APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE WESTERN DISTRICT OF KENTUCKY.

[151] Mr. Henry Lane Stone for appellant.

Mr. Lewis McQuown and Mr. Clarence U. McElroy for appellees.

By leave of court, Mr. L.A. Shaver, in behalf of The Interstate Commerce Commission, submitted a brief as amicus curioe.

Two questions of law were raised by the demurrer to the bill, were brought here by appeal, and have been argued before us. They are, first, whether that part of the act of Congress of June 29, 1906 (34 Stat. 584), which forbids the giving of free passes or the collection of any different compensation for transportation of passengers than that specified in the tariff filed, makes it unlawful to perform a contract for transportation of persons, who in good faith, before the passage of the act, had accepted such contract in satisfaction of a valid cause of action against the railroad; and, second, whether the statute, if it should be construed to render such a contract unlawful, is in [152] violation of the Fifth Amendment of the Constitution of the United States. We do not deem it necessary, however, to consider either of these questions, because, in our opinion, the court below was without jurisdiction of the cause. Neither party has questioned that jurisdiction, but it is the duty of this court to see to it that the jurisdiction of the Circuit Court, which is defined and limited by statute, is not exceeded. This duty we have frequently performed of our own motion. Mansfield, &c.; Railway Company v. Swan, 111 U.S. 379, 382; King Bridge Company v. Otoe County, 120 U.S. 225; Blacklock v. Small, 127 U.S. 96, 105; Cameron v. Hodges, 127 U.S. 322, 326; Metcalf v. Watertown, 128 U.S. 586, 587; Continental National Bank v. Buford, 191 U.S. 119.

There was no diversity of citizenship and it is not and cannot be suggested that there was any ground of jurisdiction, except that the case was a "suit . . . arising under the Constitution and laws of the United States." Act of August 13, 1888, c. 866, 25 Stat. 433, 434. It is the settled interpretation of these words, as used in this statute, conferring jurisdiction, that a suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States. Although such allegations show that very likely, in the course of the litigation, a question under the Constitution would arise, they do not show that the suit, that is, the plaintiff's original cause of action, arises under the Constitution. In Tennessee v. Union & Planters' Bank, 152 U.S. 454, the plaintiff, the State of Tennessee, brought suit in the Circuit Court of the United States to recover from the defendant certain taxes alleged to be due under the laws of the State. The plaintiff alleged that the defendant claimed an immunity from the taxation by virtue of its charter, and that therefore the tax was void, because in violation of the provision of the Constitution of the United [153] States, which forbids any State from passing a law impairing the obligation of contracts. The cause was held to be beyond the jurisdiction of the Circuit Court, the court saying, by Mr. Justice Gray (p. 464), "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 that Constitution or those laws." Again, in Boston & Montana Consolidated Copper & Silver Mining Company v. Montana Ore Purchasing Company, 188 U.S. 632, the plaintiff brought suit in the Circuit Court of the United States for the conversion of copper ore and for an injunction against its continuance. The plaintiff then alleged, for the purpose of showing jurisdiction, in substance, that the defendant would set up in defense certain laws of the United States. The cause was held to be beyond the jurisdiction of the Circuit Court, the court saying, by Mr. Justice Peckham (pp. 638, 639).

"It would be wholly unnecessary and improper in order to prove complainant's cause of action to go into any matters of defence which the defendants might possibly set up and then attempt to reply to such defence, and thus, if possible, to show that a Federal question might or probably would arise in the course of the trial of the case. To allege such defence and then make an answer to it before the defendant has the opportunity to itself plead or prove its own defence is inconsistent with any known rule of pleading so far as we are aware, and is improper.

"The rule is a reasonable and just one that the complainant in the first instance shall be confined to a statement of its cause of action, leaving to the defendant to set up in his answer what his defence is and, if anything more than a denial of complainant's cause of action, imposing upon the defendant the burden of proving such defence.

"Conforming itself to that rule the complainant would not, in the assertion or proof of its cause of action, bring up a single Federal question. The presentation of its cause of action would not show that it was one arising under the Constitution or laws of the United States.

[154] "The only way in which it might be claimed that a Federal question was presented would be in the complainant's statement of what the defence of defendants would be and complainant's answer to such defence. Under these circumstances the case is brought within the rule laid down in Tennessee v. Union & Planters' Bank, 152 U.S. 454. That case has been cited and approved many times since, . . ."

The interpretation of the act which we have stated was first announced in Metcalf v. Watertown, 128 U.S. 586, and has since been repeated and applied in Colorado Central Consolidated Mining Company v. Turck, 150 U.S. 138, 142; Tennessee v. Union & Planters' Bank, 152 U.S. 454, 459; Chappell v. Waterworth, 155 U.S. 102, 107; Postal Telegraph Cable Company v. Alabama, 155 U.S. 482, 487; Oregon Short Line & Utah Northern Railway Company v. Skottowe, 162 U.S. 490, 494; Walker v. Collins, 167 U.S. 57, 59; Muse v. Arlington Hotel Company, 168 U.S. 430, 436; Galveston &c.; Railway v. Texas, 170 U.S. 226, 236; Third Street & Suburban Railway Company v. Lewis, 173 U.S. 457, 460; Florida Central & Peninsular Railroad Company v. Bell, 176 U.S. 321, 327; Houston & Texas Central Railroad Company v. Texas, 177 U.S. 66, 78; Arkansas v. Kansas & Texas Coal Company & San Francisco Railroad, 183 U.S. 185, 188; Vicksburg Waterworks Company v. Vicksburg, 185 U.S. 65, 68; Boston & Montana Consolidated Copper & Silver Mining Company v. Montana Ore Purchasing Company, 188 U.S. 632, 639; Minnesota v. Northern Securities Company, 194 U.S. 48, 63; Joy v. City of St. Louis, 201 U.S. 332, 340; Devine v. Los Angeles, 202 U.S. 313, 334. The application of this rule to the case at bar is decisive against the jurisdiction of the Circuit Court.

It is ordered that the

Judgment be reversed and the case remitted to the Circuit Court with instructions to dismiss the suit for want of jurisdiction.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

[828] Scalia, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Kennedy, Souter, Thomas, and Breyer, JJ., joined, and in which Stevens, J., joined as to Parts I and II—A. Stevens, J., filed an opinion concurring in part and concurring in the judgment, post, p. 834. Ginsburg, J., filed an opinion concurring in the judgment, in which O'Connor, J., joined, post, p. 839.

James W. Dabney argued the cause for petitioner. With him on the brief were Paul Izzo, Timothy P. Gallogly, Arthur R. Miller, Marcia H. Sundeen, and Carol M. Wilhelm.

Peter W. Gowdey argued the cause for respondent. With him on the brief were Christopher P. Murphy, Janine A. Carlan, Kenneth W. Starr, and Daryl L. Joseffer.^[1]

In this case, we address whether the Court of Appeals for the Federal Circuit has appellate jurisdiction over a case in which the complaint does not allege a claim arising under federal patent law, but the answer contains a patent-law counterclaim.

Respondent, Vornado Air Circulation Systems, Inc., is a manufacturer of patented fans and heaters. In late 1992, [828] respondent sued a competitor, Duracraft Corp., claiming that Duracraft's use of a "spiral grill design" in its fans infringed respondent's trade dress. The Court of Appeals for the Tenth Circuit found for Duracraft, holding that Vornado had no protectable trade-dress rights in the grill design. See Vornado Air Circulation Systems, Inc. v. Duracraft Corp., 58 F. 3d 1498 (1995) (Vornado I).

Nevertheless, on November 26, 1999, respondent lodged a complaint with the United States International Trade Commission against petitioner, The Holmes Group, Inc., claiming that petitioner's sale of fans and heaters with a spiral grill design infringed respondent's patent and the same trade dress held unprotectable in Vornado I. Several weeks later, petitioner filed this action against respondent in the United States District Court for the District of Kansas, seeking, inter alia, a declaratory judgment that its products did not infringe respondent's trade dress and an injunction restraining respondent from accusing it of trade-dress infringement in promotional materials. Respondent's answer asserted a compulsory counterclaim alleging patent infringement.

The District Court granted petitioner the declaratory judgment and injunction it sought. 93 F. Supp. 2d 1140 (Kan. 2000). The court explained that the collateralestoppel effect of Vornado I precluded respondent from relitigating its claim of trade-dress rights in the spiral grill design. It rejected respondent's contention that an intervening Federal Circuit case, Midwest Industries, Inc. v. Karavan Trailers, Inc., 175 F. 3d 1356 (1999), which disagreed with the Tenth Circuit's reasoning in Vornado I, constituted a change in the law of trade dress that warranted relitigation of respondent's trade-dress claim. The court also stayed all proceedings related to respondent's counterclaim, adding that the counterclaim would be dismissed if the declaratory judgment and injunction entered in favor of petitioner were affirmed on appeal.

