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Friday, July 6, 2012

Seventh Circuit Vacates Lower Court's Decision in Chicago Tribune Case Against University

The Seventh Circuit has vacated a lower court's judgment in favor of the Chicago Tribune and against the University of Illinois, in which the newspaper sought access to some of the university's documents under a federal statute. The court held that the newspaper needed to file its claim under state law. The case involves the Tribune's series of "clout scandal" articles.

The briefs of both sides in this court contend that 28 U.S.C. §1331, the federal-question jurisdiction, supplies subject-matter jurisdiction for this suit. The district judge must have assumed likewise. But the United States, whose brief as amicus curiae supports the University's understanding of the 1974 Act, also observes that there is serious doubt about subject-matter jurisdiction, because the Tribune's claim to the documents arises under state rather than federal law. The University may have a federal defense to the Tribune's claim, but it is blackletter law that a federal defense differs from a claim arising under federal law. See, e.g., Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804 (1986). And although the University, as the natural defendant in state court, might have been able to seek a federal declaratory judgment under the mirror-image doctrine applicable to declaratory litigation, see NewPage Wisconsin System Inc. v. United Steel Workers, 651 F.3d 775 (7th Cir. 2011) (collecting authority), the Tribune rather than the University commenced this suit. The Tribune is the natural plaintiff and cannot use 28 U.S.C. §2201, the declaratory-judgment statute, to have a federal court blot out a potential federal defense to its own potential state-law suit. See, e.g., Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 16 (1983); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950).

We asked the parties to file supplemental briefs addressing subject-matter jurisdiction. Both sides contend that jurisdiction is proper under the approach of Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005). Yet Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006), shows that Grable does not alter the rule that a potential federal defense is not enough to create federal jurisdiction under §1331. See also Bennett v. Southwest Airlines Co., 484 F.3d 907, rehearing denied, 493 F.3d 762 (7th Cir. 2007). Some of the language inGrable could be read to say that all important federal issues should be resolved in a federal forum, but Empire Healthchoice concluded that Grable should not be so understood.

Indeed, Grable has nothing to do with using federal defenses to move litigation to federal court. In Grable the federal issue was part of the plaintiff's own claim. The Internal Revenue Service had seized real property to satisfy a tax lien and sold the property to Darue. Grable, the taxpayer, filed a quiet-title action in state court, asserting that Darue's title was invalid because the IRS had given notice of the seizure in the wrong way (by certified mail rather than a process server). The Supreme Court had to decide whether a claim “arises under” federal law for the purpose of §1331 when one element of a claim depends on state law and another on federal law. It concluded that the claim is federal when “a state-law claim necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of Page 1938 federal and state judicial responsibilities.” 545 U.S. at 314. This formulation can lead to problems in application, see Samuel C. Johnson 1988 Trust v. Bayfield County, 649 F.3d 799 (7th Cir. 2011), though often matters will be straight-forward. In Empire Healthchoice, for example, the Court observed that Grable depended on the fact that the dispute “centered on the action of a federal agency (IRS) and its compatibility with a federal statute, the question qualified as ‘substantial,’ and its resolution was both dispositive of the case and would be controlling in numerous other cases.” 547 U.S. at 700. Take away those ingredients—none was satisfied in Empire Healthchoice—and there is no federal jurisdiction.

Here, unlike Grable, the claim for the documents arises under state law, and only state law; the Tribune's request for the information does not depend on even a smidgeon of federal law. No federal agency's decision has been contested. The University has a potential defense under §7(1)(a), but even that may depend on state rather than federal law. (We expand on this observation below.) The §7(1)(a) exemption is not necessarily dispositive. Recall that the University's letter rejecting the Tribune's request mentioned §7(1)(b)(i), which entitles student records to protection. It is not clear to us that the 1974 Act and the implementing regulations forbid disclosure of any document that is outside the scope of the §7(1)(b)(i) exemption. A state court therefore might rule in the University's favor wholly as a matter of state law—which suggests that the federal issue not only is not “necessarily” presented, but may never be presented at all, rendering a federal court's decision nothing but an advisory opinion. The University has other potential state-law defenses as well.

The case is Chicago Tribune v. Board of Trustees, University of Illinois.

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