Why Make a Federal Case Out of It?

• U.S. Const. art. III, § 2; 28 U.S.C. §§ 1331-1332, 1367.

  • U.S. Constitution Article III, Section 2, and 28 U.S.C. §§ 1331, 1332, and 1367 relate to the jurisdiction of federal courts in the United States: 

    • U.S. Constitution Article III, Section 2 Grants the judicial power to the federal courts to hear cases arising under the Constitution, laws, and treaties of the United States. It also grants the Supreme Court original jurisdiction over cases involving ambassadors, public ministers, and consuls, and cases where a state is a party. 
    • 28 U.S.C. § 1331 Grants federal district courts original jurisdiction over civil actions that arise under the Constitution, laws, or treaties of the United States. The well-pleaded complaint rule determines if a case “arises under” federal law. 
    • 28 U.S.C. § 1332 Grants federal courts jurisdiction over civil actions between citizens of different states, or between a citizen of a state and a subject of a foreign state, if the amount in controversy exceeds $75,000. This is known as diversity jurisdiction. 
    • 28 U.S.C. § 1367 Grants federal district courts supplemental jurisdiction over claims that are related to claims in an action over which the court already has jurisdiction. It also tolls the period of limitations for claims while they are pending and for 30 days after they are dismissed. 
• see U.S. Const. amend. IV, § 1; International Show Co. V. Washington, 326 U.S. 310, 316 (1945)
  • Personal jurisdiction is constitutional when a defendant has minimum contacts with the state where a lawsuit is brought such that notions of fair play and substantial justice would not be offended.
• see 28 U.S.C. § 1391 Venue generally
  1. Applicability of Section.—Except as otherwise provided by law—

     (1)this section shall govern the venue of all civil actions brought in district courts of the United States; and

     (2)the proper venue for a civil action shall be determined without regard to whether the action is local or transitory in nature.
  2. Venue in General.—A civil action may be brought in—

     (1)a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;

     (2)a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or

     (3)if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.
  3. Residency.—For all venue purposes— 

     (1)a natural person, including an alien lawfully admitted for permanent residence in the United States, shall be deemed to reside in the judicial district in which that person is domiciled;

     (2)an entity with the capacity to sue and be sued in its common name under applicable law, whether or not incorporated, shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question and, if a plaintiff, only in the judicial district in which it maintains its principal place of business; and

     (3)a defendant not resident in the United States may be sued in any judicial district, and the joinder of such a defendant shall be disregarded in determining where the action may be brought with respect to other defendants.\
  4. Residency of Corporations in States With Multiple Districts.— For purposes of venue under this chapter, in a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.\
  5. Actions Where Defendant Is Officer or Employee of the United States.—

     (1)In general.— A civil action in which a defendant is an officer or employee of the United States or any agency thereof acting in his official capacity or under color of legal authority, or an agency of the United States, or the United States, may, except as otherwise provided by law, be brought in any judicial district in which (A) a defendant in the action resides, (B) a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (C) the plaintiff resides if no real property is involved in the action. Additional persons may be joined as parties to any such action in accordance with the Federal Rules of Civil Procedure and with such other venue requirements as would be applicable if the United States or one of its officers, employees, or agencies were not a party.

     (2)Service.— The summons and complaint in such an action shall be served as provided by the Federal Rules of Civil Procedure except that the delivery of the summons and complaint to the officer or agency as required by the rules may be made by certified mail beyond the territorial limits of the district in which the action is brought.
  6. Civil Actions Against a Foreign State.—A civil action against a foreign state as defined in section 1603(a) of this title may be brought—

     (1)in any judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated;

     (2)in any judicial district in which the vessel or cargo of a foreign state is situated, if the claim is asserted under section 1605(b) of this title;

     (3)in any judicial district in which the agency or instrumentality is licensed to do business or is doing business, if the action is brought against an agency or instrumentality of a foreign state as defined in section 1603(b) of this title; or

