BENEFICIAL NATIONAL BANK et al. v. ANDERSON et al.

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CASES ADJUDGED
IN THE
SUPREME COURT OF THE UNITED STATES
AT
OCTOBER TERM, 2002
BENEFICIAL NATIONAL BANK et al. v. ANDERSON
et al.
certiorari to the united states court of appeals for
the eleventh circuit
No. 02–306. Argued April 30, 2003—Decided June 2, 2003
Respondents, who secured loans from petitioner national bank, filed a
state-court suit against the bank and two other petitioners, seeking
damages on the theory, among others, that the bank’s interest rates
violated “the common law usury doctrine” and an Alabama usury stat-
ute. The complaint did not refer to any federal law. Petitioners re-
moved the case to Federal District Court, asserting that the National
Bank Act governs the interest rate that a national bank may charge,
see 12 U. S. C. § 85, that the rates charged to respondents complied with
§ 85, that § 86 provides the exclusive remedies available against a na-
tional bank charging excessive interest, and that respondents’ action
was therefore one “arising under” federal law that could be removed
under 28 U. S. C. § 1441. The District Court denied respondents’ mo-
tion to remand the case to state court, but certified the question
whether it had jurisdiction to the Eleventh Circuit. In reversing, the
latter court held that under the “well-pleaded complaint” rule, removal
is not permitted unless the complaint expressly alleges a federal claim,
and that the narrow exception known as the complete pre-emption doc-
trine did not apply because there was no evidence of clear congressional
intent to permit removal under §§ 85 and 86.
Held: Respondents’ cause of action arose only under federal law and could,
therefore, be removed under § 1441. Pp. 6–11.
1

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2 BENEFICIAL NAT. BANK v. ANDERSON
Syllabus
(a) As a general rule, absent diversity jurisdiction, a case is not re-
movable if the complaint does not affirmatively allege a federal claim.
Potential defenses, including a federal statute’s pre-emptive effect,
Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for
Southern Cal., 463 U. S. 1, do not provide a basis for removal. One
exception to the general rule occurs when a federal statute completely
pre-empts a cause of action. Where this Court has found such pre-
emption, the federal statutes at issue—the Labor Management Rela-
tions Act, 1947, see Avco Corp. v. Machinists, 390 U. S. 557, and the
Employee Retirement Income Security Act of 1974, see Metropolitan
Life Ins. Co. v. Taylor, 481 U. S. 58—provided the exclusive cause of
action for the claim asserted and also set forth procedures and remedies
governing that cause of action. Pp. 6–8.
(b) Because respondents’ complaint expressly charged petitioners
with usury, Metropolitan Life, Avco, and Franchise Tax Bd. provide the
framework for answering the question whether the National Bank Act
provides the exclusive cause of action for usury claims against national
banks. Section 85 sets substantive limits on the interest rates that na-
tional banks may charge, while § 86 prescribes the remedies available to
borrowers who are charged higher rates and the procedures governing
such claims. If the interest charged here did not violate § 85 limits, the
statute pre-empts any common-law or Alabama statutory rule that
would treat those rates as usurious and would, thus, provide a federal
defense. That defense would not justify removal. Only if Congress
intended § 86 to provide the exclusive cause of action for usury claims
against national banks would the statute be comparable to the provi-
sions construed in Avco and Metropolitan Life. This Court has long
construed the National Bank Act as providing the exclusive federal
cause of action for usury against national banks. See, e. g., Farmers’
and Mechanics’ Nat. Bank v. Dearing, 91 U. S. 29. The Court has also
recognized the special nature of federally chartered banks. Uniform
rules limiting their liability and prescribing exclusive remedies for their
overcharges are an integral part of a banking system that needed pro-
tection from possible unfriendly state legislation. The same federal in-
terest supports the established interpretation of §§ 85 and 86 that gives
those provisions the requisite pre-emptive force to provide removal ju-
risdiction. Pp. 9–11.
287 F. 3d 1038, reversed.
Stevens, J., delivered the opinion of the Court, in which Rehnquist,
C. J., and O’Connor, Kennedy, Souter, Ginsburg, and Breyer, JJ.,
joined. Scalia, J., filed a dissenting opinion, in which Thomas, J., joined,
post, p. 11.

