20 January 2007

Mistaken Federalism (Part II)

Last month, I promised — with as much sincerity, or indeed follow-through, as any politician (that time in DC wasn't entirely wasted) — that I'd discuss more about the mistaken Federalism involved in probating an author's will and allocating copyrights. And so, here we are.

Under ordinary circumstances, federal courts do not get involved in probate battles. A judge-made doctrine known as the "probate exception" holds that ordinary federal jurisdiction does not exist over actions that might be brought in both federal court and state probate court; instead, the federal court "must" defer to the state probate court.1 However, not all actions under federal law may be brought in both federal and state courts; some federal actions are under exclusive federal jurisdiction. For example,

(a) Except as provided in subsection (b) of this section, the district courts shall have original and exclusive jurisdiction of all cases under title 11.
   (b) Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.2

That seems fairly straightforward, right? Except, of course, if there's a Playmate and oil money involved. And, of course, lawyers.

The Supreme Court was forced to confront the oil and the Playmate last spring. The bankruptcy court's ruling had gone in the Playmate's favor; the state probate court's ruling had gone in favor of the "ordinary" heirs to the oil money. (Not entirely coincidentally, the Playmate was not a resident of the state in which the probate court sat, while the "ordinary" oil money heir was.) This led to a conflict: Did the bankruptcy court have an obligation to consider the pleadings before it independently, or was it bound by a (questionable on its face) ruling by the state probate court? The Supreme Court held that the bankruptcy court not only could, but must, independently assert its jurisdiction, and that exercising its jurisdiction could overrule the result in the probate proceeding.

[A] state court's final judgment determining its own jurisdiction ordinarily qualifies for full faith and credit, so long as the jurisdictional issue was fully and fairly litigated in the court that rendered the judgment. At issue here, however, is not the Texas Probate Court's jurisdiction, but the federal courts' jurisdiction to entertain [the Playmate]'s tortious interference claim. Under our federal system, Texas cannot render its probate courts exclusively competent to entertain a claim of that genre.3

So, then, the bankruptcy court had jurisdiction to determine the Playmate's state-law claim within the bankruptcy adversary complaint framework, regardless of the probate court's jurisdiction — or ultimate decision on the merits.

But what happens in the fact pattern I described above? There's another issue of exclusive federal jurisdiction — one somewhat broader than that for bankruptcy.

The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases.4

Of course, there's still a (potential) exception to this. We'll get there next time I take up this cudgel.

  1. See Markham v. Allen, 326 U. S., 490 (1946); see also Sutton v. English, 246 U.S. 199 (1918); Waterman v. Canal-Louisiana Bank & Trust Co., 215 U.S. 33 (1909)
  2. 28 U.S.C. § 1334.
  3. Marshall v. Marshall, No. 04–1544 (U.S. 01 May 2006), slip op. at 17 (citation omitted).
  4. 28 U.S.C. § 1338(a).