[829] Respondent appealed to the Court of Appeals for the Federal Circuit. Notwithstanding petitioner's challenge to its jurisdiction, the Federal Circuit vacated the District Court's judgment, 13 Fed. Appx. 961 (2001), and remanded for consideration of whether the "change in the law" exception to collateral estoppel applied in light of TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U. S. 23 (2001), a case decided after the District Court's judgment which resolved a Circuit split involving Vornado I and Midwest Industries. We granted certiorari to consider whether the Federal Circuit properly asserted jurisdiction over the appeal. 534 U. S. 1016 (2001).

Congress vested the Federal Circuit with exclusive jurisdiction over "an appeal from a final decision of a district court of the United States . . . if the jurisdiction of that court was based, in whole or in part, on [28 U. S. C. § ] 1338 . . . ." 28 U. S. C. § 1295(a)(1) (emphasis added). Section 1338(a), in turn, provides in relevant part that "[t]he district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents . . . ." Thus, the Federal Circuit's jurisdiction is fixed with reference to that of the district court, and turns on whether the action arises under federal patent law.^[2]

Section 1338(a) uses the same operative language as 28 U. S. C. § 1331, the statute conferring general federalquestion jurisdiction, which gives the district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." (Emphasis added.) We said in Christianson v. Colt Industries Operat- [830] ing Corp., 486 U. S. 800, 808 (1988), that "[l]inguistic consistency" requires us to apply the same test to determine whether a case arises under § 1338(a) as under § 1331.

The well-pleaded-complaint rule has long governed whether a case "arises under" federal law for purposes of § 1331.^[3] See, e. g., Phillips Petroleum Co. v. Texaco Inc., 415 U. S. 125, 127-128 (1974) (per curiam). As "appropriately adapted to § 1338(a)," the well-pleaded-complaint rule provides that whether a case "arises under" patent law "must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration . . . ." Christianson, 486 U. S., at 809 (internal quotation marks omitted). The plaintiff's well-pleaded complaint must "establis[h] either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law . . . ." Ibid. Here, it is undisputed that petitioner's well-pleaded complaint did not assert any claim arising under federal patent law. The Federal Circuit therefore erred in asserting jurisdiction over this appeal.

Respondent argues that the well-pleaded-complaint rule, properly understood, allows a counterclaim to serve as the basis for a district court's "arising under" jurisdiction. We disagree.

[831] Admittedly, our prior cases have only required us to address whether a federal defense, rather than a federal counterclaim, can establish "arising under" jurisdiction. Nevertheless, those cases were decided on the principle that federal jurisdiction generally exists "only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U. S. 386, 392 (1987) (emphasis added). As we said in The Fair v. Kohler Die & Specialty Co., 228 U. S. 22, 25 (1913), whether a case arises under federal patent law "cannot depend upon the answer." Moreover, we have declined to adopt proposals that "the answer as well as the complaint . . . be consulted before a determination [is] made whether the case `ar[ises] under' federal law . . . ." Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U. S. 1, 10-11, n. 9 (1983) (citing American Law Institute, Study of the Division of Jurisdiction Between State and Federal Courts § 1312, pp. 188-194 (1969)). It follows that a counterclaim—which appears as part of the defendant's answer, not as part of the plaintiff's complaint—cannot serve as the basis for "arising under" jurisdiction. See, e. g., In re Adams, 809 F. 2d 1187, 1188, n. 1 (CA5 1987); FDIC v. Elefant, 790 F. 2d 661, 667 (CA7 1986); Takeda v. Northwestern National Life Ins. Co., 765 F. 2d 815, 822 (CA9 1985); 14B C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3722, pp. 402-414 (3d ed. 1998).

Allowing a counterclaim to establish "arising under" jurisdiction would also contravene the longstanding policies underlying our precedents. First, since the plaintiff is "the master of the complaint," the well-pleaded-complaint rule enables him, "by eschewing claims based on federal law, . . . to have the cause heard in state court." Caterpillar Inc., supra, at 398-399. The rule proposed by respondent, in contrast, would leave acceptance or rejection of a state forum to the master of the counterclaim. It would allow a [832] defendant to remove a case brought in state court under state law, thereby defeating a plaintiff's choice of forum, simply by raising a federal counterclaim. Second, conferring this power upon the defendant would radically expand the class of removable cases, contrary to the "[d]ue regard for the rightful independence of state governments" that our cases addressing removal require. See Shamrock Oil & Gas Corp. v. Sheets, 313 U. S. 100, 109 (1941) (internal quotation marks omitted). And finally, allowing responsive pleadings by the defendant to establish "arising under" jurisdiction would undermine the clarity and ease of administration of the well-pleaded-complaint doctrine, which serves as a "quick rule of thumb" for resolving jurisdictional conflicts. See Franchise Tax Bd., supra, at 11.

For these reasons, we decline to transform the longstanding well-pleaded-complaint rule into the "well-pleadedcomplaint-or-counterclaim rule" urged by respondent.

Respondent argues, in the alternative, that even if a counterclaim generally cannot establish the original "arising under" jurisdiction of a district court, we should interpret the phrase "arising under" differently in ascertaining the Federal Circuit's jurisdiction. In respondent's view, effectuating Congress's goal of "promoting the uniformity of patent law," Brief for Respondent 21, requires us to interpret §§ 1295(a)(1) and 1338(a) to confer exclusive appellate jurisdiction on the Federal Circuit whenever a patent-law counterclaim is raised.^[4]

[833] We do not think this option is available. Our task here is not to determine what would further Congress's goal of ensuring patent-law uniformity, but to determine what the words of the statute must fairly be understood to mean. It would be difficult enough to give "arising under" the meaning urged by respondent if that phrase appeared in § 1295(a)(1)—the jurisdiction-conferring statute—itself. Cf. Economic Stabilization Act of 1970, § 211(b)(2), 85 Stat. 749 (providing the Temporary Emergency Court of Appeals with exclusive jurisdiction over appeals "in cases and controversies arising under this title"). Even then the phrase would not be some neologism that might justify our adverting to the general purpose of the legislation, but rather a term familiar to all law students as invoking the wellpleaded-complaint rule. Cf. Coastal States Marketing, Inc. v. New England Petroleum Corp., 604 F. 2d 179, 183 (CA2 1979) ("The use of the phrase `cases and controversies arising under' . . . is strong evidence that Congress intended to borrow the body of decisional law that has developed under 28 U. S. C. § 1331 and other grants of jurisdiction to the district courts over cases `arising under' various regulatory statutes"). But the present case is even weaker than that, since § 1295(a)(1) does not itself use the term, but rather refers to jurisdiction under § 1338, where it is well established that "arising under any Act of Congress relating to patents" invokes, specifically, the well-pleaded-complaint rule. It would be an unprecedented feat of interpretive necromancy to say that § 1338(a)'s "arising under" language means one thing (the well-pleaded-complaint rule) in its own right, [834] but something quite different (respondent's complaint-orcounterclaim rule) when referred to by § 1295(a)(1).^[5]

Not all cases involving a patent-law claim fall within the Federal Circuit's jurisdiction. By limiting the Federal Circuit's jurisdiction to cases in which district courts would have jurisdiction under § 1338, Congress referred to a wellestablished body of law that requires courts to consider whether a patent-law claim appears on the face of the plaintiff's well-pleaded complaint. Because petitioner's complaint did not include any claim based on patent law, we vacate the judgment of the Federal Circuit and remand the case with instructions to transfer the case to the Court of Appeals for the Tenth Circuit. See 28 U. S. C. § 1631.

It is so ordered.

The Court correctly holds that the exclusive jurisdiction of the Court of Appeals for the Federal Circuit in patent [835] cases is "fixed with reference to that of the district court," ante, at 829. It is important to note the general rule, however, that the jurisdiction of the court of appeals is not "fixed" until the notice of appeal is filed. See Griggs v. Provident Consumer Discount Co., 459 U. S. 56, 58-59 (1982) (per curiam) ("The filing of a notice of appeal is an event of jurisdictional significance—it confers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal").

Thus, if a case began as an antitrust case, but an amendment to the complaint added a patent claim that was pending or was decided when the appeal is taken, the jurisdiction of the district court would have been based "in part" on 28 U. S. C. § 1338(a), and therefore § 1295(a)(1) would grant the Federal Circuit jurisdiction over the appeal. Conversely, if the only patent count in a multicount complaint was voluntarily dismissed in advance of trial, it would seem equally clear that the appeal should be taken to the appropriate regional court of appeals rather than to the Federal Circuit. See Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 823-824 (1988) (Stevens, J., concurring). Any other approach "would enable an unscrupulous plaintiff to manipulate appellate court jurisdiction by the timing of the amendments to its complaint." Id., at 824. To the extent that the Court's opinion might be read as endorsing a contrary result by reason of its reliance on cases involving the removal jurisdiction of the district court, I do not agree with it.

