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Filing a Lawsuit in Federal Court

By: Marc A. Campsen

The first question facing an attorney after determining to file a lawsuit is: where to file – state or federal court? Although the vast majority of potential claims arising under federal or state laws may be brought in state court, access to federal court is significantly more circumscribed. In essence, access to federal court is limited to claims falling within two discrete categories – federal question and diversity of citizenship.

The first category – federal question – extends federal jurisdiction to “all civil actions arising under the Constitution, laws, or treaties of the United States.” See 28 U.S.C. § 1331. In other words, only claims arising under federal law, not state law, fall within the “federal question” category.

The second category – diversity of citizenship – extends federal jurisdiction to “all civil actions” satisfying a two-pronged threshold requirement: (i) the “amount in controversy” (i.e., alleged damages) exceeds the sum of $75,000, exclusive of interest and costs; and (ii) there is complete “diversity of citizenship” between all adverse parties (i.e., plaintiff and defendant). See 28 U.S.C. § 1332(a). Notably, unlike the “federal question” category, under the “diversity of citizenship” category a federal court will have jurisdiction over any claim arising under state or federal law satisfying both prongs of 28 U.S.C. § 1332(a).

The plaintiff, as master of the complaint, can satisfy the amount in controversy prong of 28 U.S.C. § 1332 through “well plead” allegations on the face of the complaint establishing the damages sought exceed $75,000, to a “legal certainty.” See Marchese v. JPMorgan Chase Bank, N.A., 917 F. Supp. 2d 452 (D. Md. 2013). The diversity of citizenship prong of 28 U.S.C. § 1332 requires all adverse parties be citizens of different states at the time the lawsuit is filed. See Gardner v. AMF Bowling Centers, Inc., 271 F. Supp. 2d 732, 733 (D. Md. 2003). This prong is satisfied by a showing that no plaintiff is a citizen of the same state as any defendant. If a party is an individual, citizenship will be determined by the state in which the party resides. If, however, a party is a corporation, citizenship will be determined both by the state of incorporation and the state in which “it has its principal place of business.” See 28 U.S.C. § 1332(c)(1). A corporation, therefore, is capable of being a citizen of two states for diversity purposes. The multiple “citizenships” of a corporation, if applicable, must be accounted for in the diversity of citizenship analysis prior to filing in federal court.

Finally, as long as a single claim in a lawsuit satisfies the requirements of 28 U.S.C. §§ 1331 and/or 1332, a federal court has discretion to exercise supplemental jurisdiction over the remaining claims not meeting federal jurisdiction standards, if the remaining claims are so related to the claim(s) over which the court possesses jurisdiction that “they form part of the same case or controversy[.]” See 28 U.S.C. § 1367(a).

For more information on federal court litigation, please contact Wright, Constable & Skeen, LLP.

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