Writing for the Court, Justice David Souter held that the absence of a independent federal cause of action does not preclude federal jurisdiction when the federal issue implicated by the case is substantial and the case does not threaten to overwhelm federal courts. Justice Souter explained that federal question jurisdiction may apply to cases where a state law claim necessarily raises a stated federal issue that is actually disputed, substantial, and consistent with the legislatively proscribed balance of federal and state judicial responsibilities.

Justice Souter explained that Grable’s claim depended on the interpretation of 26 U.S.C.S. § 6335(a), making federal law an essential element of the case. He further stated that the federal issue was actually disputed and substantial since it involved the adequacy of notice under federal tax law, which directly impacts the IRS’s ability to collect delinquent taxes and provide clear title to buyers. Lastly, he emphasized the government’s strong interest in ensuring the prompt and certain collection of taxes and the importance of a federal forum for resolving disputes over federal tax provisions and noted that recognizing federal jurisdiction wouldn’t disrupt the balance between federal and state court responsibilities, since such claims rarely involve federal law. Ultimately, the SCOTUS affirmed the judgment of the Sixth Circuit, holding that the national interest in providing a federal forum for federal tax litigation was sufficiently substantial to support the exercise of federal-question jurisdiction over the disputed issue.