I also do not agree with the Court's statement that an interpretation of the "in whole or in part" language of § 1295(a)(1) to encompass patent claims alleged in a compulsory counterclaim providing an independent basis for the district court's jurisdiction would be a "neologism" that would involve "an unprecedented feat of interpretive necromancy," ante, at 833. For there is well-reasoned precedent supporting precisely that conclusion. See Aerojet-General Corp. v. [836] Machine Tool Works, Oerlikon-Buehrle Ltd., 895 F. 2d 736, 742-743 (CA Fed. 1990) (en banc) (opinion of Markey, C. J., for a unanimous court) (citing, e. g., Rengo Co. v. Molins Machine Co., 657 F. 2d 535, 539 (CA3 1981); Dale Electronics, Inc. v. R. C. L. Electronics, Inc., 488 F. 2d 382, 390 (CA1 1973); Pioche Mines Consol., Inc. v. Fidelity-Philadelphia Trust Co., 206 F. 2d 336, 336-337 (CA9 1953); Lion Mfg. Corp. v. Chicago Flexible Shaft Co., 106 F. 2d 930, 933 (CA7 1939)).^[6] I am nevertheless persuaded that a correct interpretation of § 1295(a)(1) limits the Federal Circuit's exclusive jurisdiction to those cases in which the patent claim is alleged in either the original complaint or an amended pleading filed by the [837] plaintiff. In my judgment, each of the three policies that the Court has identified as supporting the "well-pleadedcomplaint" rule governing district court jurisdiction, ante, at 831-832, points in the same direction with respect to appellate jurisdiction.

First, the interest in preserving the plaintiff's choice of forum includes not only the court that will conduct the trial but the appellate court as well. A plaintiff who has a legitimate interest in litigating in a circuit whose precedents support its theory of the case might omit a patent claim in order to avoid review in the Federal Circuit. In some cases that interest would be defeated by a rule that allowed a patent counterclaim to determine the appellate forum.

Second, although I doubt that a rule that enabled the counterclaimant to be the occasional master of the appellate forum "would radically expand" the number of cases heard by the Federal Circuit, ante, at 832, we must recognize that the exclusive jurisdiction of the Federal Circuit defined in § 1295(a)(1) does not comprise claims arising under the trademark and copyright laws, which are included in the district court's grant of jurisdiction under § 1338(a).^[7] As the instant litigation demonstrates, claims sounding in these other areas of intellectual property law are not infrequently bound up with patent counterclaims. The potential number of cases in which a counterclaim might direct to the Federal Circuit appeals that Congress specifically chose not to place within its exclusive jurisdiction is therefore significant.

Third, the interest in maintaining clarity and simplicity in rules governing appellate jurisdiction will be served by limiting [838] the number of pleadings that will mandate review in the Federal Circuit. In his opinion in Aerojet, Chief Judge Markey merely held that a counterclaim for patent infringement that was "compulsory" and not "frivolous" or "insubstantial" sufficed to establish jurisdiction; he made a point of noting that there was no assertion in the case that the patent counterclaim at issue had been filed "to manipulate the jurisdiction of [the Federal Circuit]." 895 F. 2d, at 738. The text of the statute, however, would not seem to distinguish between that counterclaim and those that are permissive, insubstantial, or manipulative, and there is very good reason not to make the choice of appellate forum turn on such distinctions. Requiring assessment of a defendant's motive in raising a patent counterclaim or the counterclaim's relative strength wastes judicial resources by inviting "unhappy interactions between jurisdiction and the merits." Kennedy v. Wright, 851 F. 2d 963, 968 (CA7 1988).

There is, of course, a countervailing interest in directing appeals in patent cases to the specialized court that was created, in part, to promote uniformity in the development of this area of the law. But we have already decided that the Federal Circuit does not have exclusive jurisdiction over all cases raising patent issues.^[8] Christianson, 486 U. S., at [839] 811-812. Necessarily, therefore, other circuits will have some role to play in the development of this area of the law. An occasional conflict in decisions may be useful in identifying questions that merit this Court's attention. Moreover, occasional decisions by courts with broader jurisdiction will provide an antidote to the risk that the specialized court may develop an institutional bias.^[9]

In sum, I concur in the Court's judgment and join Parts I and II—A of its opinion.

For reasons stated by Chief Judge Markey, writing for a unanimous en banc Federal Circuit in Aerojet-General Corp. v. Machine Tool Works, Oerlikon-Buehrle Ltd., 895 F. 2d 736 (1990), I conclude that, when the claim stated in a compulsory counterclaim "aris[es] under" federal patent law and is adjudicated on the merits by a federal district court, the Federal Circuit has exclusive appellate jurisdiction over that adjudication and other determinations made in the same case. See id., at 741-744 (distinguishing Christianson v. Colt Industries Operating Corp., 486 U. S. 800 (1988), in which this Court affirmed the jurisdictional decision of the Federal Circuit; in discussing the "well-pleaded complaint rule," the Federal Circuit observed that a patent infringement [840] counterclaim, unlike a patent issue raised only as a defense, has as its own, independent jurisdictional base 28 U. S. C. § 1338, i. e., such a claim discretely "arises under the patent laws").

The question now before this Court bears not at all on a plaintiff's choice of trial forum. The sole question presented here concerns Congress' allocation of adjudicatory authority among the federal courts of appeals. At that appellate level, Congress sought to eliminate forum shopping and to advance uniformity in the interpretation and application of federal patent law. See generally Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N. Y. U. L. Rev. 1, 30-37 (1989).

The Court's opinion dwells on district court authority. See ante, at 829-832. But, all agree, Congress left that authority entirely untouched. I would attend, instead, to the unique context at issue, and give effect to Congress' endeavor to grant the Federal Circuit exclusive appellate jurisdiction at least over district court adjudications of patent claims. See Dreyfuss, supra, at 36.

In the instant case, however, no patent claim was actually adjudicated. For that sole reason, I join the Court's judgment.

[1] David W. Long filed a brief for the Patent, Trademark, and Copyright Section of the Bar Association of the District of Columbia as amicus curiae.

[2] Like Christianson v. Colt Industries Operating Corp., 486 U. S. 800, 814-815 (1988), this case does not call upon us to decide whether the Federal Circuit's jurisdiction is fixed with reference to the complaint as initially filed or whether an actual or constructive amendment to the complaint raising a patent-law claim can provide the foundation for the Federal Circuit's jurisdiction.

[3]The well-pleaded-complaint rule also governs whether a case is removable from state to federal court pursuant to 28 U. S. C. § 1441(a), which provides in relevant part:

"Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending."

See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U. S. 1 (1983).

[4] Echoing a variant of this argument, Justice Ginsburg contends that "giv[ing] effect" to Congress's intention "to eliminate forum shopping and to advance uniformity in . . . patent law" requires that the Federal Circuit have exclusive jurisdiction whenever a patent claim was "actually adjudicated." Post, at 840 (opinion concurring in judgment).We rejected precisely this argument in Christianson, viz., the suggestion that the Federal Circuit's jurisdiction is "fixed `by reference to the case actually litigated.' " 486 U. S., at 813 (quoting Brief for Respondent in Christianson v. Colt Industries Operating Corp., O. T. 1987, No. 87-499, p. 31). We held that the Federal Circuit's jurisdiction, like that of the district court, "is determined by reference to the well-pleaded complaint, not the well-tried case." 486 U. S., at 814.

[5] Although Justice Stevens agrees that a correct interpretation of § 1295(a)(1) does not allow a patent-law counterclaim to serve as the basis for the Federal Circuit's jurisdiction, he nevertheless quibbles that "there is well-reasoned precedent" supporting the contrary conclusion. See post, at 835 (opinion concurring in part and concurring in judgment). There is not. The cases relied upon by Justice Stevens and by the court in Aerojet-General Corp. v. Machine Tool Works, Oerlikon-Buehrle Ltd., 895 F. 2d 736 (CA Fed. 1990), simply address whether a district court can retain jurisdiction over a counterclaim if the complaint (or a claim therein) is dismissed or if a jurisdictional defect in the complaint is identified. They do not even mention the well-pleaded-complaint rule that the statutory phrase "arising under" invokes. Nor do any of these cases interpret § 1295(a)(1) or another statute conferring appellate jurisdiction with reference to the jurisdiction of the district court. Thus, the cases relied upon by Justice Stevens have no bearing on whether the phrase "arising under" can be interpreted differently in ascertaining the jurisdiction of the Federal Circuit than that of the district court.

