When your commercial law dispute leads to litigation, one of the first decisions your company will have to make includes determining whether you have a state or federal case.
Key Differences Between State and Federal Commercial Disputes
Some of the primary differences between commercial disputes under state or federal law include:
- Jurisdiction: State law commercial disputes typically end up in state court, whereas federal law disputes typically go to federal court.
- Applicable law: State courts typically hear cases arising under state law, although they can also hear cases involving federal claims. Federal courts specialize in handling commercial disputes arising under federal law, although they can hear cases involving state law claims between parties from different states or countries.
- Court procedures: State and federal courts use different rules, procedures, and deadlines for cases.
When Does a Commercial Dispute Fall Under Federal Jurisdiction?
A commercial law dispute can end up in federal court under various circumstances, including:
- Cases arising under federal law: When a plaintiff asserts a commercial law claim arising under federal law, the plaintiff may file suit in federal court; alternatively, a defendant may remove a case initially filed in state court to federal court.
- Diversity cases: When a commercial dispute filed in state court involves parties residing in different states and claiming over $75,000, a defendant may remove the case to federal court unless the defendant resides in the same state as the federal court.
- Cases involving the federal government or federal agencies: A plaintiff filing an action involving the U.S. government or a federal agency or officer as a party may bring their action in federal court. Furthermore, a federal officer can remove such a case initially filed in state court to federal court.
When Does a Commercial Dispute Fall Under State Jurisdiction
Commercial disputes that lead to litigation typically end up in state court. State law usually governs business contracts, meaning state courts typically hear breach-of-contract claims. State laws include numerous other commercial law statutes, including the Uniform Commercial Code and various consumer protection statutes.
State law also usually governs employment and labor disputes. However, federal laws such as the National Labor Relations Act, Title VII of the Civil Rights Act, and the Americans with Disabilities Act can apply to commercial disputes arising from the employment context.
Finally, commercial disputes may arise from real estate transactions, which usually end up in state court. State courts typically have primary jurisdiction over real estate-related matters, including title disputes, contract claims, and zoning/land use issues.
Factors Businesses Should Consider
Factors that businesses in Manhattan should consider when deciding between state and federal jurisdiction for their commercial dispute include:
- Choosing a venue: The nature of a commercial dispute can limit a company’s choice of venue. For example, if a dispute does not involve federal law, parties from different states, or a federal agency, a plaintiff may not have the option to file suit in federal court. However, when the circumstances give options between state and federal courts, companies should evaluate the pros and cons of each option.
- Evaluating advantages and disadvantages of state vs. federal court: State and federal courts have varying advantages and disadvantages. For example, state court judges may have more significant experience with state commercial law issues. Conversely, federal courts have less congested dockets, leading to swifter resolutions of commercial disputes.
- Pursuing alternative dispute resolution instead of court litigation: In many cases, alternative dispute resolution can offer another option for resolving a commercial dispute. ADR methods like mediation or arbitration can help parties resolve disputes more quickly and cost-efficiently than traditional litigation in state or federal court.
Contact a Commercial Law Attorney Today
If you’re facing a commercial dispute involving state or federal law, a commercial law attorney can help you protect your business’s interests. Contact Levy Goldenberg LLP today for a confidential consultation with a Manhattan litigation attorney to discuss your company’s legal options in a state or federal commercial dispute.