Seeking Justice in the Correct Jurisdiction

The United States judicial system is a web of state courts and federal courts, bankruptcy courts and tax courts, administrative courts and special appeals courts. Not every court can hear every type of case, and it is the plaintiff’s responsibility to file suit in the correct forum. If the court lacks subject matter jurisdiction, the defendant can motion to dismiss the suit—even without arguing the case on the merits.


Subject matter jurisdiction is fundamental to a court’s ability to decide a case. But, for a foreign party unfamiliar with United States law, the choice is not always straightforward. Sound legal advice on where a claim should be filed or defended is critical for successful litigation. Consider the following factors:


A.        Diversity Jurisdiction


Lawsuits between citizens and non-citizens are generally heard in federal district courts. The parties are diverse, meaning that they do not fall under the jurisdiction of a common state.


Several exceptions to this rule exist, with important implications for non-citizen parties that reside or do business in the United States. For example, no diversity exists in suits between citizens and non-citizen permanent residents of the same state. Also, because all corporations are citizens of their place of business and place of incorporation, no diversity exists where a non-citizen permanent resident sues a U.S. company that primarily does business abroad, if the company is incorporated in the plaintiff’s state of residence.


What happens when parties relocate after litigation begins? Diversity is required at filing, but an initial lack of diversity is not always reversible error, if diversity arises by the time judgment is entered.


B.        Amount in Controversy


Even where complete diversity exists, a federal court will not hear the case unless the amount in controversy exceeds $75,000, exclusive of interest and costs. But, imagine a situation where one plaintiff sues Defendant A and Defendant B, each for $40,000? Or, two plaintiffs—each with a claim for $40,000 against the same defendant—try to sue the defendant in the same action?


The court would allow the first case, but dismiss the second. (Still, one plaintiff who alone has a claim for more than $75,000 will open the door for lesser claims arising from the same circumstances.)


Where a plaintiff files suit in the wrong place, the defendant may ask the court to dismiss the case or to remove it to another jurisdiction. The Jayaram Law has experience representing foreign entities who have been sued in the United States or have a claim against an entity in the United States. We have successfully litigated jurisdictional issues arising out of these circumstances, and would be happy to discuss your matter with you.