defendant violated federal law by their actions. No federal law mandates the shipping of toys, whether banned or unbanned.

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  • "No federal law mandates the shipping of toys, whether banned or unbanned." This is most unfortunate and should really be changed right away. Federal law should mandate the shipping of toys on one's birthday, and other important gift giving holidays. ;)
    – ohwilleke
    Dec 27, 2021 at 20:13
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To add to the correct statements made by the other answers, the well-pleaded complaint rule is actually even more extreme than the situation you present.

Suppose that a restaurant refuses to serve customers because they are black, in clear violation of federal civil rights statutes, and the customer refuses to leave. Then, the restaurant, knowing that it is about to be sued in federal court for a civil rights violation, brings a civil suit under state law seeking $1 of damages against the customer for trespassing on the theory that the customer didn't leave immediately when told that he wouldn't be served (a claim to which a federal law defense applies). The customer files a counterclaim for violation of his civil rights under the federal statute prohibiting racial discrimination in public accommodations.

Does this counterclaim asserting a claim for relief arising under federal law give a U.S. District Court subject-matter jurisdiction?

The answer is no. Under the well-pleaded complaint rule, not only federal law defenses, but federal law counterclaims are irrelevant and do not provide a basis for the removal of a case to federal court. Federal court jurisdiction is a matter in which the race to the courthouse can be outcome determinative.

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Breach of contract is a state (common) law matter: the federal court doesn't have jurisdiction to hear the case.

The correct forum is the state court system because the cause of action alleged is entirely state based law: we have a contract and you have broken it.

You can certainly raise the defence of impossibility because a federal law prohibits you from complying with the terms of the contract and the state court can consider the merits of that defence. However, impossibility is a difficult bar to reach. For example, if the toys could be modified (even at high cost) to meet the Federal regulation, the contract is not impossible, just more expensive for the defendant to complain with.

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  • If I were the defendant in the matter and lost I would certainly appeal immediately to federal court on the basis of the state court failing to apply federal law.
    – Joshua
    Dec 26, 2021 at 23:50
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    @Joshua Depend mg on the content of the federal law, the state court might or might not have failed to apply it. If there was a way for the manufacturer to comply, even at prohibitive cost, the federal law would not bar the manufacture of the toys. Dec 27, 2021 at 1:05
  • @DavidSiegel: From question: "the federal government issued regulations banning this type of toy"
    – Joshua
    Dec 27, 2021 at 3:09
  • @Joshua But exactly what was banned and whether something that might satisfy the contract yet comply with the law cannot be determined with assurance from the question. But if we assume that there was no way to lawfully fulfill the contract, then the defense ought to prevail, it seems. Dec 27, 2021 at 3:23
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Court procedure requires written pleadings, normally drafted by Counsel, then, at the end of the process there is a trial (oral hearing) where the parties are represented by Counsel.

The purpose of the pleadings is to ensure that both sides know what is being claimed and what the defences are so at the time of the trial the plaintiff's Counsel in representing the plaintiff at the trial would, as you say expect and then anticipate the defendant's attempt to exculpate the defendant by deflecting all liability onto the federal government's law that bans the toys

But at the much earlier stage when the plaintiff's Counsel is drafting the pleadings, they will not know what the defences in the defendant's pleadings will be.

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  • -1 Plaintiff's counsel may not know for certain what the defense's legal theories and thus pleadings will be, but often the main line will be obvious. In the given hypothetical, plaintiff cannot help but realize that defense will plead the effect of the federal law, Indeed if not for this expectation, why is plaintiff trying to bring the case in federal court, as the question assumes? This answer fails to address the issue in the question. Dec 27, 2021 at 16:22
  • @DavidSiegel We are reading the question differently. On my reading the federal law issue is not the essence of the question. The OP simply wants to know How is [it] possible and realistic? that The plaintiff ’s claim... for breach of contract... could be set forth in its entirety without ever mentioning the toy regulation. Essentially the OP understands the federal law issue as set out in the text but doesn't understand how a particular hypothetical situation regarding pleading can arise and may be confusing pleadings with the trial.
    – Nemo
    Dec 27, 2021 at 16:45
  • You seem to be ignoring the long quote which forms most of the question and addresses the "well-pleaded complaint rule" a limitation on federal jurisdiction. The scenario is taken from that quote, and the OP cannot see how that scenario can lead to applying that rule, the main issue the other answers address. The OP could have been clearer. TH OP asks about the plaintiff's reasonable expectation of what the defense will be, which you also do not address. Dec 27, 2021 at 16:48
  • @DavidSiegel Also I can't see any indication in the text that the plaintiff [is] trying to bring the case in federal court as you say you see implied.
    – Nemo
    Dec 27, 2021 at 16:49
  • @DavidSiegel I think the OP is reading a text. It all makes perfect sense to them except for one thing. It is that one specific thing they are asking about.
    – Nemo
    Dec 27, 2021 at 16:51

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