     (4)in the United States District Court for the District of Columbia if the action is brought against a foreign state or political subdivision thereof.
  7. Multiparty, Multiforum Litigation.— A civil action in which jurisdiction of the district court is based upon section 1369 of this title may be brought in any district in which any defendant resides or in which a substantial part of the accident giving rise to the action took place.
     (June 25, 1948, ch. 646, 62 Stat. 935; Pub. L. 87–748, § 2, Oct. 5, 1962, 76 Stat. 744; Pub. L. 88–234, Dec. 23, 1963, 77 Stat. 473; Pub. L. 89–714, §§ 1, 2, Nov. 2, 1966, 80 Stat. 1111; Pub. L. 94–574, § 3, Oct. 21, 1976, 90 Stat. 2721; Pub. L. 94–583, § 5, Oct. 21, 1976, 90 Stat. 2897; Pub. L. 100–702, title X, § 1013(a), Nov. 19, 1988, 102 Stat. 4669; Pub. L. 101–650, title III, § 311, Dec. 1, 1990, 104 Stat. 5114; Pub. L. 102–198, § 3, Dec. 9, 1991, 105 Stat. 1623; Pub. L. 102–572, title V, § 504, Oct. 29, 1992, 106 Stat. 4513; Pub. L. 104–34, § 1, Oct. 3, 1995, 109 Stat. 293; Pub. L. 107–273, div. C, title I, § 11020(b)(2), Nov. 2, 2002, 116 Stat. 1827; Pub. L. 112–63, title II, § 202, Dec. 7, 2011, 125 Stat. 763.)

​Requirements for Removing a Case From State Court to Federal Court

State and federal courts have overlapping jurisdiction over many legal claims. Plaintiffs are responsible for choosing where to file their lawsuits, but defendants can have their say in some situations. “Removal” is the process of transferring a lawsuit filed in state court to the United States District Court with jurisdiction over the same area.

A defendant can remove a case from state to federal court by filing a notice of removal in federal court and then notifying the state court and the other parties. They might need the agreement or joinder of any other defendants, or they might be able to remove a case on their own. After removal, the state court no longer has jurisdiction over the lawsuit. A plaintiff can move the federal court to remand the case to state court, but the state court otherwise has no further involvement. Before removing a case, a defendant should consider the potential advantages of federal court and review the jurisdictional requirements and local rules for removal.

Why Remove a Case to Federal Court?

Federal courts may present certain advantages for defendants. For example:

• Since federal judges have lifetime appointments, their courts often offer more consistency in terms of matters like docketing.
• Federal courts tend to have more experience with certain types of lawsuits, so removal could mean that the case makes it through the court more efficiently.
• Rules of procedure and caselaw are often more consistent in federal court. The Federal Rules of Civil Procedure are the same throughout the nation, and all district courts in a circuit are bound by the same precedents.
• Jury pools in federal courts usually come from a wider geographic area.

If a defendant decides that federal court would offer enough advantages, they should begin looking at the procedure for removal.

Deadline to Remove a Case

A defendant has 30 days from the date when they receive the plaintiff’s petition or complaint to remove the case to federal court. A case that is not removable when it is first filed can become removable later if the plaintiff adds new claims, joins more defendants, or increases the amount in controversy. A defendant can remove a case within 30 days of receiving an amended petition or complaint. In many situations, however, the defendant cannot remove the case if more than one year has elapsed since the lawsuit was first filed.

Federal Subject Matter Jurisdiction

A case is removable to federal court only if the federal court would have had subject matter jurisdiction in the first place. The two most well-known bases for federal court subject-matter jurisdiction are:

• Federal question jurisdiction: The case arises under the US Constitution or a federal statute; and
• Diversity jurisdiction: The plaintiff(s) and defendant(s) are from different states, and the amount in controversy is at least $75,000.

Federal courts can exercise supplemental jurisdiction over state-law claims that are closely related to the other claims in the lawsuit.

If a plaintiff who is a citizen of California files suit in a California state court against a defendant who is a citizen of Minnesota, for example, they could file in federal court if the amount of their claims is $75,000 or more. If a plaintiff is asserting causes of action under both federal and state laws, a federal court could have jurisdiction over all the claims under federal question and supplemental jurisdiction.