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3 Cite as: 539 U. S. 1 (2003)
Opinion of the Court
Seth P. Waxman argued the cause for petitioners. With
him on the briefs were Dennis G. Lyons, Howard N. Cayne,
Mary Gabrielle Sprague, Brian C. Duffy, Christopher R.
Lipsett, Russell J. Bruemmer, Paul R. Q. Wolfson, Alan
S. Kaplinsky, and Burt M. Rublin.
Matthew D. Roberts argued the cause for the United
States as amicus curiae urging reversal. With him on the
brief were Solicitor General Olson, Assistant Attorney
General McCallum, Deputy Solicitor General Clement,
Mark B. Stern, Julie L. Williams, Daniel P. Stipano,
L. Robert Griffin, and Douglas B. Jordan.
Brian M. Clark argued the cause for respondents. With
him on the brief was Dennis G. Pantazis.*
Justice Stevens delivered the opinion of the Court.
The question in this case is whether an action filed in a
state court to recover damages from a national bank for al-
legedly charging excessive interest in violation of both “the
common law usury doctrine” and an Alabama usury statute
*Drew S. Days III, Beth S. Brinkmann, and Seth M. Galanter filed a
brief for the American Bankers Association et al. as amici curiae urging
reversal.
Briefs of amici curiae urging affirmance were filed for the State of
Arizona et al. by Terry Goddard, Attorney General of Arizona, Mary
O’Grady, Solicitor General, Joseph A. Kanefield, Assistant Attorney Gen-
eral, and Dan Schweitzer, and by the Attorneys General for their respec-
tive States as follows: Gregg Renkes of Alaska, Richard Blumenthal of
Connecticut, Thurbert E. Baker of Georgia, Mark J. Bennett of Hawaii,
Lisa Madigan of Illinois, Thomas J. Miller of Iowa, J. Joseph Curran, Jr.,
of Maryland, Mike Hatch of Minnesota, Jeremiah W. (Jay) Nixon of Mis-
souri, Peter Heed of New Hampshire, Patricia A. Madrid of New Mexico,
Eliot Spitzer of New York, Jim Petro of Ohio, Hardy Myers of Oregon,
Henry McMaster of South Carolina, Larry Long of South Dakota, Greg
Abbott of Texas, and Christine O. Gregoire of Washington; for AARP et al.
by Deborah M. Zuckerman, Stacy J. Canan, and Michael R. Schuster; and
for Consumer Attorneys of California by James C. Sturdevant.

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4 BENEFICIAL NAT. BANK v. ANDERSON
Opinion of the Court
may be removed to a federal court because it actually arises
under federal law. We hold that it may.
I
Respondents are 26 individual taxpayers who made
pledges of their anticipated tax refunds to secure short-term
loans obtained from petitioner Beneficial National Bank, a
national bank chartered under the National Bank Act. Re-
spondents brought suit in an Alabama court against the bank
and the two other petitioners that arranged the loans, seek-
ing compensatory and punitive damages on the theory,
among others, that the bank’s interest rates were usurious.
App. 18–30. Their complaint did not refer to any federal
law.
Petitioners removed the case to the United States District
Court for the Middle District of Alabama. In their notice of
removal they asserted that the National Bank Act, Rev. Stat.
§ 5197, as amended, 12 U. S. C. § 85,1 is the exclusive provi-
1 Title 12 U. S. C. § 85 provides:
“Rate of interest on loans, discounts and purchases
“Any association may take, receive, reserve, and charge on any loan or
discount made, or upon any notes, bills of exchange, or other evidences of
debt, interest at the rate allowed by the laws of the State, Territory, or
District where the bank is located, or at a rate of 1 per centum in excess
of the discount rate on ninety-day commercial paper in effect at the Fed-
eral reserve bank in the Federal reserve district where the bank is located,
whichever may be the greater, and no more, except that where by the
laws of any State a different rate is limited for banks organized under
state laws, the rate so limited shall be allowed for associations organized
or existing in any such State under title 62 of the Revised Statutes.
When no rate is fixed by the laws of the State, or Territory, or District,
the bank may take, receive, reserve, or charge a rate not exceeding 7 per
centum, or 1 per centum in excess of the discount rate on ninety day
commercial paper in effect at the Federal reserve bank in the Federal
reserve district where the bank is located, whichever may be the greater,
and such interest may be taken in advance, reckoning the days for which
the note, bill, or other evidence of debt has to run. The maximum amount
of interest or discount to be charged at a branch of an association located
outside of the States of the United States and the District of Columbia

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5 Cite as: 539 U. S. 1 (2003)
Opinion of the Court
sion governing the rate of interest that a national bank may
lawfully charge, that the rates charged to respondents com-
plied with that provision, that Rev. Stat. § 5198, 12 U. S. C.
§ 86, provides the exclusive remedies available against a na-
tional bank charging excessive interest,2 and that the re-
moval statute, 28 U. S. C. § 1441, therefore applied. App.
31–35. The District Court denied respondents’ motion to
remand the case to state court but certified the question
whether it had jurisdiction to proceed with the case to the
Court of Appeals pursuant to 28 U. S. C. § 1292(b).
A divided panel of the Eleventh Circuit reversed. Ander-
son v. H&R Block, Inc., 287 F. 3d 1038 (2002). The majority
held that under our “well-pleaded complaint” rule, removal
is generally not permitted unless the complaint expressly al-
leges a federal claim and that the narrow exception from that
rule known as the “complete preemption doctrine” did not
apply because it could “find no clear congressional intent to
permit removal under §§ 85 and 86.” Id., at 1048. Because
this holding conflicted with an Eighth Circuit decision, Kris-
shall be at the rate allowed by the laws of the country, territory, depend-
ency, province, dominion, insular possession, or other political subdivision
where the branch is located. And the purchase, discount, or sale of a bona
fide bill of exchange, payable at another place than the place of such pur-
chase, discount, or sale, at not more than the current rate of exchange for
sight drafts in addition to the interest, shall not be considered as taking
or receiving a greater rate of interest.”
2 Section 86 provides:
“Usurious interest; penalty for taking; limitations
“The taking, receiving, reserving, or charging a rate of interest greater
than is allowed by section 85 of this title, when knowingly done, shall be
deemed a forfeiture of the entire interest which the note, bill, or other
evidence of debt carries with it, or which has been agreed to be paid
thereon. In case the greater rate of interest has been paid, the person
by whom it has been paid, or his legal representatives, may recover back,
in an action in the nature of an action of debt, twice the amount of the
interest thus paid from the association taking or receiving the same: Pro-
vided, That such action is commenced within two years from the time the
usurious transaction occurred.”

