Federal Court vs. State Court

There are two court systems in every state.  One is a federal court system and one is operated by the state.  Each system has jurisdictional issues and cases are filed in one system or the other depending on the type of case it is.

Federal courts are considered courts of limited jurisdiction.  That’s because Congress and the Constitution set forth what cases can be heard in federal courts. The United States Constitution (Article III, Section 2) sets forth the jurisdiction of the federal courts.

Some cases start in State court but then get removed to federal court.  Removal is automatic and the plaintiff has to seek remand within 30 days of removal or lose his or her right to do so.  Courts have federal removal jurisdiction only over cases that could have originated pursuant to the Court’s federal subject matter jurisdiction. 28 U.S.C. §1441(a). The Courts’ subject matter jurisdiction is limited to those involving a federal question or where diversity of citizenship exists. 28 U.S.C. §§ 1331, 1332.

Diversity of Citizenship– Most cases are removed from State to Federal court because there is a diversity of citizenship between the parties, either claimed because of the supposed improper joinder of an in-state defendant or in reality because the parties are from different states.  Federal courts have jurisdiction over a case of a civil nature in which parties are residents of different states and the amount in controversy exceeds $75,000.  If a federal court obtains jurisdiction over a matter because of diversity of citizenship of the parties, it is usually required to apply state law since the issues concern matters of state law.  The traditional thought is that the reasoning behind federal jurisdiction in these cases is to avoid “home cooking” of a defendant in the plaintiff’s home state.  Because of this, if there is no diversity between the defendant and the state, there is no federal jurisdiction.  So, for example, in most cases, if the plaintiff is from Georgia and the defendant is from Alabama, the plaintiff can file suit in Alabama and the case will remain in State Court.  Using the same facts, if the plaintiff files suit in Georgia, the case can be removed to the federal court in Georgia.

Federal Question– Federal courts have original jurisdiction over cases that arise under the U.S. Constitution, the laws of the United States, and the treaties made under the authority of the United States.  Federal courts have exclusive jurisdiction in these type of cases, including some of the following:

Suits between states—Cases in which two or more states are a party.

Cases involving ambassadors and other high-ranking public figures—Cases arising between foreign ambassadors and other high-ranking public officials.

Federal crimes—Crimes defined by the U.S. Constitution or those defined and/or punished by federal statute.  Such crimes include treason against the United States, piracy, counterfeiting, crimes against the law of nations, and crimes relating to the federal government’s authority to regulate interstate commerce.

Bankruptcy—The statutory procedure, usually triggered by insolvency, by which a person is relieved of most debts and undergoes a judicially supervised reorganization or liquidation for the benefit of the person’s creditors.

Patent, copyright, and trademark cases

Admiralty—The system of jurisprudence that has grown out of the practice of admiralty courts: courts that exercise jurisdiction over all maritime contracts, torts, injuries, and offenses.

Antitrust—The body of law designed to protect trade and commerce from restraining monopolies, price fixing, and price discrimination.

Securities and banking regulation—The body of law protecting the public by regulating the registration, offering, and trading of securities and the regulation of banking practices.

Other cases specified by federal statute—Any other cases specified by an applicable federal statute.


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