Singh v. Duane Morris Llp

• Citation: 538 F.3d 334
• Decision Date: 30 July 2008
• Docket Number: No. 07-20321.,07-20321.
• Parties: Robin SINGH, Doing Business as Testmasters, Plaintiff-Appellant, v. DUANE MORRIS LLP; Richard T. Redano, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

538 F.3d 334

Robin SINGH, Doing Business as Testmasters, Plaintiff-Appellant, v. DUANE MORRIS LLP; Richard T. Redano, Defendants-Appellees.

No. 07-20321.

United States Court of Appeals, Fifth Circuit.

July 30, 2008.

Daniel J. Sheehan, Jr. (argued), John McGrath Phalen, Jr., Daniel Sheehan & Associates, Dallas, TX, for Singh.

George M. Kryder, III (argued), Gabriela Angelina Gallegos, Vinson & Elkins, Dallas, TX, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before REAVLEY, SMITH and DENNIS, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Robin Singh sued Duane Morris LLP and attorney Richard Redano (jointly "Redano") for malpractice allegedly committed during Redano's representation of Singh in a federal trademark lawsuit. Because the federal courts lack subject matter jurisdiction over this malpractice action, we vacate the judgment and render a judgment of dismissal.

I.

This case arises out of a dispute between two test-prep companies over use of the name "Testmasters." Singh, who owned a California-based test-prep company, and Test Masters Educational Services, Inc. ("TES"), a Texas-based company, sued in federal court, asserting various trademark claims against each other. Redano represented Singh. After a five-day trial, a jury found that Singh's mark was descriptive and that he had established secondary meaning in the "Testmasters" mark. The jury also found that TES had infringed Singh's mark but was not liable, because it had been an innocent prior user. Both parties appealed, and we reversed, holding that Singh had presented "little or no evidence regarding secondary meaning." Test Masters Educ. Servs., Inc. v. Singh, 46 Fed.Appx. 227, 2002 WL 1940083, *4 (5th Cir.2002) (per curiam) (unpublished).¹

Singh filed this malpractice suit against Redano in Texas state court, claiming that Redano had mistakenly failed at trial to introduce available evidence that would have successfully established secondary meaning. Redano removed to federal court, basing federal jurisdiction on the contention that the outcome of the malpractice case depended on resolving questions of federal trademark law.

The district court, Judge Vanessa Gilmore presiding, denied Singh's motion to remand, concluding that it had subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1338(a) and the All Writs Act, 28 U.S.C. § 1651. The court granted in part Redano's motion for summary judgment and dismissed Singh's malpractice claims. The court held that collateral estoppel bars Singh's malpractice claims and that Singh's claims are precluded by his failure to file a Federal Rule of Civil Procedure 60(b) motion with additional secondary meaning evidence after the trademark trial had been concluded.

II.

We review de novo the district court's assumption of subject matter jurisdiction. Local 1351 Int'l Longshoremens Ass'n v. Sea-Land Serv., Inc., 214 F.3d 566, 569 (5th Cir.2000). Pursuant to 28 U.S.C. §§ 1331 and 1338(a), federal courts have subject matter jurisdiction over civil actions "arising under" federal law and specifically over actions "arising under any Act of Congress relating to ... trademarks." We must decide whether a state-law malpractice claim "arises under" federal law merely because the alleged malpractice occurred in a prior federal trademark suit. We conclude that such claim does not arise under federal law and does not confer subject matter jurisdiction under § 1331 or 1338(a).

Singh sued Redano in state court on a state-law cause of action. Having removed the case to federal court, Redano contends that federal jurisdiction is proper because resolving the malpractice claim necessarily requires resolving a federal question — to-wit, whether Singh could have established secondary meaning in his trademark.

