Carl E. Berg v. Hayden Leason Heller, Ehrman, White & McAuliffe Paul Alexander

After this court in an unpublished disposition affirmed summary judgment in his favor as a defendant in a federal court action alleging violations of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and RICO, 18 U.S.C. §§ 1961-1968 , Carl Berg sued the plaintiff in that action, Hayden Lea-son, and Leasoris lawyers, Heller, Ehrman, White & McAuliffe, for malicious prosecution in state court. Leason removed on the ground that the malicious prosecution claim was based on alleged violations of federal law and therefore “arises under” the laws of the United States for purposes of federal question jurisdiction. 28 U.S.C. §§ 1331 , 1441(b). The district court declined to remand in a published opinion. Berg v. Leason, 793 F.Supp. 930 (N.D.Cal.1992). We hold that the federal element is insufficiently substantial to confer “arising under” jurisdiction because the malicious prosecution court need only decide whether the underlying claim was “legally tenable,” the cause of action is created by state law, and state law controls the standard by which the strength of the federal claim in the underlying action is measured. We therefore reverse.

I

The rule is well…