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6 BENEFICIAL NAT. BANK v. ANDERSON
Opinion of the Court
pin v. May Dept. Stores Co., 218 F. 3d 919 (2000), we granted
certiorari. 537 U. S. 1169 (2003).
II
A civil action filed in a state court may be removed to
federal court if the claim is one “arising under” federal law.
§ 1441(b). To determine whether the claim arises under fed-
eral law, we examine the “well pleaded” allegations of the
complaint and ignore potential defenses: “[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.” Louisville & Nashville R. Co. v. Mottley,
211 U. S. 149, 152 (1908); see Taylor v. Anderson, 234 U. S.
74 (1914). Thus, a defense that relies on the preclusive ef-
fect of a prior federal judgment, Rivet v. Regions Bank of
La., 522 U. S. 470 (1998), or the pre-emptive effect of a fed-
eral statute, Franchise Tax Bd. of Cal. v. Construction La-
borers Vacation Trust for Southern Cal., 463 U. S. 1 (1983),
will not provide a basis for removal. As a general rule, ab-
sent diversity jurisdiction, a case will not be removable if
the complaint does not affirmatively allege a federal claim.
Congress has, however, created certain exceptions to that
rule. For example, the Price-Anderson Act contains an un-
usual pre-emption provision, 42 U. S. C. § 2014(hh), that not
only gives federal courts jurisdiction over tort actions aris-
ing out of nuclear accidents but also expressly provides for
removal of such actions brought in state court even when
they assert only state-law claims. See El Paso Natural Gas
Co. v. Neztsosie, 526 U. S. 473, 484–485 (1999).
We have also construed § 301 of the Labor Management
Relations Act, 1947 (LMRA), 29 U. S. C. § 185, as not only
pre-empting state law but also authorizing removal of ac-

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7 Cite as: 539 U. S. 1 (2003)
Opinion of the Court
tions that sought relief only under state law. Avco Corp. v.
Machinists, 390 U. S. 557 (1968). We later explained that
holding as resting on the unusually “powerful” pre-emptive
force of § 301:
“The Court of Appeals held, 376 F. 2d, at 340, and we
affirmed, 390 U. S., at 560, that the petitioner’s action
‘arose under’ § 301, and thus could be removed to federal
court, although the petitioner had undoubtedly pleaded
an adequate claim for relief under the state law of con-
tracts and had sought a remedy available only under
state law. The necessary ground of decision was that
the pre-emptive force of § 301 is so powerful as to dis-
place entirely any state cause of action ‘for violation of
contracts between an employer and a labor organiza-
tion.’ Any such suit is purely a creature of federal law,
notwithstanding the fact that state law would provide a
cause of action in the absence of § 301. Avco stands for
the proposition that if a federal cause of action com-
pletely pre-empts a state cause of action any complaint
that comes within the scope of the federal cause of ac-
tion necessarily ‘arises under’ federal law.” Franchise
Tax Bd., 463 U. S., at 23–24 (footnote omitted).
Similarly, in Metropolitan Life Ins. Co. v. Taylor, 481
U. S. 58 (1987), we considered whether the “complete pre-
emption” approach adopted in Avco also supported the re-
moval of state common-law causes of action asserting im-
proper processing of benefit claims under a plan regulated
by the Employee Retirement Income Security Act of 1974
(ERISA), 29 U. S. C. § 1001 et seq. For two reasons, we held
that removal was proper even though the complaint pur-
ported to raise only state-law claims. First, the statutory
text in § 502(a), 29 U. S. C. § 1132, not only provided an ex-
press federal remedy for the plaintiffs’ claims, but also in its
jurisdiction subsection, § 502(f), used language similar to the
statutory language construed in Avco, thereby indicating