Under Texas law, "[w]hen a legal malpractice claim arises from earlier litigation, the plaintiff ... bears the burden to prove he would have prevailed on the underlying cause of action." Williams v. Briscoe, 137 S.W.3d 120, 124 (Tex.App. — Houston [1st Dist.] 2004, no writ). That rule, which is necessary to satisfy the causation element of a malpractice claim, has been dubbed the "suit within a suit" requirement: "[T]he plaintiff must establish that the underlying suit would have been won `but for' the attorney's breach of duty...." Ballesteros v. Jones, 985 S.W.2d 485, 489 (Tex.App. — San Antonio 1998, pet. denied). Hence, Singh must prove there was sufficient evidence of secondary meaning such that he could have established secondary meaning in his prior federal trademark suit.

A federal question exists "only [in] those cases in which a well-pleaded complaint establishes either 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."² Redano seizes on the necessary-resolution language of Franchise Tax Board, observing that the "suit within a suit" requirement of Singh's Texas malpractice claim necessarily raises a federal question. But the Supreme Court has subsequently warned that Franchise Tax Board's necessary-resolution language should be read as part of a carefully nuanced standard rather than a broad and simplistic rule.

The fact that a substantial federal question is necessary to the resolution of a state-law claim is not sufficient to permit federal jurisdiction: "Franchise Tax Board ... did not purport to disturb the long-settled understanding that the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 813, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). Likewise, "the presence of a disputed federal issue ... [is] never necessarily dispositive." Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). Instead, "[f]ar from creating some kind of automatic test, Franchise Tax Board thus candidly recognized the need for careful judgments about the exercise of federal judicial power in an area of uncertain jurisdiction." Merrell Dow, 478 U.S. at 814, 106 S.Ct. 3229.

If, however, the standard for federal question jurisdiction is no "automatic test," what sort of test is it? Although the Court's answer has at times been less than pellucid,³ it recently summed up the requisite inquiry: "[T]he question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable, 545 U.S. at 314, 125 S.Ct. 2363. In other words, federal question jurisdiction exists where (1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities. Although the first and second elements are probably satisfied in this case, the third and fourth are not.

The federal issue here is not substantial. "[F]ederal jurisdiction demands not only a contested federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum." Id. at 313, 125 S.Ct. 2363. In Merrell Dow, 478 U.S. at 814, 106 S.Ct. 3229, the Court held that where Congress has provided no private remedy for the violation of a federal drug regulatory statute, the fact that violation of the statute is an element of a state tort claim is insufficient to establish a substantial federal interest. As in Merrell Dow, Singh's malpractice claim makes federal law only tangentially relevant to an element of a state tort claim.⁴

But the federal interest here is weaker still. The Merrell Dow Court reasoned that because Congress had established no private remedy for violations of the statute, it had no substantial interest in seeing the statute applied in state tort cases. Federal trademark law not only provides no remedy for aggrieved clients to recover against negligent trademark attorneys but also has an object entirely different from that of state malpractice law. It cannot be said that federal trademark law evinces any substantial federal interest in regulating attorney malpractice.

This is not a case in which the federal issue requires resolution of an important question of law. In Grable, the plaintiff brought a state quiet title action, claiming the defendant's record title was invalid because the IRS had failed properly to notify the plaintiff of its seizure of the property as required by federal statute. The Court found a substantial federal interest in the state action, because "[t]he meaning of the federal tax provision is an important issue of federal law that sensibly belongs in federal court" and because the IRS notice requirements implicate the government's "strong interest in the prompt and certain collection of delinquent taxes." Grable, 545 U.S. at 315, 125 S.Ct. 2363 (quotation omitted).

In contrast, this case involves no important issue of federal law. Instead, the federal issue is predominantly one of fact — whether Singh had sufficient evidence that his trademark had acquired secondary meaning.⁵ Though obviously significant to Singh's claim, that issue does not require "resort to the experience, solicitude, and hope of uniformity that a federal forum offers." Id. at 312, 125 S.Ct. 2363.

Not only is the federal interest insubstantial, but federal jurisdiction over this state-law malpractice claim would upend the balance between federal and state judicial responsibilities. Because federal "jurisdiction to hear a state-law claim always raises the possibility of upsetting the state-federal line drawn (or at least assumed) by Congress, ... there must always be an assessment...