How moving your case to federal court could benefit your business Featured

9:01pm EDT March 31, 2012
How moving your case to federal court could benefit your business

Whether your company is involved in a lawsuit as a plaintiff or a defendant, bringing the case to a federal trial court could be to your advantage.

Federal trial courts only accept limited types of cases, but if yours qualifies, your attorney can help you determine if moving to that venue is the right decision, says Andrea Figler Ventura, an associate at Dykema Gossett LLP, who previously served as a law clerk for the United States District Court for the Central District of California.

“Although overworked, federal judges generally have more time to read the pleadings and take the time to analyze the motions that are coming in front of them,” she says.

Smart Business spoke with Ventura about how to determine if moving an eligible case to federal civil trial court could be a smart move.

What kinds of cases are eligible to be heard in federal court?

Federal courts are limited in their jurisdiction, and you can only get cases in for two basic reasons. One, you have to have a federal question, a case arising from the Constitution, or from a federal statute or treaty.

The other way into federal court is to have a controversy between diverse parties, which means that the defendant has to be from a state different from the plaintiff, and the amount in controversy has to be more than $75,000. Aside from other statutes that specifically allow a case to be filed in federal court, those are the two basic ways into federal court. Otherwise, your case will not be accepted. Federal trial courts are fairly strict on analyzing these particular jurisdictional issues.

As a CEO, if you are involved in a lawsuit, you need to talk to general counsel as soon as possible. For example, if a plaintiff has filed a lawsuit against your company in state court, you only have a small window — 30 days — to remove cases to federal court.

You need to provide your lawyer with all the information possible to help decide whether you can and should remove the case to federal court. Removal can be tricky, especially when other defendants are involved.

What are the benefits of bringing a case to federal court?

As always, it depends on what the case is.  But, generally speaking, federal trial courts may have more time to analyze the pleadings in order to reach a decision based on the papers alone. If your lawyer finds your case can be dismissed under these circumstances, federal court may be the best choice. Federal trial judges are typically more willing to take things ‘off-calendar’ and decide on the papers that lawyers have filed. Under these circumstances, you as a business leader don’t have to pay for a lawyer to appear in court to argue the case.

And, generally speaking, federal judges perhaps have more pedigree to analyze the cases in front of them. Federal judges have been through a lot just to be nominated for the appointment by the U.S. president and, once they’ve been affirmed by the U.S. Senate, they’ve passed the test, so to speak. They are not elected as some state judges are.

And, while it is a generalization, federal court judges are more likely to dismiss a pleading on an initial motion, or motion for summary judgment, if there is a solid reason to do so based on the letter of the law, and a court of appeal would likely affirm the decision.  Obviously, this generalization favors defendants.

What are some other benefits?

When it comes to discovery, there’s a more structured format in federal court, versus state court. This typically presents less surprise than state court. So federal discovery  allows you to get a better feel of what you’ll go through in this process.

Also, the discovery rules have mandatory disclosure, which can be very helpful to plaintiffs. Sometimes plaintiffs will file a lawsuit, but they don’t have any evidence or information supporting their allegations. But because there is mandatory initial disclosure under federal law, they get some key information early in the case.

In the same sense, because there is a mandatory disclosure rule, both parties have crucial information up front, which, in some cases, allows them to reach a settlement sooner and narrow the costs for both parties.

How does the judgment process differ?

In federal trial court, there is one single judge that oversees the entire case, so he or she knows everything from A to Z about the issues. While magistrate judges assist the federal judge with discovery issues, the federal trial judge has the ultimate say on everything. Therefore, discovery, trial and settlement are all under one judge. Because of that, the judge has control of the timeline. With this control, many federal judges run a tight ship, making the federal trial process move more quickly than in state court where, generally speaking, the process isn’t as structured and you can have different judges on different parts of the case.

Also, because federal judges are appointed by the president, some presidents nominated federal judges seeking the general mandate to follow the letter of the law, which can benefit defendants, generally speaking. This judicial doctrine narrows the power of the court to really follow what Congress meant to do by analyzing the text of the law rather than interpreting the reasoning of why it passed the law. In other words, it focuses on the letter of the law more so than the spirit of the law. Interpretation of the spirit of the law can lead to broader and more diverse judicial decisions.

Andrea Figler Ventura is an associate at Dykema Gossett LLP. Reach her at (213) 457-1745 or Aventura@dykema.com.

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