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8 BENEFICIAL NAT. BANK v. ANDERSON
Opinion of the Court
that the two statutes should be construed in the same way.
481 U. S., at 65. Second, the legislative history of ERISA
unambiguously described an intent to treat such actions “as
arising under the laws of the United States in similar fashion
to those brought under section 301 of the Labor-Management
Relations Act of 1947.” Id., at 65–66 (internal quotation
marks and emphasis omitted).
Thus, a state claim may be removed to federal court in
only two circumstances—when Congress expressly so pro-
vides, such as in the Price-Anderson Act, supra, at 6, or
when a federal statute wholly displaces the state-law cause
of action through complete pre-emption.3 When the federal
statute completely pre-empts the state-law cause of action,
a claim which comes within the scope of that cause of action,
even if pleaded in terms of state law, is in reality based on
federal law. This claim is then removable under 28 U. S. C.
§ 1441(b), which authorizes any claim that “arises under” fed-
eral law to be removed to federal court. In the two catego-
ries of cases 4 where this Court has found complete pre-
emption—certain causes of action under the LMRA and
ERISA—the federal statutes at issue provided the exclusive
cause of action for the claim asserted and also set forth pro-
cedures and remedies governing that cause of action. See
29 U. S. C. § 1132 (setting forth procedures and remedies for
civil claims under ERISA); § 185 (describing procedures and
remedies for suits under the LMRA).
3 Of course, a state claim can also be removed through the use of the
supplemental jurisdiction statute, 28 U. S. C. § 1367(a), provided that an-
other claim in the complaint is removable.
4 This Court has also held that federal courts have subject-matter juris-
diction to hear posessory land claims under state law brought by Indian
tribes because of the uniquely federal “nature and source of the possessory
rights of Indian tribes.” Oneida Indian Nation of N. Y. v. County of
Oneida, 414 U. S. 661, 667 (1974). Because that case turned on the special
historical relationship between Indian tribes and the Federal Government,
it does not assist the present analysis.

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9 Cite as: 539 U. S. 1 (2003)
Opinion of the Court
III
Count IV of respondents’ complaint sought relief for
“usury violations” and claimed that petitioners “charged . . .
excessive interest in violation of the common law usury doc-
trine” and violated “Alabama Code § 8–8–1, et seq. by charg-
ing excessive interest.” App. 28. Respondents’ complaint
thus expressly charged petitioners with usury. Metropoli-
tan Life, Avco, and Franchise Tax Board provide the frame-
work for answering the dispositive question in this case:
Does the National Bank Act provide the exclusive cause of
action for usury claims against national banks? If so, then
the cause of action necessarily arises under federal law and
the case is removable. If not, then the complaint does not
arise under federal law and is not removable.
Sections 85 and 86 serve distinct purposes. The former
sets forth the substantive limits on the rates of interest that
national banks may charge. The latter sets forth the ele-
ments of a usury claim against a national bank, provides for
a 2-year statute of limitations for such a claim, and pre-
scribes the remedies available to borrowers who are charged
higher rates and the procedures governing such a claim. If,
as petitioners asserted in their notice of removal, the interest
that the bank charged to respondents did not violate § 85
limits, the statute unquestionably pre-empts any common-
law or Alabama statutory rule that would treat those rates
as usurious. The section would therefore provide the peti-
tioners with a complete federal defense. Such a federal de-
fense, however, would not justify removal. Caterpillar Inc.
v. Williams, 482 U. S. 386, 393 (1987). Only if Congress in-
tended § 86 to provide the exclusive cause of action for usury
claims against national banks would the statute be compara-
ble to the provisions that we construed in the Avco and Met-
ropolitan Life cases.5
5 Because the proper inquiry focuses on whether Congress intended the
federal cause of action to be exclusive rather than on whether Congress
intended that the cause of action be removable, the fact that these sections

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10 BENEFICIAL NAT. BANK v. ANDERSON
Opinion of the Court
In a series of cases decided shortly after the Act was
passed, we endorsed that approach. In Farmers’ and Me-
chanics’ Nat. Bank v. Dearing, 91 U. S. 29, 32–33 (1875), we
rejected the borrower’s attempt to have an entire debt for-
feited, as authorized by New York law, stating that the vari-
ous provisions of §§ 85 and 86 “form a system of regulations
. . . [a]ll the parts [of which] are in harmony with each other
and cover the entire subject,” so that “the State law would
have no bearing whatever upon the case.” We also ob-
served that “[i]n any view that can be taken of [§ 86], the
power to supplement it by State legislation is conferred nei-
ther expressly nor by implication.” Id., at 35. In Evans v.
National Bank of Savannah, 251 U. S. 108, 114 (1919), we
stated that “federal law . . . completely defines what con-
stitutes the taking of usury by a national bank, referring to
the state law only to determine the maximum permitted
rate.” See also Barnet v. National Bank, 98 U. S. 555, 558
(1879) (The “statutes of Ohio and Indiana upon the subject
of usury . . . cannot affect the case” because the Act “creates
a new right” that is “exclusive”); Haseltine v. Central Bank
of Springfield, 183 U. S. 132, 134 (1901) (“[T]he definition of
usury and the penalties affixed thereto must be determined
by the National Banking Act and not by the law of the
State”).
In addition to this Court’s longstanding and consistent con-
struction of the National Bank Act as providing an exclusive
federal cause of action for usury against national banks, this
Court has also recognized the special nature of federally
chartered banks. Uniform rules limiting the liability of na-
tional banks and prescribing exclusive remedies for their
overcharges are an integral part of a banking system that
needed protection from “possible unfriendly State legisla-
tion.” Tiffany v. National Bank of Mo., 18 Wall. 409, 412
of the National Bank Act were passed in 1864, 11 years prior to the pas-
sage of the statute authorizing removal, is irrelevant, contrary to respond-
ents’ assertions.

