California Shock Trauma Air Rescue v. State Compensation Insurance Fund, 636 F.3d 538

CALSTAR provides air-ambulance services to employees whose employers are self-insured or insured, alleging underpayment by Employers and various insurers.
CALSTAR filed two state-law claims in the Eastern District of California in 2009: quantum meruit, unjust enrichment, and open book account, plus a declaratory judgment that California’s rate regulation is pre-empted by federal law.
CALSTAR contends the FAA preempts California’s workers’ compensation rate statute at issue, arguing federal jurisdiction under 28 U.S.C. § 1331.
The district court dismissed for lack of subject matter jurisdiction, treating CALSTAR’s federal-preemption argument as insufficient to create federal question jurisdiction under the well-pleaded complaint rule.
The court of appeals reviews de novo and agrees that the well-pleaded complaint rule precludes federal jurisdiction over purely state-law claims, with the preemption defense not transforming the claims into federal questions.
The court also holds there is no jurisdiction over CALSTAR’s declaratory judgment claim, and affirms dismissal, awarding costs to Employers.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does CALSTAR’s state-law claim arise under federal law?	CALSTAR argues federal preemption questions justify jurisdiction.	Employers asserts no arising-under jurisdiction because the claims are state law and preemption is a defense, not a necessary element.	No arising-under jurisdiction; well-pleaded rule bars federal question.
Does Grable allow federal jurisdiction for substantial federal questions arising from state claims here?	Grable suggests federal issues embedded in state claims create jurisdiction.	Grable’s test is not met because no federal issue is necessary or central to the state claims.	Grable does not apply; no federal question present under well-pleaded rule.
Can CALSTAR’s declaratory judgment claim create federal jurisdiction?	CALSTAR relies on Shaw to expand jurisdiction over pre-emption claims against private parties.	Shaw involved a state official; declaratory judgments between private parties do not create arising-under jurisdiction.	No jurisdiction; declaratory judgment against private parties does not confer federal question jurisdiction.

Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125 (1974) (preemption issue alone not arising under federal law)
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (significant federal issues must be necessary and substantial)
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) (well-pleaded complaint rule governs federal-question jurisdiction)
Gully v. First Nat’l Bank, 299 U.S. 109 (1936) (elements of action must include a federal right or immunity)
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) (Ex parte Young framework; state-official defendant relevance)
Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950) (Declaratory Judgment Act is procedural, not a basis for federal jurisdiction)
Colonial Penn Grp., Inc. v. Colonial Deposit Co., 834 F.2d 229 (1st Cir.1987) (jurisdiction over pre-emption declarations generally limited to state-official defendants)
Albradco, Inc. v. Bevona, 982 F.2d 82 (2d Cir.1992) (Shaw does not apply to private-party disputes)
New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321 (5th Cir.2008) (Shaw does not apply to purely private party disputes)