[6] The Court dismisses the cases cited in Aerojet, a unanimous opinion for an en banc Federal Circuit, as having "no bearing" on this case because they do not parse the term "arising under" or interpret 28 U. S. C. § 1295(a)(1). Ante, at 834, n. 4. But surely it is not a "quibbl[e]" to acknowledge them as supporting the Aerojetcourt's conclusion that the jurisdiction of the district court can be based on a patent counterclaim, thereby satisfying the "in whole or in part" requirement of § 1295(a)(1).

In any event, the assertion that only the power of black magic could give "arising under" a different meaning with respect to appellate jurisdiction is belied by case law involving the Temporary Emergency Court of Appeals (TECA), which had exclusive jurisdiction over appeals in cases "arising under" the Economic Stabilization Act of 1970 (ESA), § 211(b)(2), 85 Stat. 749. Most courts departed from the traditional understanding of "arising under" and interpreted the statute to grant TECA appellate jurisdiction over ESA issues, including those raised as a defense. Courts nevertheless interpreted the statute's identical language respecting the district courts to grant traditional "arising under" jurisdiction. See Coastal States Marketing, Inc. v. New England Petroleum Corp., 604 F. 2d 179, 185-186 (CA2 1979) ("It must be candidly recognized that according the TECA some form of `issue' jurisdiction places on the phrase, `cases and controversies arising under,' . . . a construction that differs from the meaning associated with these words in other jurisdictional statutes, and differs even from the grant of jurisdiction to the district courts in [the ESA]"). Thus, although I am in agreement with the Court's ultimate decision not to determine appellate jurisdiction by reference to the defendant's patent counterclaim, I find it unnecessary and inappropriate to slight the contrary reasoning of the Court of Appeals.

[7] The statute grants the Federal Circuit "exclusive jurisdiction . . . if the jurisdiction of [the district] court was based, in whole or in part, on [28 U. S. C.] section 1338 .. . , except that a case involving a claim arising under any Act of Congress relating to copyrights, exclusive rights in mask works, or trademarks and no other claims under section 1338(a) shall be governed" by provisions relating to appeals to the regional courts of appeals. 28 U. S. C. § 1295(a)(1).

[8] In explicit contrast with the TECA, see n. 1, supra, the Federal Circuit was granted appellate jurisdiction over cases involving patent law claims, not issues. See Christianson v. Colt Industries Operating Corp., 486 U. S. 800,820-821, n. 1 (1988) (Stevens, J.,concurring) (quoting H. R. Rep. No. 97-312, p. 41 (1981)) ("Cases will be within the jurisdiction of the Court of Appeals for the Federal Circuit in the same sense that cases are said to `arise under' federal law for purposes of federal question jurisdiction. Contrast, Coastal States Marketing, Inc. v.New England Petroleum Corp., 604 F. 2d 179 (2d Cir., 1979) [Temporary Emergency Court of Appeals properly has jurisdiction over issues, not claims,arising under the Economic Stabilization Act]" (internal quotation marks omitted)).

Considerations of convenience to the parties and the courts support Congress' decision to determine the Federal Circuit's appellate jurisdiction based on the claims alleged in the well-pleaded complaint rather than the issues resolved by the district court's judgment. If, for example, the district court's judgment rests on multiple grounds, directing the appeal is a relatively straightforward matter by reference to the complaint. As Judge Easterbrook explains in Kennedy v.Wright, 851 F. 2d 963 (CA7 1988), fixing appellate jurisdiction with respect to the complaint also ensures that a case that has been appealed and remanded will return to the same appellate court if there is a subsequent appeal. Id., at 968 (describing the risk of "a game of jurisdictional ping-pong" if subsequent appeals are directed based on the grounds for decision rather than the pleadings).

[9] See Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N. Y. U. L. Rev. 1, 25-30, 54 (1989) (evaluating criticism that the Federal Circuit demonstrates a greater pro-patent bias than regional circuits).

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.

[668] Charles L. Black argued the cause for petitioners. With him on the brief were W. P. Z. German, Alvin F. Molony, Hawley C. Kerr, Donald Campbell, Ray S. Fellows, Dan Moody, Walace Hawkins, Earl A. Brown and Raymond M. Myers.

Harry D. Turner argued the cause for respondent. With him on the brief were Don Emery, Rayburn L. Foster, George L. Sneed, S. E. Floren, Jr. and Eugene O. Monnett.

In 1945, Michigan-Wisconsin Pipe Line Company sought from the Federal Power Commission a certificate of public convenience and necessity, required by § 7 (c) of the Natural Gas Act, 52 Stat. 825, as amended, 15 U. S. C. § 717f (c), for the construction and operation of a pipe line to carry natural gas from Texas to Michigan and Wisconsin. A prerequisite for such a certificate is adequate reserves of gas. To obtain these reserves Michigan-Wisconsin entered into an agreement with Phillips Petroleum Company on December 11, 1945, whereby the latter undertook to make available gas from the Hugoton Gas Field, sprawling over Kansas, Oklahoma and Texas, which it produced or purchased from others. Phillips had contracted with petitioners, Skelly Oil Company, Stanolind Oil and Gas Company, and Magnolia Petroleum Company, to purchase gas produced by them in the Hugoton Field for resale to Michigan-Wisconsin. Each contract provided that "in the event Michigan-Wisconsin Pipe Line Company shall fail to secure from the Federal Power Commission on or before [October 1, 1946] a certificate of public convenience and necessity for the construction and operation of its pipe line, Seller [a petitioner] shall have the right to terminate this contract by written notice to Buyer [Phillips] delivered to Buyer at any time after December 1, 1946, but before the issuance of such certificate." The legal significance of this provision is at the core of this litigation.

The Federal Power Commission, in response to the application of Michigan-Wisconsin, on November 30, 1946, ordered that "A certificate of public convenience and necessity be and it is hereby issued to applicant [Michigan-Wisconsin], upon the terms and conditions of this order," listing among the conditions that there be no transportation [670] or sale of natural gas by means of the sanctioned facilities until all necessary authorizations were obtained from the State of Wisconsin and the communities proposed to be served, that Michigan-Wisconsin should have the approval of the Securities and Exchange Commission for its plan of financing, that the applicant should file for the approval of the Commission a schedule of reasonable rates, and that the sanctioned facilities should not be used for the transportation of gas to Detroit and Ann Arbor except with due regard for the rights and duties of Panhandle Eastern Pipe Line Company, which had intervened before the Federal Power Commission, in its established service for resale in these areas, such rights and duties to be set forth in a supplemental order. It was also provided that Michigan-Wisconsin should have fifteen days from the issue of the supplemental order to notify the Commission whether the certificate "as herein issued is acceptable to it." Finally, the Commission's order provided that for purposes of computing the time within which applications for rehearing could be filed, "the date of issuance of this order shall be deemed to be the date of issuance of the opinions, or of the supplemental order referred to herein, whichever may be the later." 5 F. P. C. 953, 954, 956.

News of the Commission's action was released on November 30, 1946, but the actual content of the order was not made public until December 2, 1946. Petitioners severally, on December 2, 1946, gave notice to Phillips of termination of their contracts on the ground that Michigan-Wisconsin had not received a certificate of public convenience and necessity. Thereupon Michigan-Wisconsin and Phillips brought suit against petitioners in the District Court for the Northern District of Oklahoma. Alleging that a certificate of public convenience and necessity, "within the meaning of said Natural Gas Act and said contracts" had been issued prior to petitioners' attempt [671] at termination of the contracts, they invoked the Federal Declaratory Judgment Act for a declaration that the contracts were still "in effect and binding upon the parties thereto." Motions by petitioners to have Michigan-Wisconsin dropped as a party plaintiff were sustained, but motions to dismiss the complaint for want of jurisdiction were denied. The case then went to the merits, and the District Court decreed that the contracts between Phillips and petitioners had not been "effectively terminated and that each of such contracts remain [sic] in full force and effect." The Court of Appeals for the Tenth Circuit affirmed, 174 F. 2d 89, and we brought the case here, 338 U. S. 846, because it raises in sharp form the question whether a suit like this "arises under the Constitution, laws or treaties of the United States," 28 U. S. C. § 1331, so as to enable District Courts to give declaratory relief under the Declaratory Judgment Act. 48 Stat. 955, as amended, now 28 U. S. C. § 2201.