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11 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
(1874). The same federal interest that protected national
banks from the state taxation that Chief Justice Marshall
characterized as the “power to destroy,” McCulloch v. Mary-
land, 4 Wheat. 316, 431 (1819), supports the established in-
terpretation of §§ 85 and 86 that gives those provisions the
requisite pre-emptive force to provide removal jurisdiction.
In actions against national banks for usury, these provisions
supersede both the substantive and the remedial provisions
of state usury laws and create a federal remedy for over-
charges that is exclusive, even when a state complainant, as
here, relies entirely on state law. Because §§ 85 and 86 pro-
vide the exclusive cause of action for such claims, there is, in
short, no such thing as a state-law claim of usury against a
national bank. Even though the complaint makes no men-
tion of federal law, it unquestionably and unambiguously
claims that petitioners violated usury laws. This cause of
action against national banks only arises under federal law
and could, therefore, be removed under § 1441.
The judgment of the Court of Appeals is reversed.
It is so ordered.
Justice Scalia, with whom Justice Thomas joins,
dissenting.
Today’s opinion takes the view that because the National
Bank Act, 12 U. S. C. §§ 85, 86, provides the exclusive cause
of action for claims of usury against a national bank, all such
claims—even if explicitly pleaded under state law—are to
be construed as “aris[ing] under” federal law for purposes
of our jurisdictional statutes. Ante this page. This view
finds scant support in our precedents and no support what-
ever in the National Bank Act or any other Act of Congress.
I respectfully dissent.
Unless Congress expressly provides otherwise, the federal
courts may exercise removal jurisdiction over state-court
actions “of which the district courts of the United States

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12 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
have original jurisdiction.” 28 U. S. C. § 1441(a). In this
case, petitioners invoked as the predicate for removal the
district courts’ original jurisdiction over “all civil actions
arising under the Constitution, laws, or treaties of the United
States.” § 1331.
This so-called “arising under” or “federal question” ju-
risdiction has long been governed by the well-pleaded-
complaint rule, which provides that “federal jurisdiction ex-
ists 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). A federal ques-
tion “is presented” when the complaint invokes federal law
as the basis for relief. It does not suffice that the facts al-
leged in support of an asserted state-law claim would also
support a federal claim. “The [well-pleaded-complaint] rule
makes the plaintiff the master of the claim; he or she may
avoid federal jurisdiction by exclusive reliance on state law.”
Ibid. See also The Fair v. Kohler Die & Specialty Co., 228
U. S. 22, 25 (1913) (“Of course the party who brings a suit
is master to decide what law he will rely upon”). Nor does
it even suffice that the facts alleged in support of an asserted
state-law claim do not support a state-law claim and would
only support a federal claim. “Jurisdiction may not be sus-
tained on a theory that the plaintiff has not advanced.”
Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U. S.
804, 809, n. 6 (1986).
Under the well-pleaded-complaint rule, “a federal court
does not have original jurisdiction over a case in which the
complaint presents a state-law cause of action, but also as-
serts that federal law deprives the defendant of a defense he
may raise, . . . or that a federal defense the defendant may
raise is not sufficient to defeat the claim.” Franchise Tax
Bd. of Cal. v. Construction Laborers Vacation Trust for
Southern Cal., 463 U. S. 1, 10 (1983). Of critical importance
here, the rejection of a federal defense as the basis for origi-
nal federal-question jurisdiction applies with equal force

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13 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
when the defense is one of federal pre-emption. “By unim-
peachable authority, a suit brought upon a state statute does
not arise under an act of Congress or the Constitution of the
United States because prohibited thereby.” Gully v. First
Nat. Bank in Meridian, 299 U. S. 109, 116 (1936). “[A] case
may not be removed to federal court on the basis of . . . the
defense of pre-emption . . . .” Caterpillar, supra, at 393.
To be sure, pre-emption requires a state court to dismiss a
particular claim that is filed under state law, but it does not,
as a general matter, provide grounds for removal.
This Court has twice recognized exceptions to the well-
pleaded-complaint rule, upholding removal jurisdiction not-
withstanding the absence of a federal question on the face of
the plaintiff ’s complaint. First, in Avco Corp. v. Machinists,
390 U. S. 557 (1968), we allowed removal of a state-court ac-
tion to enforce a no-strike clause in a collective-bargaining
agreement. The complaint concededly did not advance a
federal claim, but was subject to a defense of pre-emption
under § 301 of the Labor Management Relations Act, 1947
(LMRA), 29 U. S. C. § 185. The well-pleaded-complaint rule
notwithstanding, we treated the plaintiff ’s state-law contract
claim as one arising under § 301, and held that the case could
be removed to federal court. Avco, supra, at 560.
The only support mustered by the Avco Court for its con-
clusion was a statement wrenched out of context from our
decision in Textile Workers v. Lincoln Mills of Ala., 353
U. S. 448, 457 (1957), that “[a]ny state law applied [in a § 301
case] will be absorbed as federal law and will not be an in-
dependent source of private rights.” To begin with, this
statement is entirely unnecessary to the landmark holding
in Lincoln Mills—that § 301 not only gives federal courts
jurisdiction to decide labor relations cases but also supplies
them with authority to create the governing substantive law.
Id., at 456. More importantly, understood in the context of
that holding, the quoted passage in no way supports the
proposition for which it is relied upon in Avco—that state-

