What kinds of lawsuits do federal courts handle?
UPDATED: December 16, 2019
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Federal courts are courts of limited jurisdiction. This means that unlike in state courts where you can file almost any type of lawsuit, by law, federal courts may only hear limited types of cases. Article III of the United States Constitution gives federal courts this limited right. There are two main categories of cases that federal courts can hear—cases that fall under federal law and cases that satisfy diversity jurisdiction. Federal court can also hear cases in which the United States is a party, as well as cases in which two or more states are parties to the action.
Lawsuits That Fall Under Federal Law
Lawsuits that fall under federal law are called federal question cases. Federal question cases involve laws that arise out of the United States Constitution, as well as United States statutes and treaties. Some types of federal question cases are strictly limited to federal courts. Federal question cases that are strictly limited to federal courts include cases that involve federal crimes, bankruptcy, patent or copyright, federal tax, antitrust, securities and banking regulations, and some maritime or admiralty claims.
Other types of federal question claims have concurrent jurisdiction. These cases may be heard by both state and federal courts. Cases involving concurrent jurisdiction include many civil rights, labor rights, or environmental claims. Oftentimes, it is beneficial to file these types of claims in state court, as state laws may offer more protection for them. The reason for this is that federal laws designate the minimum legal protection given in these areas, and the states can ramp up their legal protections if they choose to. However, an attorney filing a claim that falls within concurrent jurisdiction will look at many different factors when determining which court to file the claim in.
Federal courts select juries from a larger geographical area than state courts do; this may be beneficial for some cases. Federal courts also sometimes have different statute of limitations than state courts. This means that if you lose the chance to file your claim in state court, then you may still be able to file it in federal court.
Lawsuits That Meet Diversity Jurisdiction
Even if the claim does not fall within the federal question criteria, you still may be able to file it in federal court if you meet diversity jurisdiction. To meet diversity jurisdiction, all parties must have diverse citizenship, and there must be at least $75,000 at stake in the claim. The second prong of diversity jurisdiction is fairly simple: if there is at least $75,000 in damages alleged in the party’s claim, then this prong is met. To meet the first prong, all parties must be of diverse citizenship. In other words, not one member on the plaintiffs’ side can be a citizen of the same state as any member of the defendants’ side. This is usually straightforward for individuals, as citizenship is based on primary residence, and individuals are only allowed to reside in one state for purposes of diversity.
Citizenship can get confusing when there are corporations involved in the lawsuit. Corporations may “reside” in two states for the purposes of diversity, meaning, the state in which it was incorporated in and the state in which it has its primary place of business. For example, if an individual residing in California wants to sue a corporation that has its primary place of business in Massachusetts, but was incorporated in California, the parties are not diverse, and the individual must sue the corporation in state court.
If you have further questions about filing your claim in federal court, talk to an attorney. Depending on the type of claim you have, federal court may be your only option. However, you may also be able to choose where to file your claim, in which case your attorney will be able to discuss both the benefits and drawbacks to filing your claim in state or federal court.