"[T]he operation of the Declaratory Judgment Act is procedural only." Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 240. Congress enlarged the range of remedies available in the federal courts but did not extend their jurisdiction. When concerned as we are with the power of the inferior federal courts to entertain litigation within the restricted area to which the Constitution and Acts of Congress confine them, "jurisdiction" means the kinds of issues which give right of entrance to federal courts. Jurisdiction in this sense was not altered by the Declaratory Judgment Act. Prior to that Act, a federal court would entertain a suit on a contract only if the plaintiff asked for an immediately enforceable remedy like money damages or an injunction, but such relief could only be given if the requisites of jurisdiction, in the sense of a federal right or diversity, provided foundation for resort to the federal courts. The Declaratory Judgment Act allowed relief to be given by way of recognizing the plaintiff's [672] right even though no immediate enforcement of it was asked. But the requirements of jurisdiction—the limited subject matters which alone Congress had authorized the District Courts to adjudicate—were not impliedly repealed or modified. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U. S. 293, 300; Colegrove v. Green, 328 U. S. 549, 551-52.

If Phillips sought damages from petitioners or specific performance of their contracts, it could not bring suit in a United States District Court on the theory that it was asserting a federal right. And for the simple reason that such a suit would "arise" under the State law governing the contracts. Whatever federal claim Phillips may be able to urge would in any event be injected into the case only in anticipation of a defense to be asserted by petitioners. "Not every question of federal law emerging in a suit is proof that a federal law is the basis of the suit." Gully v. First National Bank, 299 U. S. 109, 115; compare 28 U. S. C. § 1257, with 28 U. S. C. § 1331. Ever since Metcalf v. Watertown, 128 U. S. 586, 589, it has been settled doctrine that where a suit is brought in the federal courts "upon the sole ground that the determination of the suit depends upon some question of a Federal nature, it must appear, at the outset, from the declaration or the bill of the party suing, that the suit is of that character." But "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 that Constitution or those laws." Tennessee v. Union & Planters' Bank, 152 U. S. 454, 464. The plaintiff's claim itself must present a federal question "unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose." Taylor v. Anderson, 234 U. S. 74, 75-76; Louisville & Nashville R. Co. v. Mottley, 211 U. S. 149, 152.

[673] These decisions reflect the current of jurisdictional legislation since the Act of March 3, 1875, 18 Stat. 470, first entrusted to the lower federal courts wide jurisdiction in cases "arising under this Constitution, the Laws of the United States, and Treaties." U. S. Const. Art. III, § 2. "The change is in accordance with the general policy of these acts, manifest upon their face, and often recognized by this court, to contract the jurisdiction of the Circuit Courts [which became the District Courts] of the United States." Tennessee v. Union & Planters' Bank, supra at 462. See also Arkansas v. Kansas & Texas Coal Co., 183 U. S. 185, 188, and Gully v. First National Bank, supra at 112-14. With exceptions not now relevant Congress has narrowed the opportunities for entrance into the federal courts, and this Court has been more careful than in earlier days in enforcing these jurisdictional limitations. See Gully v. First National Bank, supra at 113.

To be observant of these restrictions is not to indulge in formalism or sterile technicality. It would turn into the federal courts a vast current of litigation indubitably arising under State law, in the sense that the right to be vindicated was State-created, if a suit for a declaration of rights could be brought into the federal courts merely because an anticipated defense derived from federal law. Not only would this unduly swell the volume of litigation in the District Courts but it would also embarrass those courts—and this Court on potential review—in that matters of local law may often be involved, and the District Courts may either have to decide doubtful questions of State law or hold cases pending disposition of such State issues by State courts. To sanction suits for declaratory relief as within the jurisdiction of the District Courts merely because, as in this case, artful pleading anticipates a defense based on federal law would contravene the whole trend of jurisdictional legislation [674] by Congress, disregard the effective functioning of the federal judicial system and distort the limited procedural purpose of the Declaratory Judgment Act. See Developments in the Law—Declaratory Judgments—1941-1949, 62 Harv. L. Rev. 787, 802-03 (1949). Since the matter in controversy as to which Phillips asked for a declaratory judgment is not one that "arises under the . . . laws . . . of the United States" and since as to Skelly and Stanolind jurisdiction cannot be sustained on the score of diversity of citizenship, the proceedings against them should have been dismissed.

As to Magnolia, a Texas corporation, a different situation is presented. Since Phillips was a Delaware corporation, there is diversity of citizenship. Magnolia had qualified to do business in Oklahoma and appointed an agent for service of process in accordance with the prevailing Oklahoma statute. Okla. Stat. Ann. tit. 18, § 452 (1937). Magnolia claimed that the subject matter of this proceeding did not arise in Oklahoma within the meaning of its consent to be sued. This contention was rejected below, and we do not reexamine the local law as applied by the lower courts. Under the doctrine of Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U. S. 165, venue was properly laid in Oklahoma; that the declaratory remedy which may be given by the federal courts may not be available in the State courts is immaterial.

Therefore, in the case of Magnolia we must reach the merits. They relate to two matters: (1) the clause in the contract with Phillips permitting its termination at any time after December 1, 1946, but before the "issuance" of "a certificate of public convenience and necessity" by the Federal Power Commission; and (2) whether this provision was satisfied by Magnolia's notice of termination of December 2, 1946, despite the Commission's order of November 30, 1946. The phraseology "certificate of [675] public convenience and necessity" in the contract is identic with the phrase in § 7 (c) of the Natural Gas Act. The Court of Appeals equated the term of the contract with that in the statute and in effect deemed its problem to be the proper construction of what constitutes the "issuance" of a "certificate of public convenience and necessity" within the meaning of § 7 (c). So viewing the matter, the court held that the order of November 30, 1946, satisfied the requirement of the contract, and that therefore a certificate of public convenience and necessity had been issued within the terminal period of the contract, and that its termination was not timely.

It will be recalled that the order of November 30, 1946, had three parts: (A) it stated that "A certificate of public convenience and necessity be and it is hereby issued to applicant [Michigan-Wisconsin]"; (B) it imposed certain conditions upon the grant, some of which were to be set forth in a supplemental order; and (C) it said that "For the purpose of computing the time within which applications for rehearing may be filed, the date of issuance of this order shall be deemed to be the date of issuance of the opinions, or of the supplemental order referred to herein, whichever may be the later." 5 F. P. C. at 954, 956. The course of reasoning by which the Court of Appeals concluded that the order of November 30, 1946, satisfied the statutory requirement for a certificate of public convenience and necessity can be briefly summarized. It relied on the grammatical argument that the Commission used the present tense in its order and subsequently referred to it as an order "issuing a certificate of public convenience and necessity," e. g., 6 F. P. C. 1, 37; the conditional nature of the order was not deemed to impair its efficacy since § 7 (e) of the Natural Gas Act authorized the Commission "to attach to the issuance of the certificate and to the exercise of the rights granted there-under such reasonable terms and conditions as the public [676] convenience and necessity may require"; and the provision of the order connecting the date of the order's issuance with the time defined for securing a rehearing was thought relevant only to the supplemental order.

We are not persuaded now to rest decision on the analysis of the Court of Appeals which led to its conclusion. We need not linger long on the merely grammatical argument of that court; it is given more weight than it can bear. Of course, the Commission has considerable administrative discretion to decide when an order may fairly be deemed to have been "issued." Section 16 of the Act provides that "Orders of the Commission shall be effective on the date and in the manner which the Commission shall prescribe." But surely a certificate cannot be said to have been issued for purposes of defining rights and the seeking of reconsideration by an aggrieved person if its substance is merely in the bosom of the Commission. Knowledge of the substance must to some extent be made manifest. Here the content of the order of November 30, 1946, was not made public until December 2, 1946, the date of the termination notice.

The Commission itself in its rule for computing rehearing time distinguishes between "adoption" of an order and its "issuance."^[1] However, as a matter of [677] usage, the Commission has referred to an order as having "issued" a certificate on a particular date when in fact the date was that of "adoption." See, e. g., Arkansas Louisiana Gas Co., 5 F. P. C. 813, 897; cf. Pacific Gas & Elec. Co., 5 F. P. C. 824, 901. Finally, the restriction of the Court of Appeals of the rehearing provision of Part C to the supplemental order finds no support on the face of the order of November 30, 1946. There is nothing to indicate that Part C was not to apply to the entire order for purposes of § 19 of the Act, which allows a rehearing by a party aggrieved "within thirty days after the issuance of such order" and makes such rehearing a prerequisite to judicial review. See 6 F. P. C. 323.

Since the requirements of the Natural Gas Act for the issuance of "a certificate of public convenience and necessity" may be distributive in scope, varying with the different contexts in which the question must be examined, this is not the occasion to decide that these requirements have a single uniform content. Whether the statutory requirement here was satisfied is not a question of fact, the finding of which by the District Court is to be respected unless clearly erroneous. The District Court merely found that the content of the piece of paper dated November 30, 1946, was that day agreed upon in executive session of the Commission and that that fact was made known. But this leaves untouched the legal significance of this action of the Commission, and the Court ought not now in darkness to pronounce on this question.