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14 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
law claims relating to labor relations necessarily arise under
§ 301. If one reads Lincoln Mills with any care, it is clear
beyond doubt that the relevant passage merely confirms that
when, in deciding cases arising under § 301, courts employ
legal rules that overlap with, or are even explicitly borrowed
from, state law, such rules are nevertheless rules of federal
law. It is in this sense that “[a]ny state law applied [in a
§ 301 case] will be absorbed as federal law”—in the sense
that federally adopted state rules become federal rules, not
in the sense that a state-law claim becomes a federal claim.
Other than its entirely misguided reliance on Lincoln
Mills, the opinion in Avco failed to clarify the analytic basis
for its unprecedented act of jurisdictional alchemy. The
Court neglected to explain why state-law claims that are
pre-empted by § 301 of the LMRA are exempt from the stric-
tures of the well-pleaded-complaint rule, nor did it explain
how such a state-law claim can plausibly be said to “arise
under” federal law. Our subsequent opinion in Franchise
Tax Board struggled to prop up Avco’s puzzling holding:
“The necessary ground of decision [in Avco] was that the
pre-emptive force of § 301 is so powerful as to displace
entirely any state cause of action ‘for violation of con-
tracts between an employer and a labor organization.’
Any such suit is purely a creature of federal law, not-
withstanding the fact that state law would provide a
cause of action in the absence of § 301. Avco stands for
the proposition that if a federal cause of action com-
pletely pre-empts a state cause of action any complaint
that comes within the scope of the federal cause of ac-
tion necessarily ‘arises under’ federal law.” 463 U. S.,
at 23–24 (footnote omitted).
This passage has repeatedly been relied upon by the Court
as an explanation for its decision in Avco. See, e. g., ante, at
7, Caterpillar, supra, at 394; Metropolitan Life Ins. Co. v.
Taylor, 481 U. S. 58, 64 (1987). Of course it is not an expla-

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15 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
nation at all. It provides nothing more than an account of
what Avco accomplishes, rather than a justification (unless
ipse dixit is to count as justification) for the radical depar-
ture from the well-pleaded-complaint rule, which demands
rejection of the defense of federal pre-emption as a basis
for federal jurisdiction. Gully, supra, at 116. Neither the
excerpt quoted above, nor any other fragment of the decision
in Franchise Tax Board, explains how or why the nonviabil-
ity (due to pre-emption) of the state-law contract claim in
Avco magically transformed that claim into one “arising
under” federal law.
Metropolitan Life Ins. Co. v. Taylor, supra, was our sec-
ond departure from the prohibition against resting federal
“arising under” jurisdiction upon the existence of a federal
defense. In that case, Taylor sued his former employer and
its insurer, alleging breach of contract and seeking, inter alia,
reinstatement of certain disability benefits and insurance
coverages. Id., at 61. Though Taylor invoked no federal
law in his complaint, we treated his case as one arising under
§ 502 of the Employee Retirement Income Security Act of
1974 (ERISA), 29 U. S. C. § 1132, and upheld the District
Court’s exercise of removal jurisdiction. 481 U. S., at 66–67.
In reaching this conclusion, the Taylor Court broke no
new analytic ground; its opinion follows the exception estab-
lished in Avco and described in Franchise Tax Board, but
says nothing to commend that exception to logic or reason.
Instead, Taylor simply relies on the “clos[e] parallels,” 481
U. S., at 65, between the language of the pre-emptive provi-
sion in ERISA and the language of the LMRA provision
deemed in Avco to be so dramatically pre-emptive as to sum-
mon forth a federal claim where none had been asserted.
“No more specific reference to the Avco rule can be ex-
pected,” we said, than what was found in § 502(a); and we
accordingly concluded that “Congress has clearly manifested
an intent to make causes of action within the scope of the
civil enforcement provisions of § 502(a) removable to federal

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16 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
court.” 481 U. S., at 66. As in Avco and Franchise Tax
Board, no explanation was provided for Avco’s abrogation of
the rule that “[f]ederal pre-emption is ordinarily a federal
defense to the plaintiff ’s suit[, and as such] it does not appear
on the face of a well-pleaded complaint, [nor does it] author-
ize removal to federal court.” 1 481 U. S., at 63.
It is noteworthy that the straightforward (though simi-
larly unsupported) rule announced in today’s opinion—under
which (1) removal is permitted “[w]hen [a] federal statute
completely pre-empts a state-law cause of action,” ante, at 8,
and (2) a federal statute is completely pre-emptive when it
“provide[s] the exclusive cause of action for the claim as-
serted,” ibid.—is nowhere to be found in either Avco or
Taylor. To the contrary, the analysis in today’s opinion
implicitly contradicts (by rendering inexplicable) Taylor’s
discussion of pre-emption and removal. (Avco, as I observed
earlier, has no discussion to be contradicted.) Had it
thought that today’s decision was the law, the Taylor Court
need not have taken pains to emphasize the “clos[e] parallels”
between § 502(a)(1)(B) of ERISA and § 301 of the LMRA and
need not have pored over the legislative history of § 502(a)
to show that Congress expected ERISA to be treated like
the LMRA. See Taylor, supra, at 65–66 (citing H. R. Conf.
Rep. No. 93–1280, p. 327 (1974); 120 Cong. Rec. 29933 (1974)
(remarks of Sen. Williams); id., at 29942 (remarks of Sen.
Javits)). Instead, it could have rested after noting the
“unique pre-emptive force of ERISA,” Taylor, supra, at 65.
Indeed, it could even have spared itself the trouble of add-
1 This is not to say that Taylor was wrongly decided. Having been
informed through the Avco Corp. v. Machinists, 390 U. S. 557 (1968), deci-
sion that the language of § 301 triggered “arising under” jurisdiction even
with respect to certain state-law claims, Congress’ subsequent decision to
insert language into ERISA that “closely parallels” the text of § 301 can
be viewed to be, as we said, a “specific reference to the Avco rule.” 481
U. S., at 65–66. Taylor, in other words, rests upon a sort of statutory
incorporation of Avco. Avco itself, on the other hand, continues to rest
upon nothing.

