Articles

Courting Calamity or Venue Valhalla – Factors to Consider When Deciding Where to Sue

By Charles A. Horowitz

The United States has, by world standards, an unusual judicial structure, consisting of parallel federal and state court systems with partially overlapping jurisdiction. This article will provide a general overview of some differences between these systems, noting pros and cons of litigating your case in either venue.

Exclusive Federal Jurisdiction

The constitution and laws of the United States create exclusive jurisdiction over various areas of law, including patents, immigration, interstate commerce, bankruptcy, admiralty, some employee benefits under the Employee Retirement Security Act (ERISA), claims against federally regulated banks and more. Under the doctrine of express preemption, such cases cannot be brought in state court, and must be brought in federal court. The related doctrine of implied preemption precludes a party from bringing state law claims, statutory or common law, against a defendant in a federally regulated area in which there is no specific preemption mandate, but where a pervasive scheme of federal regulation implies the intent by Congress to “occupy the field.” Examples include labor law claims under the National Labor Relations Act and regulation of tobacco labeling. The current trend, as exemplified by the March 2009 Supreme Court decision of Wyeth v. Levine, is to reign in implied preemption and allow for state court adjudication in areas in which Congress has not expressed an intent to occupy the field. In the Wyeth case, the Supreme Court ruled that a plaintiff may bring a state law claim against a pharmaceutical company for failing to place a label on a certain drug warning against the risk of certain injuries, despite the fact the existing label had been approved by the federal Food and Drug Administration. A second type of implied preemption arises where federal and state laws conflict, making it impossible for a private party to comply with both.

Concurrent Jurisdiction and Diversity Jurisdiction

Some legal claims based on federal statute, such as employment discrimination under the Title VII of the Civil Rights Act of 1964 or the Americans with Disabilities Act, claims arising under the United States Constitution, and certain ERISA claims may be brought in either federal or state court. In such circumstances, a defendant seeking to have the case heard in federal court may “remove” the case to federal court by filing its request within thirty days of being sued. One important limitation on this right to remove is that removal is not available to a defendant sued within in the federal judicial district in which the defendant resides. Diversity jurisdiction allows a plaintiff to sue in federal court, or defendant sued in state court to remove the case to federal court, if the plaintiff and defendant are residents of different states and the amount in controversy (i.e., sum of all damages sought) is in excess of $75,000.

Exclusive State Court Jurisdiction

Federal courts are courts of limited jurisdiction, vested with the authority to hear only matters arising under federal law or diversity jurisdiction, as summarized above. All other cases, including routine breach of contract cases, common law torts, family law matters, insurance claims and real estate issues (e.g. foreclosures, evictions and boundary disputes), cannot be brought in federal court and must be brought in state court.

Quality and Political Biases of Jurists

There is a common perception, whether or not deserved, that federal court judges are more scholarly and legally sophisticated than their state court counterparts. In consultation with your lawyer, you might find that a judge that rules more from his or her “gut” than intellect may be more strategically advantageous. Many lawyers in Minnesota, when candidly asked, will report that over half of the 11 federal court judges in the District of Minnesota harbor a right-wing judicial bias, tending to favor business and corporate interests over individual litigants, particularly in the fields of consumer rights and employment discrimination. (This apparent bias is more evident yet at the appellate court level; appointments from successive Republican administrations have transformed the Eighth Circuit Court of Appeals from one of the nation’s most liberal circuits to one of its most conservative.) The inverse perception exists concerning state court, at least in the Hennepin County and Ramsey County court systems. A majority of judges in those venues is considered to be left leaning, or at least moderate. Calculations along these lines are risky, however, because one can roll the dice and lose. In addition, the judge assigned to your case in federal court is the judge that you get. In state court, by contrast, each side is allowed one opportunity to “strike” the judge assigned to the case.

Home Court Advantage

If you are sued in a “foreign” jurisdiction, meaning courts of a different state, you may encounter what’s often described as the “home town” or “home court” phenomenon, in which a judge or jury harbors a subtle or overt bias for the local party. For example, consider the situation in which the party suing you in its own back yard is a local company that employs members of the community. One may avoid this risk by bringing a motion to transfer venue, in federal court under the venue transfer rules, or under the legal doctrine of “forum non conveniens.” Both doctrines look to whether a case can be more efficiently or economically be litigated in a venue other than the one chosen by the plaintiff. To avoid this problem preemptively, at the contract negotiation stage, one may insist on binding arbitration or a forum clause designating a more hospitable, or at least neutral, venue.

Expense Factor

Litigation in federal court tends to be more expensive than comparable litigation in state court. Many reasons account for this, including availability of expert depositions, which state courts may not always permit, the assignment of two judges (a magistrate judge and district court judge) to every case, and a greater degree in formality and number of proceedings, conferences and disclosures.

Time Factor

Conventional wisdom is that cases tend to drag on in state court. This author, who is admitted to practice in New York, is personally aware of routine civil lawsuits that languish there for five years or more, because of the City’s incredibly crowded dockets. Urban dockets in Minnesota are similarly packed, based in part on a chronic underfunding of the judicial branch. However, some counties, including Hennepin, now require that judges complete all cases within one year of the date of filing. Many, if not most, judges take this requirement seriously. (One consequence of this time pressure is that many state court judges press the parties hard to settle their cases, more so than their federal court counterparts.) Federal court cases, by contrast, can take over a year to complete, although usually not more than two years for routine matters.

As summarized above, the choice between a federal or state court forum should be a key consideration in litigation planning. At Mansfield, Tanick & Cohen, we have extensive experience practicing in both federal and state court, and are available to advise you on issues concerning forum and other strategic considerations before filing a lawsuit.