We are not restricted to disposition of the controversy on so truncated a treatment of the issues that underlie the record. Considering the fact that so to dispose of the case [678] would involve determination of an important problem concerning a regulatory statute with implications of public importance that private litigants naturally enough do not wholly represent and that on these matters neither the courts below nor this Court had the benefit of the experience and illumination of the agency entrusted with the enforcement of the Act,^[2] the due administration of justice requires that we should exercise our discretionary power in reviewing cases to "require such further proceedings to be had as may be just under the circumstances." 28 U. S. C. § 2106; Honeyman v. Hanan, 300 U. S. 14, 25. Accordingly, we think that the proper disposition requires that we vacate the judgment as to Magnolia and remand the case in order that the Court of Appeals either itself or by sending the case back to the District Court can further explore, through ways that may be appropriate, the issues which have been laid bare. See Kennedy v. Silas Mason Co., 334 U. S. 249.

The impact of the litigation both here and below was on the proper construction of § 7 (c). Even though the language of the contract may be identic with that of § 7 (c), this language in the contract may have a scope independent of the proper construction of § 7 (c). The same words, in different settings, may not mean the same thing. Compare opinion of Mr. Justice Holmes in Towne v. Eisner, 245 U. S. 418, with his dissent in Eisner v. Macomber, 252 U. S. 189, 219. Parties do not necessarily endow statutory language in a contract with the scope of the statute, particularly when the same term may have variant meanings for different applications of the statute. See Standard Oil Co. v. Johnson, 316 U. S. [679] 481, 483. Of course the statutory meaning in the context of the entire Natural Gas Act may not be irrelevant. In remanding the case we do not mean to foreclose this line of inquiry.^[3]

In respect to Magnolia, the judgment of the Court of Appeals is vacated and the cause remanded for further proceedings not inconsistent with this opinion. As to Skelly and Stanolind, we reverse the judgment with directions that the cause be dismissed.

It is so ordered.

I concur in that part of the Court's judgment that directs dismissal of the cause as to Skelly and Stanolind. I have real doubts as to whether there is a federal question here at all, even though interpretation of the contract between private parties requires an interpretation of a federal statute and the action of a federal regulatory [680] body. But the Court finds it unnecessary to reach that question because it holds that the federal question, if any, is not a part of the plaintiff's claim and that jurisdiction does not, therefore, attach. While this result is not a necessary one, I am not prepared to dissent from it at this time.

But I am forced to dissent from the vacation and remand of the cause in respect to Magnolia. I think that, as to this petitioner, the judgment of the Court of Appeals should be affirmed. The Court decides that the Court of Appeals erred in holding that the Federal Power Commission had issued a certificate of public convenience and necessity to Michigan-Wisconsin Pipe Line Company on November 30, 1946, despite the fact that on that date the Commission adopted an order stating that "A certificate of public convenience and necessity be and it is hereby issued to Applicant, upon the terms and conditions of this order, . . . ." This disregard for what the District Court found to be the Commission's express intention is based upon two alternative grounds. First, it is suggested that while the order issuing the certificate was "adopted" on November 30, it was not "issued" until December 2. Second, it is said that Part C of the November 30 order, which concerned the date of issuance of the order for purposes of applications for rehearing, precludes a finding that a certificate was issued on November 30. Neither of these grounds, in my judgment, supports the Court's conclusion.

As to the first, which was not argued here nor in the Court of Appeals, it is true that the Commission's rules provide that an order is not to be deemed "issued" until the full text is mimeographed and mailed to the parties to the proceeding. This usually follows within two or three days after the order is "adopted." The only purpose of the postponement of the date of issuance of the [681] order, so far as we are informed, is to postpone the running of the 30-day period for applications for rehearing until the full text is available to the parties who have standing to ask for rehearing.

But the Commission uniformly refers to the date of adoption of the order as the date upon which the certificate of public convenience and necessity was "issued."^[4] It did so in this case, when, on March 12, 1947, it issued a supplemental order referring to its "order of November 30, 1946, issuing a certificate of public convenience and necessity." Furthermore, the District Court found as a fact that

"On November 30, a Saturday, the Commission in executive session made an order granting, with conditions, a certificate of public convenience and necessity to the Michigan-Wisconsin Pipe Line Company. During this session as the members of the Commission came to agreement as to the wording of the order, Mr. Fuquay, the secretary of the Commission, prepared the order in full and exact text. The secretary was directed by the Commission to release the order immediately."

Following adjournment on that day, the secretary sent a telegram to the parties to the proceeding, informing them that the "Commission today . . . adopted Opinion and Order, in Docket No. G-669, issuing certificate, with conditions, to Michigan Wisconsin Pipe Line Company." On the same day, releases to the press were made announcing the action taken by the Commission.

Skelly, Stanolind and Magnolia were not parties to this proceeding. It may very well be that the date of issuance of the order granting the certificate is December [682] 2 or some later date—for purposes of rehearing upon application of the parties. But I think there is no question that the certificate, as distinguished from the order, was issued on November 30. That is the Commission's view, as indicated by its supplemental order. The fact that it takes a few days to get its orders mimeographed and the Commission has adopted a rule that, in fairness to the parties, the time for rehearing shall not begin to run until such orders, in full text, are available, does not mean that the issuance of the certificate is also held in abeyance until that time.

The second argument requires but short answer. Part C provides that

"For the purpose of computing the time within which applications for rehearing may be filed, the date of issuance of this order shall be deemed to be the date of issuance of the opinions, or of the supplemental order referred to herein, whichever may be the later."

The paragraph means just what it says. I do not understand the Court to hold that the Commission cannot thus postpone the running of the time for rehearing. Computation of that time, as I have indicated, has no necessary relation to the date of issuance of the certificate.

I think that the Commission intended to and did issue a certificate of public convenience and necessity to Michigan-Wisconsin Pipe Line Company on November 30, 1946, whatever the date of its order, for purposes of computation of time for rehearing. The crucial clause of the contract refers to "the issuance of such certificate [of public convenience and necessity]." By their inclusion of a provision dependent upon the action of a federal agency, it is obvious that the parties intended that the contract should be construed with reference to the effective [683] date of agency action under the statutes and the practices of the Commission. The District Court so concluded.^[5] I can see no reason, therefore, to remand the cause for further proceedings. In my view, effective agency action was taken on November 30, 1946. As to Magnolia, I would affirm the judgment of the Court of Appeals.

[1]Rule 13 (b) of the Commission's Rules of Practice and Procedure provides: "In computing any period of time involving the date of the issuance of an order by the Commission, the day of issuance of an order shall be the day the Office of the Secretary mails or delivers copies of the order (full text) to the parties or their attorneys of record, or makes such copies public, whichever be the earlier. . . . The day of issuance of an order may or may not be the day of its adoption by the Commission." 18 C. F. R. § 1.13 (b). A deposition taken of the Secretary of the Commission gave light on this point. The Commission's previous rule on rehearing time is in 18 C. F. R. Cum. Supp. § 50.75.

Rule 13 (c) provides: "Orders of the Commission shall be effective as of the dates of issuance unless otherwise specifically provided in the orders." 18 C. F. R. § 1.13 (c). This provision may be of significance if the effectiveness of a certificate is an issue in proceedings under § 20 or § 21 of the Act. The Court of Appeals did not discuss the bearing of these rules upon this case.

[2] The significance of the conditions in qualifying what is formally called a "certificate" in the order of November 30, 1946, is precisely one of those matters upon which Commission practice and experience may shed helpful light.

[3]In its conclusions of law, the District Court stated: "The certificate issued by the Commission to Michigan-Wisconsin on November 30, 1946, although containing terms and conditions, was and is a certificate issued under the requirements of the Natural Gas Act and one that is provided for by that act. A consideration of the contracts between plaintiff and defendants, together with the contract between plaintiff and Michigan-Wisconsin, compels a conclusion that such certificate was one within the contemplation of the parties and satisfied the terms of the contracts."

The context suggests that in the second sentence the District Court may still have been focusing upon statutory meaning.

[4] See, e. g., Arkansas Louisiana Gas Co., 5 F. P. C. 813, 897; Pacific Gas & Elec. Co., 5 F. P. C. 824, 901.

[5] The District Court stated as one of its conclusions of law: "The certificate issued by the Commission to Michigan-Wisconsin on November 30, 1946, although containing terms and conditions, was and is a certificate issued under the requirements of the Natural Gas Act and one that is provided for by that act. A consideration of the contracts between plaintiff and defendants, together with the contract between plaintiff and Michigan-Wisconsin, compels a conclusion that such certificate was one within the contemplation of the parties and satisfied the terms of the contracts."