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17 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
ing the adjective “unique. ” While there is something
unique about statutes whose pre-emptive force is closely pat-
terned after that of the LMRA (which we had held to sup-
port removal), there is nothing whatever unique about a fed-
eral cause of action that displaces state causes of action.
Displacement alone, if today’s opinion is to be believed,
would have sufficed to establish the existence of removal
jurisdiction.
The best that can be said, from a precedential perspective,
for the rule of law announced by the Court today is that
variations on it have twice appeared in our cases in the pur-
est dicta. Rivet v. Regions Bank of La., 522 U. S. 470, 476
(1998) (“[O]nce an area of state law has been completely pre-
empted, any claim purportedly based on that pre-empted
state-law claim is considered, from its inception, a federal
claim, and therefore arises under federal law” (internal quo-
tation marks omitted)); Caterpillar, 482 U. S., at 393 (“[I]f a
federal cause of action completely pre-empts a state cause of
action any complaint that comes within the scope of the fed-
eral cause of action necessarily ‘arises under’ federal law”
(some internal quotation marks omitted)). Dicta of course
have no precedential value, see U. S. Bancorp Mortgage Co.
v. Bonner Mall Partnership, 513 U. S. 18, 24 (1994), even
when they do not contradict, as they do here, prior holdings
of the Court.
The difficulty with today’s holding, moreover, is not limited
to the flimsiness of its precedential roots. As has been
noted already, the holding cannot be squared with bedrock
principles of removal jurisdiction. One or another of two of
those principles must be ignored: Either (1) the principle
that merely setting forth in state court facts that would
support a federal cause of action—indeed, even facts that
would support a federal cause of action and would not sup-
port the claimed state cause of action—does not produce a
federal question supporting removal, Caterpillar, 482 U. S.,
at 391, or (2) the principle that a federal defense to a state

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18 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
cause of action does not support federal-question jurisdic-
tion, see id., at 393. Relatedly, today’s holding also repre-
sents a sharp break from our long tradition of respect for
the autonomy and authority of state courts. For example,
in Healy v. Ratta, 292 U. S. 263, 270 (1934), we explained that
“[d]ue regard for the rightful independence of state gov-
ernments, which should actuate federal courts, requires that
they scrupulously confine their own jurisdiction to the pre-
cise limits which the statute has defined.” And in Sham-
rock Oil & Gas Corp. v. Sheets, 313 U. S. 100, 108 (1941),
we insisted on a “strict construction” of the federal removal
statutes.2 Today’s decision ignores these venerable princi-
ples and effectuates a significant shift in decisional authority
from state to federal courts.
In an effort to justify this shift, the Court explains that
“[b]ecause [12 U. S. C.] §§ 85 and 86 provide the exclu-
sive cause of action for such claims, there is . . . no such
thing as a state-law claim of usury against a national bank.”
Ante, at 11. But the mere fact that a state-law claim is in-
valid no more deprives it of its character as a state-law claim
which does not raise a federal question, than does the fact
that a federal claim is invalid deprive it of its character as
a federal claim which does raise a federal question. The
proper response to the presentation of a nonexistent claim
to a state court is dismissal, not the “federalize-and-remove”
dance authorized by today’s opinion. For even if the Court
is correct that the National Bank Act obliterates entirely
any state-created right to relief for usury against a na-
tional bank, that does not explain how or why the claim of
2 Our traditional regard for the role played by state courts in interpret-
ing and enforcing federal law has other doctrinal manifestations. We in-
dulge, for example, a “presumption of concurrent [state and federal] juris-
diction,” which can be rebutted only “by an explicit statutory directive,
by unmistakable implication from legislative history, or by a clear incom-
patibility between state-court jurisdiction and federal interests.” Gulf
Offshore Co. v. Mobil Oil Corp., 453 U. S. 473, 478 (1981).

