Home › Case briefs › Civil Procedure

Franchise Tax Board v. Construction Laborers Vacation Trust

Supreme Court of the United States · 1983 · Civil Procedure

Civil ProcedureFederal Question JurisdictionRemovalWell-Pleaded Complaint RuleDeclaratory JudgmentComplete Preemption28 U.S.C. § 133128 U.S.C. § 1441

Facts

CLVT is an ERISA-covered vacation benefit trust established under a collective-bargaining arrangement for construction workers in southern California. California law authorized the Franchise Tax Board to levy on property or credits belonging to delinquent taxpayers and made a recipient personally liable for failing to comply. The Board issued levies seeking about $380 from funds CLVT held for three beneficiaries, but CLVT refused to transmit the money, asserting that ERISA preempted the State's levy power and that the trust agreement barred assignment or encumbrance of trust funds. The Board then filed a state-court complaint asserting a damages claim for failure to honor the levies and a declaratory judgment claim seeking a declaration that CLVT was legally obligated to honor future levies.

Issue

Whether the State's action to enforce tax levies against funds held in an ERISA-covered trust, and to obtain a declaration that the levies were valid notwithstanding ERISA, was within the original federal-question jurisdiction of the federal courts so as to permit removal. More specifically, the question was whether either claim arose under federal law because ERISA was implicated.

Rule

A case is removable on federal-question grounds only if the plaintiff's well-pleaded complaint establishes that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. A federal defense, including preemption, does not create arising-under jurisdiction even if anticipated in the complaint and even if it is the only real issue in dispute. Federal courts also lack original or removal jurisdiction over a state declaratory judgment action presenting a federal question when jurisdiction would be barred under Skelly Oil had the plaintiff sought a federal declaratory judgment, unless the state claim is completely preempted by a federal cause of action.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

The Illinois Revenue Bureau sued Lakeshore Benefit Fund in Illinois state court under an Illinois levy statute, alleging the fund failed to turn over money credited to two delinquent taxpayers. The complaint also alleges that the fund had already asserted that a federal benefits statute forbids compliance with the levy.

After the fund removes on federal-question grounds, is removal proper?

Explanation. Removal depends on original federal-question jurisdiction, and under the well-pleaded complaint rule jurisdiction must appear from the plaintiff's own claim. A state-law levy-enforcement action does not arise under federal law merely because the defendant is expected to raise federal preemption or incompatibility as a defense, even if the complaint anticipates that defense and even if it is the only real issue in dispute. The majority rejected exactly that theory of jurisdiction.