A lawsuit that is removable based solely on diversity jurisdiction is subject to an additional restriction. It cannot be removed if any defendant is a citizen of the state in which it is filed.

Venue for Removal

Once a defendant has determined that a federal court can exercise subject matter jurisdiction over the lawsuit, they must identify the court where they can file a notice of removal. Federal law states that removal must be to the district court in “the district and division within which such action is pending.” If a plaintiff files a lawsuit in a New York state court in Manhattan, for example, the court to which the case should be removed would be in the Southern District of New York.

Filing the Notice of Removal

The procedure and timing for filing a notice of removal partly depend on the basis for federal subject matter jurisdiction. The notice of removal must include “a short and plain statement of the grounds for removal.” The defendant must attach copies of all the documents served in the state case.

When a defendant seeks to remove a case based on general federal jurisdiction, all of the defendants who have been served in the state case must either consent or join the removal. If a defendant wants to remove the case more than 30 days after a different defendant was served, that defendant can still consent to removal.

If a lawsuit is not initially removable, a plaintiff can render it removable later, such as by adding a claim that falls under federal question jurisdiction. A defendant can remove the case within 30 days of receiving the amended complaint or petition, as long as the original pleading was filed no more than one year earlier. A court can waive the one-year limit if it finds that the plaintiff “acted in bad faith in order to prevent a defendant from removing the action.” For example, a plaintiff who misrepresented the amount in controversy to avoid diversity jurisdiction may be considered to have acted in bad faith.

Notice to State Court and Other Parties

The defendant must notify the other parties and the state court “promptly” after filing the notice of removal in federal court. It must provide written notice to the other parties and file a copy of the notice with the clerk of the state court.

Severing State-Law Claims

The federal court will review its jurisdiction over the causes of action in the lawsuit. It can exercise supplemental jurisdiction over state-law claims. If it finds that it does not have supplemental jurisdiction, the court may sever those claims from the lawsuit and remand them to state court.

Cases That Are Not Removable

Federal law states that certain claims may not be removed to federal court. These include claims against railroads and motor carriers for $10,000 or less, workers’ compensation claims, and civil lawsuits brought under the Violence Against Women Act. source

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Why Make a Federal Case Out of It?

Imagine this scenario: you live in and own a house in Florida, and it is badly damaged by a storm. You file an insurance claim with your insurance company, which is headquartered outside of Florida, and your insurance company denies your claim. You disagree with the insurance company’s assessment of the claim, and you hire a lawyer to represent you in a lawsuit against your insurer. Your lawyer starts a lawsuit against your insurance company in state court, in the county where your house is located. Everything appears to be going smoothly, and then suddenly your attorney informs you that your insurance company has removed your case from state court into a federal court. How did your state court case suddenly become a federal case? How can an insurance company remove your case to a completely different court—with completely different procedures—all by itself? This article examines these questions.

To understand how a case filed in state court can be removed to a federal court, you must first understand a little bit about how jurisdiction works. Simply put, “jurisdiction” describes a court’s legal authority to administer justice. In practical terms, “jurisdiction” describes a court’s ability to hear and resolve cases. A court must always have jurisdiction over a case in order to even begin the case. Without jurisdiction, a court has no authority over a case whatsoever. In the United States, jurisdiction is generally comprised of two components: (1) jurisdiction over the subject matter of a case (the law and the facts of the case), and (2) jurisdiction over the parties in the case (also known as “personal jurisdiction”). In order to have jurisdiction over a case, a court must have both personal jurisdiction and subject matter jurisdiction over the case.