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19 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
such a right is transmogrified into the claim of a federal
right. Congress’s mere act of creating a federal right and
eliminating all state-created rights in no way suggests an
expansion of federal jurisdiction so as to wrest from state
courts the authority to decide questions of pre-emption
under the National Bank Act.
Petitioners seek to justify their end run around the well-
pleaded-complaint rule by insisting that, in determining
whether federal jurisdiction exists, we are required to “ ‘look
beyond the pleadings.’ ” Brief for Petitioners 18 (quoting
Indianapolis v. Chase Nat. Bank, 314 U. S. 63, 69 (1941)).
They point out:
“[A] long line of cases disallow[s] manipulations by plain-
tiffs designed to create or avoid diversity jurisdiction,
such as misaligning the interests of the parties, naming
parties (whether plaintiffs or defendants) who have no
real interest in or relationship to the controversy, mis-
stating the citizenship of a party (whether plaintiffs or
defendants), or misstating the amount in controversy.”
Brief for Petitioners 17–18.
Petitioners insist that, like the “manipulative” complaints in
these diversity cases, “[r]espondents’ complaint is disingenu-
ously pleaded, not ‘well pleaded’ in any respect, for it pur-
ports to raise a state law claim that does not exist.” Id.,
at 16. Accordingly, the argument continues, just as federal
courts may assert jurisdiction where a plaintiff seeks to hide
the true citizenship of the parties, so too they may assert
jurisdiction where a plaintiff cloaks a necessarily federal
claim in state-law garb.
To begin with, the cases involving diversity jurisdiction
are probably distinguishable on the ground that there is a
crucial difference between, on the one hand, “looking beyond
the pleadings” to determine whether a factual assertion is
true, and, on the other hand, doing so in order to determine
whether the plaintiff has proceeded on the basis of the “cor-

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20 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
rect” legal theory. But even assuming that the analogy to
the diversity cases is apt, petitioners can derive no support
from it in this case. Their argument proceeds from the
faulty premise that if one looks behind the pleadings in this
case, one discovers that the plaintiffs have, in fact, presented
a federal claim. But that begs the question—that is, it as-
sumes the answer to the very question presented. It as-
sumes that whenever a claim of usury is brought against a
national bank, that claim is a federal one. As I have dis-
cussed above, neither logic nor precedent supports that con-
clusion; they support, at best, the proposition that the only
viable claim against a national bank for usury is a federal
one. Federal jurisdiction is ordinarily determined—invari-
ably determined, except for Avco and Taylor—on the basis
of what claim is pleaded, rather than on the basis of what
claim can prevail.
There may well be good reasons to favor the expansion of
removal jurisdiction that petitioners urge and that the Court
adopts today. As the United States explains in its amicus
brief:
“Absent removal, the state court would have only two
legitimate options—to recharacterize the claim in
federal-law terms or to dismiss the claim altogether.
Any plaintiff who truly seeks recovery on that claim
would prefer the first option, which would make the pro-
priety of removal crystal clear. A third possibility,
however, is that the state court would err and allow the
claim to proceed under state law notwithstanding Con-
gress’s decision to make the federal cause of action ex-
clusive. The complete pre-emption rule avoids that
potential error.” Brief for United States as Amicus
Curiae 17–18.
True enough, but inadequate to render today’s decision ei-
ther rational or properly within the authority of this Court.
Inadequate for rationality, because there is no more reason

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21 Cite as: 539 U. S. 1 (2003)
Scalia, J., dissenting
to fear state-court error with respect to federal pre-emption
accompanied by creation of a federal cause of action than
there is with respect to federal pre-emption unaccompanied
by creation of a federal cause of action—or, for that matter,
than there is with respect to any federal defense to a state-
law claim. The rational response to the United States’ con-
cern is to eliminate the well-pleaded-complaint rule entirely.
And inadequate for judicial authority, because it is up to Con-
gress, not the federal courts, to decide when the risk of
state-court error with respect to a matter of federal law be-
comes so unbearable as to justify divesting the state courts
of authority to decide the federal matter. Unless and until
we receive instruction from Congress that claims pre-
empted under the National Bank Act—in contrast to almost
all other claims that are subject to federal pre-emption—
“arise under” federal law, we simply lack authority to
“avoi[d] . . . potential errors,” id., at 18, by permitting
removal.
* * *
Today’s opinion has succeeded in giving to our Avco deci-
sion a theoretical foundation that neither Avco itself nor Tay-
lor provided. Regrettably, that theoretical foundation is it-
self without theoretical foundation. That is to say, the more
general proposition that (1) the existence of a pre-emptive
federal cause of action causes the invalid assertion of a state
cause of action to raise a federal question, has no more logic
or precedent to support it than the very narrow proposition
that (2) the LMRA (Avco) and statutes modeled after the
LMRA (Taylor) cause invalid assertions of state causes of
action pre-empted by those particular statutes to raise fed-
eral questions. Since I believe that, as between an inexpli-
cable narrow holding and an inexplicable broad one, the for-
mer is the lesser evil, I would adhere to the approach taken
by Taylor and on the basis of stare decisis simply affirm,
without any real explanation, that the LMRA and statutes
modeled after it have a “unique pre-emptive force” that

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22 BENEFICIAL NAT. BANK v. ANDERSON
Scalia, J., dissenting
(quite illogically) suspends the normal rules of removal juris-
diction. Since no one asserts that the National Bank Act is
modeled after the LMRA, the state-law claim pleaded here
cannot be removed, and it is left to the state courts to
dismiss it. From the Court’s judgment to the contrary,
I respectfully dissent.