[767] Willie D. Bright, pro per.

Philip R. Placier, Charles P. McCarthy, Thelen, Marrin, Johnson & Bridges, San Francisco, Cal., for defendants-appellees.

[768] Before WRIGHT, KENNEDY and BEEZER, Circuit Judges.

Plaintiff brought an action against his employer in a California state court. He alleged that his employer had breached his employment contract by paying him less than the contract required. The employer removed the case to federal district court on the ground that plaintiff had artfully pleaded what was in reality a challenge to the employer's compliance with federal law requiring the withholding of federal income tax. The district court denied plaintiff's motion to remand, dismissed the action, and awarded attorney's fees to the employer. We affirm and impose sanctions.

On November 7, 1983, Willie D. Bright entered into an employment contract with Bechtel Petroleum, Inc. pursuant to a collective bargaining agreement. On January 3, 1984, Bright provided to Bechtel a federal Employee's Withholding Allowance Certificate (W-4 Form) on which he claimed an exemption from the withholding of federal income tax.

In accordance with federal internal revenue regulations, Bechtel forwarded Bright's W-4 Form to the Internal Revenue Service (IRS). On March 14, 1984, the IRS issued a directive to Bechtel declaring Bright's W-4 Form invalid and ordering Bechtel to begin withholding federal income tax. Pursuant to a California state income tax regulation, Bechtel also began withholding state income tax. In 1984, a total of $2,486.18 in federal tax and $736.00 in state tax was withheld from Bright's wages.

On June 1, 1984, Bright filed an action against Bechtel, and certain individual agents, in California Superior Court alleging a breach of contract. Bechtel removed the case to the United States District Court for the Northern District of California on the ground that the true basis of the complaint was that Bechtel had complied with federal income tax laws in withholding tax from Bright's wages. Bechtel also moved for dismissal of the action, and for an award of costs and attorney's fees on the ground the complaint was frivolous and filed in bad faith.

Bright moved to remand the case back to state court, arguing that he desired to litigate only the question of Bechtel's withholding of state income tax from his wages.

On December 4, 1984, the district court denied Bright's motion to remand, granted the motion to dismiss, and awarded attorney's fees in the amount of $3300 to Bechtel.

On December 19, 1984, Bright filed a motion asking the court for "clarification" of the grounds of its judgment. Before the district court had ruled on this motion, Bright filed a notice of appeal from the judgment. The court subsequently denied Bright's motion. Bright also filed a notice of appeal from that order. The two appeals have been consolidated.

A question of federal subject matter jurisdiction, such as that permitting removal of a case from state to federal court, is reviewable de novo. See Mobil Oil Corp. v. City of Long Beach, 772 F.2d 534, 538 (9th Cir.1985). This court reviews de novo a district court's ruling on a motion to dismiss for failure to state a claim upon which relief can be granted. Trerice v. Pedersen, 769 F.2d 1398, 1400 (9th Cir.1985).

Bright's complaint alleges that Bechtel breached the employment contract by "issuing [769] to plaintiff paychecks that were in amounts less than contracted and agreed for." The complaint alleges a cause of action based upon "breach of contract and a gross violation of Christian principles."

Bechtel petitioned to remove the case to federal district court on the ground that the "breach" Bright alleges is based upon Bechtel's withholding of income tax pursuant to federal law. Bechtel contends the action falls within the district court's original jurisdiction because it "arises under" federal internal revenue statutes.^[1]

An action may "arise under" a law of the United States if the plaintiff's right to relief necessarily turns on construction of federal law. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 9, 103 S.Ct. 2841, 2846, 77 L.Ed.2d 420 (1983); Mobil Oil Corp. v. City of Long Beach, 772 F.2d 534, 539 (9th Cir.1985). Under the "well-pleaded complaint" rule, the federal question, which invokes federal jurisdiction, must appear from the complaint and not from any federal defense the defendant might raise to defeat the claim. Franchise Tax Board, 463 U.S. at 10, 103 S.Ct. at 2846; Mobil Oil Corp., 772 F.2d at 538-39.

Although the plaintiff is generally considered the "master of his complaint" and is free to choose the forum for his action, this principle is not without limitation. Schroeder v. Trans World Airlines, Inc., 702 F.2d 189, 190 (9th Cir.1983).^[2] A plaintiff will not be allowed to conceal the true nature of a complaint through "artful pleading." Id. at 191; see also Olguin v. Inspiration Consolidated Copper Co., 740 F.2d 1468, 1472 (9th Cir.1984).

Bechtel, through background information in its petition for removal and supporting affidavits,^[3] demonstrated that Bright, despite "artfully pleading" his action as a breach of contract, in fact is challenging federal income tax withholding laws and regulations. Bright had written two letters threatening a lawsuit for breach of contract against Bechtel for complying with the IRS directive to withhold income tax from his wages. Both letters criticized the IRS directive as illegal and cited federal internal revenue statutes. The second letter expressly referred to a decision in this circuit, Stonecipher v. Bray, 653 F.2d 398 (9th Cir.1981), cert. denied, 454 U.S. 1145, 102 S.Ct. 1006, 71 L.Ed.2d 297 (1982), which dismissed a suit, similar to the instant action, as frivolous.

In addition, affidavits were presented to the district court showing that Bright's complaint contains language virtually identical to that in the complaint of another employee who had filed an action against Bechtel in state court.^[4] That action had been removed to the Northern District on the same ground, that the alleged breach of contract derived from the company's withholding of federal income tax from a [770] paycheck, and had been dismissed as frivolous shortly before Bright filed the complaint in this action.

Once the removal petition had been filed, Bright asserted for the first time that he intended only to litigate a claim involving the withholding of California state income tax. Thus, Bright argues, no federal question is raised. Bright's assertion must be regarded as disingenuous. The complaint simply does not state a claim limited to a state tax issue. It is clear under the circumstances that Bright has raised this new argument as another attempt to evade the jurisdiction of the Northern District, which has been acting swiftly to dismiss similar suits as frivolous.

Accordingly, the removal of the action to federal court was proper. See Chandler v. Perini Power Constructors, Inc., 520 F.Supp. 1152, 1155 (D.N.H.1981).

Under 26 U.S.C. § 3402, an employer has a mandatory duty to withhold federal income tax from an employee's wages where required by applicable regulations. See Maxfield v. United States Postal Service, 752 F.2d 433, 434 (9th Cir.1984); Chandler v. Perini Power Constructors, Inc., 520 F.Supp. 1152, 1153 (D.N.H.1981). The actions taken by Bechtel, in withholding federal income tax from Bright's wages, were fully in accordance with federal internal revenue regulations.^[5] This circuit has repeatedly held that an employer is not liable to an employee for complying with its legal duty to withhold tax. Maxfield, 752 F.2d at 434; see Stonecipher v. Bray, 653 F.2d 398, 403 (9th Cir.1981) (employer has not breached employment contract by withholding taxes from wages and paying employee the balance), cert. denied, 454 U.S. 1145, 102 S.Ct. 1006, 71 L.Ed.2d 297 (1982); Callow v. Amerace Corp., 681 F.2d 1242, 1243 (9th Cir.1982) (affirming dismissal of action against employer seeking to recover withheld federal and state income tax).

The Internal Revenue Code, 26 U.S.C. § 3403, expressly provides that an employer is liable to the IRS for the payment of tax withheld, and "shall not be liable to any person for the amount of any such payment." Thus, suits by employees against employers for tax withheld are "statutorily barred." Chandler, 520 F.Supp. at 1156.

In addition, we have held that actions, such as this, are barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a), which prohibits suits "for the purpose of restraining the assessment or collection of any tax." Maxfield, 752 F.2d at 434. A lawsuit, such as in the instant case, can be viewed as one to restrain collection (through withholding) of federal income tax. See id.; Chandler, 520 F.Supp. at 1155.

The district court properly dismissed Bright's claim involving withholding of federal income tax.

Bright's complaint also raises a breach of contract claim against Bechtel based on the withholding of state income tax. Bechtel withheld state income tax in compliance with a California state regulation, 22 Cal.Admin.Code § 4340-1(b), providing that a federal determination that a withholding exemption claim is invalid is also effective for state withholding purposes.

As the district court failed to remand any part of the case to state court, and granted a final dismissal of the case, we must assume [771] the district court also dismissed the claim involving withholding of state tax.

