In Gunn v. Minton, Docket No. 11-1118 (U.S. Feb. 20, 2013), the United States Supreme Court made clear that federal courts will have exclusive jurisdiction for only the rarest of rare legal malpractice claims. In doing so, it reversed the judgment of the Texas Supreme Court, which had concluded that the plaintiff’s legal malpractice claim raised a “substantial federal issue” concerning patent law and thereby deprived the Texas state courts of jurisdiction.
In Gunn, the defendants had represented the plaintiff in a patent infringement claim, which he lost. The plaintiff claimed that his loss was due to the defendants’ failure to raise an “experimental-use” argument, and filed a legal malpractice action against the defendants in Texas state court. The defendants raised a causation argument, contending that the plaintiff’s patent infringement claim would have failed even if they had raised the experimental-use argument because it was meritless. The trial court agreed and granted summary judgment for the defendants.
Shifting gears, the plaintiff argued in his appeal that the trial court lacked subject matter jurisdiction because his legal malpractice claim involved patent law. The Texas Supreme Court agreed with him, concluding that his claim involved a “substantial federal issue.” The United States Supreme Court reversed.
Federal courts have exclusive jurisdiction in “all civil actions arising under any Act of Congress relating to patents.” Though federal law did not create the legal malpractice action, the Court explained that federal courts may have jurisdiction over a state law claim (like legal malpractice) if a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. The Court agreed that resolving the federal patent question, i.e., whether the experimental-use claim was meritless, was both necessary to the plaintiff’s case and actually disputed. But the plaintiff’s claim failed the third and fourth requirements. In fact, the Court went as far as saying, “we are comfortable concluding that state legal malpractice claims based on underlying patent matters will rarely, if ever, arise under federal patent law for purposes of” federal courts having exclusive jurisdiction. The short-fall for federal court jurisdiction was that the federal issue must not be merely significant to the parties, but it must have importance to the federal system as a whole. The Court was doubtful and largely unconcerned with any precedential or preclusive effect a state court’s decision on a patent law issue may have, adding that “[b]ecause of the backward-looking nature of a legal malpractice case … [n]o matter how the state courts resolve the hypothetical ‘case within a case,’ it will not change the real-world result of the prior federal patent litigation.”
The Gunn decision, of course, does not preclude all legal malpractice litigation in federal courts. Federal court jurisdiction may still be available under the courts’ diversity jurisdiction, e.g., when an Ohio resident alleges legal malpractice by his Michigan attorney. The Court also left the door cracked, albeit just a sliver, for federal courts to have exclusive federal question jurisdiction in a legal malpractice case. After Gunn, however, it will be only the rarest and unique legal malpractice cases that will find federal question jurisdiction available.