Illinois State Bar Association v. Shelton

Filing 3

ORDER OF REMAND: Pursuant to 28 U.S.C. § 1447(c), this case is REMANDED to the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, for lack of federal subject matter jurisdiction. Signed by Judge G. Patrick Murphy on 5/23/2011. (jhs)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ILLINOIS STATE BAR ASSOCIATION,

)
)
Plaintiff,
)
)
vs.
)
)
LARRY J.W. SHELTON d/b/a Shelton’s )
Realty and Legal Support Services, Inc., )
Shelton’s Legal Support Services, and )
Nationwide Negotiators,
)
)
Defendant.
)

CIVIL NO. 11-390-GPM

MEMORANDUM AND ORDER
MURPHY, District Judge:
This case is before the Court sua sponte on the issue of federal subject matter jurisdiction.
See Johnson v. Wattenbarger, 361 F.3d 991, 992 (7th Cir. 2004) (a district court’s “first duty in
every suit” is “to determine the existence of subject-matter jurisdiction”). Plaintiff Illinois State Bar
Association (“ISBA”) brings this action against Defendant Larry J.W. Shelton for engaging in the
unauthorized practice of law, in violation of Illinois statutory and common law.

See 705

ILCS 205/1; King v. First Capital Fin. Servs. Corp., 828 N.E.2d 1155, 1162 (Ill. 2005) (it is the
constitutional prerogative of the Supreme Court of Illinois to regulate the practice of law in Illinois,
and legislative enactments punishing the unauthorized practice of law are merely in aid of the
Supreme Court’s authority). Additionally, ISBA alleges violations by Shelton of the Illinois
Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. This case was filed
originally in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, and comes
to this Court on removal pursuant to 28 U.S.C. § 1441. Shelton, the removing party, alleges that this
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action is one “arising under” federal law within the meaning of the statutory grant of federal subject
matter jurisdiction providing that “[t]he district courts shall have original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
According to Shelton this case is within so-called “federal question” jurisdiction because ISBA’s
action against him violates the First Amendment rights of Shelton and his clients, as well as the
Fourteenth Amendment equal protection rights of Shelton’s clients. Also, Shelton contends that the
state laws invoked by ISBA in fact present federal questions, as the state laws supposedly
were enacted pursuant to mandates contained in federal laws and regulations not specified
by Shelton.
In general, “[t]he presence or absence of federal-question jurisdiction is governed by the
‘well-pleaded complaint rule,’ which provides that federal jurisdiction exists only when a federal
question is presented on the face of the plaintiff’s properly pleaded complaint. The rule makes the
plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on
state law.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing Gully v. First Nat’l
Bank, 299 U.S. 109, 112-13 (1936)). Correspondingly, a defense that is based on federal law does
not create federal question jurisdiction for purposes of removal to federal court: “[T]he defendant
cannot cause a transfer to federal court simply by asserting a federal question in his responsive
pleading.” Rice v. Panchal, 65 F.3d 637, 639 (7th Cir. 1995). See also Holmes Group, Inc. v.
Vornado Air Circulation Sys., Inc., 535 U.S. 826, 830-32 (2002) (a counterclaim arising under
federal law does not create federal question jurisdiction); Louisville & Nashville R.R. Co. v.
Mottley, 211 U.S. 149, 153 (1908) (“A suggestion of one party, that the other will or may set up a
claim under the Constitution or laws of the United States, does not make the suit one arising under
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that Constitution or those laws.”); Blackburn v. Sundstrand Corp., 115 F.3d 493, 495 (7th Cir. 1997)
(“[I]t has been understood for a very long time that a federal defense to a claim arising under state
law does not create federal jurisdiction and therefore does not authorize removal.”); Lister v.
Stark, 890 F.2d 941, 943 n.1 (7th Cir. 1989) (noting that “a case must be remanded to state court if
the sole basis for federal jurisdiction is a . . . defense” based on federal law). Accordingly, subject
matter jurisdiction pursuant to 28 U.S.C. § 1331 does not exist in this case by virtue of Shelton’s
claim that ISBA is violating his federal rights.1
With respect to Shelton’s claim that this case arises under federal law because the state law
invoked by ISBA is the product of federal mandates, this assertion is frivolous. Also, even if
there were any truth to this claim, it would not create federal jurisdiction, inasmuch as the laws that
Shelton is charged with violating are, indisputably, state laws. See, e.g., Austin v. Ameriquest
Mortgage Co., 510 F. Supp. 2d 1218, 1226-27 (N.D. Ga. 2007) (finding that a claim brought
pursuant to a state anti-racketeering statute did not arise under federal law, although the predicate
acts of racketeering alleged in the complaint also could have been asserted as predicate racketeering
acts in a suit under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§ 1961 et seq.). The Court is aware of only one means by which a state cause of action can be
transmogrified into a claim for relief under federal law, the doctrine of complete preemption.
Complete preemption occurs when “the preemptive force of a [federal] statute is so ‘extraordinary’
that it ‘converts an ordinary state common-law complaint into one stating a federal claim for

1. To the extent Shelton is attempting to assert the constitutional rights of his clients, this violates
elementary rules of standing in federal court. See Elk Grove Unif. Sch. Dist. v. Newdow, 542 U .S.
1, 12 (2004) (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)) (noting “the general prohibition
on a litigant’s raising another person’s legal rights”).
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purposes of the well-pleaded complaint rule.’”

Nelson v. Stewart, 422 F.3d 463, 466-67

(7th Cir. 2005) (quoting Caterpillar, 482 U.S. at 393). “Once an area of state law has been
completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from
its inception, a federal claim, and therefore arises under federal law.” Id. at 467. “In such situations,
the federal statute . . . not only preempts state law but also authorizes removal of actions that sought
relief only under state law.” Id. (brackets omitted). The Supreme Court of the United States has
found complete preemption as to only four federal laws: the Labor Management Relations Act
of 1947 (also known as the Taft-Hartley Act), 29 U.S.C. § 141 et seq., see Avco Corp. v. Aero Lodge
No. 735, Int’l Ass’n of Machinists & Aerospace Workers, 390 U.S. 557, 559-60 (1968); a treaty
concerning Native American tribal land, see Oneida Indian Nation of N.Y. v. Oneida County,
N.Y., 414 U.S. 661, 681-82 (1974); the Employee Retirement Income Security Act of 1974, 29
U.S.C. § 1001 et seq., see Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66-67 (1987); and the
National Bank Act, 12 U.S.C. § 21 et seq. See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 8-11
(2003). None of the aforementioned federal laws are implicated in this case. The Court concludes
that this case does not arise under federal law for purposes of removal.
To conclude the Court finds that this case was improperly removed. Accordingly, pursuant
to 28 U.S.C. § 1447(c), this case is REMANDED to the Circuit Court of the Twentieth Judicial
Circuit, St. Clair County, Illinois, for lack of federal subject matter jurisdiction.
IT IS SO ORDERED.
DATED: May 23, 2011
/s/ G. Patrick Murphy
G. PATRICK MURPHY
United States District Judge
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