Teresa Schiller, '95: Lawsuits in Federal Court--What Businesses Can Expect
Making a federal case of it: What businesses can expect in federal lawsuits
How do businesses resolve disputes? One option is to seek a federal court’s assistance. A business may file a lawsuit in federal court or find itself defending against such a lawsuit. Either way, what can businesses expect? Here is some structural and strategic information.
What business disputes can be heard in federal court? Where are federal courts located?
A federal court can hear cases such as the following: (1) disputes involving questions of federal law; and (2) disputes between citizens of different states involving a claim for damages of at least $75,000.
Federal courts are located in every state. In Texas, federal trial courts convene in Fort Worth, Dallas and 26 other cities. The federal appellate court covering Texas (the Fifth U.S. Circuit Court of Appeals) is based in New Orleans. The next -- and highest -- federal appellate court is the U.S. Supreme Court in Washington, D.C.
Why choose federal court?
Businesses resolve disputes in federal court for reasons such as quality, manageability and relatively favorable law.
First, the quality of federal courts tends to be high. Federal judges are selected through a competitive process involving presidential nomination, FBI background checks, and U.S. Senate confirmation. They have life tenure, which facilitates impartiality. Federal judges have law school graduates on staff and other resources to assist them.
Second, some businesses find federal lawsuits to be more manageable than state court lawsuits. Federal trial judges tend to handle fewer cases at a time, allowing them to focus more on particular cases and potentially be more responsive to urgent matters. Federal trial judges also are more likely to make decisions resolving entire cases without the need for trials, which enhances efficiency.
Third, a business may decide to sue in federal court because federal law is more favorable. Accordingly, businesses should compare the federal and state law applicable to any dispute.
Besides federal lawsuits, other dispute resolution options include ongoing negotiation, state lawsuits, mediation and arbitration. Some combination of these options may be helpful.
Teresa Schiller is a business and employment lawyer at Beard Kultgen Brophy Bostwick & Dickson PLLC in Dallas and Waco. She formerly worked for a federal trial judge and a federal appellate judge.
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