Regarding personal jurisdiction, a court must have jurisdiction over the parties to a lawsuit. For example, a court in Florida would not have personal jurisdiction over individuals in Oregon for a dispute that only took place in Oregon. Personal jurisdiction can become far more complicated, especially when dealing with corporations (which are legal entities that can be all over the world), but the general idea is that the parties to a lawsuit must have some connection to the state in which the lawsuit is brought. An Ohio man suing another Ohio man for an event that occurred in Ohio cannot bring a suit in Florida to resolve the dispute; he would most likely have to bring it in Ohio. Likewise, in the opening scenario, a Florida state court would have personal jurisdiction over the case, because both you and your house are located in Florida, and your insurance company has transacted business in Florida by issuing you an insurance policy under the laws of the state of Florida.

Regarding subject matter jurisdiction, certain courts have only limited subject matter jurisdiction. That is to say that certain courts can only resolve disputes in very narrow areas of the law. For example, federal bankruptcy courts alone have the legal authority to hear and decide bankruptcy cases. No other court in the country has that power. By contrast, most state level trial courts are courts of “general jurisdiction”, meaning that their subject matter jurisdiction is not limited to certain types of disputes. They have the general power to resolve most disputes that arise within their geographical area of the state (such as a county), apart from certain pre-empted subject matters (such as bankruptcy). In the first example, you can properly bring your lawsuit against your insurance company in your local circuit court, because your dispute (most likely a breach of contract action) falls within the general jurisdiction of your state court. Most likely, your attorney would bring suit in the county where you and your house reside.

Now, how does a state court claim suddenly wind up in federal court? Federal courts in the U.S. are courts of limited jurisdiction. Federal courts only have the power to resolve disputes in a number of limited subject matters. Among these subject matters, are (1) disputes involving federal question(s) and (2) disputes involving “diversity of citizenship”. Federal question jurisdiction is exactly what it sounds like. In order for a federal court to have jurisdiction arising under federal question jurisdiction, the case must involve some kind of federal law (i.e. a “federal question”). Unsurprisingly federal courts have the power to interpret federal laws, and create federal case law. Interestingly, state courts also have the power to interpret federal laws, and they are not bound by federal courts’ decisions (apart from the U.S. Supreme Court).

Federal diversity jurisdiction arises when two conditions are met: (1) there must be complete diversity of citizenship between the parties and (2) the “amount in controversy” is greater than $75,000.00. Diversity of citizenship is also exactly what it sounds like. The parties must be citizens of different states. In the first example, diversity of citizenship exists in your case, because you reside in Florida, and your insurance company is headquartered outside of Florida. As to the second element, your claim against your insurance company must be greater than $75,000.00, in order to have diversity jurisdiction.

Once federal diversity jurisdiction exists, any claim—even if it is also proper in state court—may be brought in federal court. When you started your lawsuit, you could have brought your claim in either state court or federal court. Even though you brought your claim in state court, the other party has the right to remove your case to federal court within 30 days after receiving the lawsuit. This is according to federal law, which expressly grants “original jurisdiction” to the federal court in all diversity cases (28 U.S.C. § 1332). Procedurally, this is done by the party seeking to move the case to federal court by filing a “Notice of Removal” in the federal court. If your attorney believes that their removal to federal court is improper, then you can file a “Motion for Remand” within 30 days after the filing of the Notice of Removal. Once a case is removed to federal court (and not remanded back to state court), then the case will be decided by a federal judge. All of the procedural rules of the federal court will apply to your case, even though the federal judge will still apply state law.

Why do some insurers prefer to remove cases to federal court? There are potentially strategic reasons to do so. For instance, if an insurer sees that the case has been assigned to a judge in a state court that they think will rule unfavorably to them, they may want to remove the case to another judge, which can be easily done by removal to federal court. Likewise, many attorneys are not admitted to federal court, or they are not familiar with federal court procedures, so removal may be a way for the insurance company to catch your attorney off-guard. Also, federal courts tend to be generally uniform across the country, and abide by strict procedural guidelines. Some insurers may prefer the increased formality of the federal court system, which again can catch an unfamiliar attorney off-guard.

If you are concerned that your insurance claim could potentially end up in federal court, or if you have a question about your claim in general, please give us a call. Many of our attorneys have experience practicing in both state and federal courts, and we have attorneys who have experience dealing with federal removal issues. source