The district court had proper jurisdiction over the claim for breach of contract involving state tax withholding. Once the federal court acquires jurisdiction of a case on removal, it also acquires jurisdiction over pendent state law claims. Salveson v. Western States BankCard Ass'n, 731 F.2d 1423, 1430 (9th Cir.1984). Dismissal of the federal claim does not deprive a federal court of the power to adjudicate the remaining pendent state claims. Rosado v. Wyman, 397 U.S. 397, 403-04, 90 S.Ct. 1207, 1213, 25 L.Ed.2d 442 (1970); Anderson v. Allstate Ins. Co., 630 F.2d 677, 681 (9th Cir.1980).

The claims involving withholding of state tax and of federal tax arose out of a "common nucleus of operative fact." See United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). Bechtel's withholding of both taxes was based upon the single IRS directive. The California regulation makes the IRS determination effective for state purposes as well. Although the funds withheld were allocated between the IRS and the California Franchise Tax Board, the act of withholding was a single transaction.

Furthermore, the same issue, concerning whether an employer can be held liable in breach of contract for complying with government regulations, is raised in the claim involving state tax withholding. To conserve judicial resources, it was appropriate for the district court to decide this issue. It was not an abuse of discretion to refuse to remand this claim to state court.

Bright argues that it is inappropriate for a federal court to consider state tax issues. It is true that the principle of comity generally bars challenges to the validity of state tax systems in federal court.^[6] See Miller v. City of Los Angeles, 755 F.2d 1390, 1391 (9th Cir.), cert. denied, 474 U.S. 995, 106 S.Ct. 408, 88 L.Ed.2d 359 (1985). However, the California state income taxation system is not at issue in this action. Bright does contend that the regulation requiring an employer to withhold state tax if the IRS determines an exemption claim is invalid, 22 Cal.Admin.Code § 4340-1(b), violates the California constitution and state statutes which purportedly prohibit such a delegation of state taxation authority to the federal government. This is simply not relevant. Even if the regulation is invalid, it was justifiable for Bechtel to rely upon it and comply with its command. The only issue raised in this action is whether an employer can be held liable under California law for obeying a California regulation.

One California court has recently considered a claim similar to that brought by Bright in the instant case. In Otworth v. Southern Pacific Transp. Co., 166 Cal.App.3d 452, 167 Cal.App.3d 102E, 212 Cal.Rptr. 743, 744-45 (1985), the plaintiff alleged conversion, breach of contract, violations of constitutional rights, and unjust enrichment against his employer for withholding federal and state income tax. The funds had been turned over to the IRS and California Franchise Tax Board. Id., 212 Cal.Rptr. at 745. The court affirmed dismissal of these claims and imposed sanctions for frivolous appeal. Id., 212 Cal.Rptr. at 748-49.

The court appeared to view the state tax withholding issue as part and parcel of the federal tax withholding dispute. Consequently, the court's conclusion that the plaintiff failed to state a claim for breach of contract would apply to both the withholding of federal and state tax. The court held that, in the absence of a provision requiring the employer to refrain from withholding, an employer "discharges its [772] contractual obligations when it withholds taxes from the employee's wages and pays the employee the balance." Id., 212 Cal.Rptr. at 747.

Even if a technical breach of contract were established, Bright could not prevail in this action. Under Cal.Civ.Code § 1511(1), no liability exists for breach of a contract whose performance has been made impossible by operation of law. Baird v. Wendt Enterprises, Inc., 248 Cal.App.2d 52, 56 Cal.Rptr. 118, 120 (1967); see generally 1 Witkin, Summary of California Law, "Contracts," § 607, at 517 (8th ed. 1973). A party is not required to violate the law to avoid liability for breach of contract.^[7] See Northrop Corp. v. Triad Financial Establishment, 593 F.Supp. 928, 937 (C.D.Cal.1984) (interpreting California law).

The claim involving withholding of state tax was properly dismissed.

The district court did not abuse its discretion in awarding attorney's fees. See Callow v. Amerace Corp., 681 F.2d 1242, 1243 (9th Cir.1982). The action is plainly frivolous, brought in bad faith, and for the purposes of harassment.^[8]

The district court was made aware of another recent judgment in the Northern District, dismissing a nearly identically worded complaint by another Bechtel employee, which found that there was an organized campaign of "tax protest" lawsuits, aimed at "thwarting federal tax regulations by inundating employers with frivolous suits in the hope that the volume and cost of litigation involved in defending these actions will deter employers from withholding taxes." McFarland v. Bechtel, 586 F.Supp. 907 (N.D.Cal.1984).

Under these circumstances, the award of attorney's fees was "an appropriate deterrent to future frivolous suits." Callow, 681 F.2d at 1243.

The district court's final judgment was entered on December 4, 1984. On December 19, 1984, Bright filed a motion for "clarification" of the judgment. Even if this court liberally construes Bright's motion as a motion under Federal Rule of Civil Procedure 52(b) to amend the findings or under Rule 59(e) to alter or amend the judgment, the motion was not made within 10 days after entry of the judgment as required by the rules.

Even had the motion been timely, it was properly denied. Rule 52(a) provides that findings of fact and conclusions of law are unnecessary in decisions on motions.

"When a judgment is affirmed, this court has authority to award fees and double costs on appeal in its discretion pursuant to 28 U.S.C. § 1912. Federal Rule of Appellate Procedure 38 provides for the same remedy if the court finds an appeal is frivolous." Maxfield v. United States Postal Service, 752 F.2d 433, 434-35 (9th Cir.1984) This court has imposed such sanctions previously in cases involving similar frivolous claims against employers for withholding income tax. Maxfield, 752 F.2d at 435; Stonecipher v. Bray, 653 F.2d 398, 403 (9th Cir.1981), cert. denied, 454 U.S. 1145, 102 S.Ct. 1006, 71 L.Ed.2d 297 (1982).

An award of attorney's fees is particularly warranted in this case as Bechtel [773] should not be forced to bear the expense of this action and appeal simply because it properly complied with federal and state law. Bechtel is an innocent bystander caught in the crossfire of Bright's war against the income taxation system. Bechtel should therefore be awarded reasonable attorney's fees and double costs on appeal. See Maxfield, 752 F.2d at 435.

In this case, Bechtel shall have 15 days following the filing of this decision within which to submit a declaration for attorneys' fees calculated in accordance with the factors set forth in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976).

AFFIRMED.

[1] Bechtel argues that removal of the case was proper under 28 U.S.C. § 1441(a) & (b), as the action was within the original jurisdiction of the district court pursuant to 28 U.S.C. § 1331 (original jurisdiction of all civil actions "arising under the Constitution, laws, or treaties of the United States") and 28 U.S.C. § 1340 (original jurisdiction of any civil action arising under federal statutes providing for internal revenue). See Chandler v. Perini Power Constructors, Inc., 520 F.Supp. 1152, 1154 n. 3 (D.N.H.1981) (upholding removal pursuant to these statutes of a case alleging breach of an employment agreement, on the ground that the suit actually challenged employer's withholding of federal income tax).

[2] In Schroeder, the plaintiffs attempted to frame their action as a breach of agreement under state law. This court looked through to the substance of the action and found it actually involved a labor dispute governed by federal law. Id. at 190-91. As in the instant case, the plaintiffs had attempted to avoid application of federal law by relying on state law to articulate their claims.

[3] It is proper to use the petition for removal to clarify the action presented in the complaint in determining whether it raises a federal question. Schroeder, 702 F.2d at 191; Olguin, 740 F.2d at 1473.

[4] For example, both complaints framed the cause of action as "breach of contract and a gross violation of Christian principles." This is hardly coincidental.

[5] Under 26 C.F.R. § 31.3402(f)(2)-1(g)(1) & (2), an employer is required to forward an employee's W-4 Form to the IRS, if the employee claims an exemption from withholding of tax while earning more than $200 per week. Under 26 C.F.R. § 31.3402(f)(2)-1(g)(5)(v), if the IRS issues a directive instructing an employer to disregard an employee's withholding exemption W-4 Form as defective, the employer must withhold amounts from the employee's wages in accordance with the IRS notice.

[6] In addition, the Tax Injunction Act, 28 U.S.C. § 1341, deprives federal district courts of subject matter jurisdiction over actions for injunctive relief from state taxation schemes. Marvin F. Poer & Co. v. Counties of Alameda, 725 F.2d 1234, 1236 (9th Cir.1984). This court also refuses to recognize jurisdiction over actions for refunds of state taxes. Id.

[7] An administrative regulation, of course, has the force of law. And government regulations cannot be varied or evaded by private contract. Alpha Beta Food Markets, Inc. v. Retail Clerks Union Local 770, 45 Cal.2d 764, 291 P.2d 433, cert. denied, 350 U.S. 996, 76 S.Ct. 547, 100 L.Ed. 861 (1956).

[8] As a further example of the frivolous and bad faith nature of this action, Bright's complaint seeks more than one hundred million dollars in damages from Bechtel for withholding approximately $3222 in taxes.