Federal Court: Jurisdiction and Venue Defined

Autor: Melinda H. South

In filing a lawsuit, an attorney must consider both jurisdiction and venue to determine in which court a case can be filed and in which court a case should be filed. “Jurisdiction” means that a court has the power to exercise authority over all persons and things within its territory. To properly file a lawsuit, you must file the lawsuit in a court that has jurisdiction. “Venue” is the geographical location of a particular court. To properly file a lawsuit, you must file the case in an appropriate venue.

There are two ways a lawsuit may end up in federal court. First, a case may be filed in the federal court directly. Second, although a plaintiff files a case in state court, the defendant may request that the case be transferred (or “removed”) to federal court under certain circumstances. In either case, the lawsuit must be filed both in a court that has jurisdiction and one that is a proper venue. Whether the case is filed initially in federal court or removed to federal court, the attorney filing the lawsuit must consider the effect of Public Law No. 112-63, which is better known as the “Federal Courts Jurisdiction and Venue Clarification Act of 2011.”

Some of the key points in the Federal Courts Jurisdiction and Venue Clarification Act of 2011[1], which became effective January 6, 2012, are the following:

I. Jurisdiction

A. Timing of Removal with multiple defendants

Allows each defendant a full thirty days following service[2] on that defendant to file a removal notice.

B. New procedures for establishing the amount in controversy necessary to sustain diversity jurisdiction

Standard of proof for a defendant is by the preponderance of the evidence to establish amount in controversy exceeds the jurisdictional minimum. Information collected during state court discovery may be used to support removal.

C. Notice of removal be filed no later than one year after an action is commenced, Defendant can avoid the one-year bar by demonstrating the plaintiff has acted in bad faith in order to prevent defendant from removing the action.

D. Eliminates a federal court’s discretion to hear state law claims asserted in a case removed to federal court on the basis of federal question jurisdiction. If entire case is removed, federal court “shall sever from the action all state law claims…and shall remand the severed claims to the state court from which the action was removed.” It appears to apply to separate and independent state law claims.

E. All defendants in an action must consent to removal of a case.

F. Citizenship Determination

Federal courts cannot exercise jurisdiction over claims between a citizen of a State and “citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State.”

Corporations and insurance companies with significant foreign operations are to be considered citizens of both the state by which they are incorporated and any other state, including any foreign state, where it maintains its principal place of business.

II. Venue

A. New Section 1390 which establishes that these provisions do not apply to admiralty or maritime claims.

B. Section 1391(c) is new and defines residency for natural persons, entities, whether or not incorporation and defendants who do not reside in the United States.

C. The Act provides for a new procedure for transferring venue “to any district or division to which all parties have consented” even if venue would not otherwise be proper in that district. (The Court must find that the transfer is “for the convenience of the parties and witnesses and in the interest of justice.”) However under this section, transfers from the district court of the United States shall not be permitted to the District Courts of Guam, Northern Mariana Islands or Virgin Islands.

Proper consideration of both jurisdiction and venue are just some of the issues an attorney must consider before filing a lawsuit.[3]

Sobre el Autor: Melinda H. South is an attorney with the bufete de abogados de lesiones personales de Allen & Allen. Melinda works in the Richmond office as a legal researcher and assists in the preparation of firm briefs and legal memoranda.

[1] The Act may be found at http://www.gpo.gov/.

[2] “Service” or “service of process” is the legal term for delivery to the person or entity being sued of the legal documents by which the lawsuit is started and by which the court asserts its jurisdiction over the parties and the controversy. The “process” usually consists in the United States of both a “summons” and a “complaint”. The summons is a paper that tells a person or entity being sued that he is being sued in a specific court. The complaint is a document that states who has filed the lawsuit (the “plaintiff”) and the plaintiff’s allegations of wrongdoing by the person or entity being sued (the “defendant”) and the legal remedy sought by the plaintiff. The summons also informs the defendant that he or she has a specified number of days under law to respond to the summons and complaint, usually by filing a written document known as the “Answer”.

[3] For a more in depth review of the changes, see the House Judiciary Committee Report at http://www.gpo.gov/.