Where Can You Sue A Business And Why Does Location Matter?

THE DIFFERENT LOCATIONS AND TYPES OF COURTS WHERE BUSINESSES AND PEOPLE CAN BE SUED

There are two major types of courts in the United States: federal courts and state courts. Some people mistakenly think that a business can only be sued in federal court if it breaks a federal law and can only be sued in state court if it breaks state law, but that is not true. Federal district courts can hear lawsuits involving either violations of state law or federal law. For example, businesses are frequently sued for breach of contract, fraud, and premises liability—normally state law claims—in federal district court. Businesses are also often sued in federal district court for violations of intellectual property laws (i.e., trademark and copyright infringement) and employment discrimination—areas often governed by both federal and state laws.

Likewise, state courts have the authority to decide cases arising under both state and federal law. Businesses are frequently sued in state courts for violations of state law, and, less frequently, for violations of federal law. State courts can also decide cases arising under laws from a different state than the one in which that court is located. For example, two businesses may choose to sue each other in New York state court but the contract they are suing under says that law from Michigan applies. The state court in New York will likely decide this type of lawsuit by applying contract law from Michigan, as originally agreed by the parties when they signed the contract.

In other words, businesses can and often are sued under state and federal law in both state and federal courts all around the country. Does that mean you can sue a business anywhere you like? Not exactly. There are several limits on where you can sue. The two most important limits are called Jurisdiction and Venue.

JURISDICTION

Jurisdiction essentially means the legal power of a court to decide certain types of cases. Jurisdiction has to do with both the specific people or businesses in the lawsuit (called Personal Jurisdiction) and the type of claims being brought (called Subject Matter Jurisdiction). While both types of Jurisdiction are complicated and nuanced, the basic idea is that a court must have both the legal power over the parties in the lawsuit—Personal Jurisdiction—and the legal power to hear that type of case—Subject Matter Jurisdiction. If a court lacks one or both of these types of jurisdiction, your case will fail at the outset. No matter what other circumstances might exist, the Court simply doesn’t have the power to help you.

For example, a state court in Alaska would generally have the power to decide a lawsuit you are bringing against a business that operates in Alaska or was formed in Alaska (i.e., Personal Jurisdiction) but would not have power to decide a case you want to bring against a business that only operates in the lower 48 states and was formed in Virginia. As another example, both a state district court and federal district court located in Colorado may have authority to hear a breach of contract case or personal injury case you want to bring against a business (i.e., Subject Matter Jurisdiction), but Denver Probate Court would not have authority to decide these types of cases because its Subject Matter Jurisdiction is limited to cases involving estates of deceased individuals, guardianships, conservatorships, and similar matters.

In general, you need to pick either a federal or state court that has both the power to hear a case involving the business you want to sue and the power to decide the type of claim(s) you want to bring against that business.

VENUE

Oftentimes, multiple courts will have both Personal Jurisdiction and Subject Matter Jurisdiction over the type of case you want to bring. Which court should hear your case when that happens?

This question is resolved by a concept called Venue. While the two types of Jurisdiction have to do with a court’s legal power over specific parties and types of claims, Venue is primarily concerned with choosing the most appropriate geographical location among courts that already have both Personal Jurisdiction and Subject Matter Jurisdiction.

For example, while all Texas state district courts would have the power to hear a typical breach of contract case between two Texas businesses, Venue would likely not be appropriate in a district court located in El Paso if one business is based in Houston, the other is based in Dallas, and all of the events that are relevant to the breach of contract occurred in San Antonio. The court in El Paso may have both Personal Jurisdiction and Subject Matter Jurisdiction, but the location simply would not make sense when there are other courts with both Personal Jurisdiction and Subject Matter Jurisdiction that are physically closer to the parties and facts of the dispute. Similarly, all federal district courts have the power to hear a lawsuit for federal trademark infringement between two U.S. businesses that involves infringement occurring inside the U.S. In other words, all federal district courts have Personal Jurisdiction and Subject Matter Jurisdiction over this type of lawsuit, but Venue would not be proper in the U.S. District Court for the District of Massachusetts if one business is based in Colorado, the other is in Kansas, and the infringement occurred only in Nebraska. The federal district courts in those three states would be more appropriate venues for the lawsuit, given their geographic proximity to the parties and events involved in the lawsuit.

While Venue statutes are complex and vary from one state to another and from state courts to federal courts, they generally either permit or require lawsuits to be held where the legal wrong occurred (i.e., where a contract was broken), where the defendant resides (i.e., the district where the business that broke the contract is located), or where some other related event took place (i.e., where a broken contract was originally signed).

If you are feeling a little confused or uncertain right about now, no need to worry. A skilled litigator can parse through the complex questions of jurisdiction and venue that often arise when suing an out-of-state business to help you determine the best place to file your particular lawsuit.

CONTACT AN ATTORNEY TODAY

Are you thinking about suing a business but are not sure where you should file it? Reach out to Volpe Law today to request a consultation. We can be contacted through our online form or by calling us directly at (303) 268-2867. Our team of dedicated attorneys are here to listen to your case and identify the best legal options for you.

DISCLAIMER

The information contained on this website is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter.  Laws frequently change and therefore this content is not necessarily up to date, nor comprehensive. Contact us or another attorney with any legal questions specific to your matter. You may request a consultation by calling us as 303-268-2867 or completing a consultation request form.