If you are involved in business litigation in California, the court system in which your case is heard can have a significant impact on the outcome. The California State Court system differs notably from the federal courts in California in many ways, particularly surrounding the following factors.
In order for a court to preside over a case, it must have jurisdiction in the matter. Federal courts have jurisdiction over cases involving a purported violation of a federal statute or a constitutional matter, such as a party challenging a state or federal law based on the United States Constitution.
Federal courts also hear cases with diversity jurisdiction, meaning the plaintiffs and defendants have their principal places of business in different states. The amount in controversy in a diversity jurisdiction claim must exceed $75k in order to reach federal court. For example, if a business in California fails to pay a New York-based vendor $80k for services rendered in a signed agreement, this breach of contract could invoke federal diversity jurisdiction.
Diversity jurisdiction becomes much more complicated with multiple defendants, new defendants arising during a case, and motions to remove from state to federal court. It is important to hire an experienced California business attorney to navigate these nuances.
California judges are elected, while federal judges are appointed. Because of this difference in authority, federal judges are typically required to possess deeper experience and higher credentials than state judges. That is not at all to dismiss the experience and credentials of state judges, but rather, highlight the fact that federal court is the pinnacle of the profession.
Because federal judges have often held positions with prestigious law firms, run highly successful private practices, and/or served as federal prosecutors, they are much more rigid—as is the federal court system in general, even at the clerk level. They are strict with their rules, and by the book with their processes and documents. Federal courts are usually unbending in their application of the Federal Rules of Evidence, whereas California state courts adhere less strictly to the California Evidence Code. California has a reputation for being relaxed all around; this can, to an extent, be said of its courtrooms compared to federal court.
The rigidity of federal court makes a federal lawsuit more expensive to litigate than a state lawsuit. No lawsuit is cheap, of course, and alternative dispute resolution such as mediation is often recommended prior to going to court. It is usually wise to include an arbitration or mediation clause in your business contracts to make litigation the last resort in a claim against your company, or prevent courtroom litigation of most issues.
In California State Court, you will be assigned to the courthouse that is nearest geographically either to your place of business or to the place of the incident in dispute. Your jury pool will be drawn from that same judicial district. If you file a lawsuit for a transaction that took place in North County San Diego, for instance, your case will likely be heard in Vista, Calif., where the San Diego Superior Court is located. The jury pool, then, will be from Vista and the surrounding area—a dramatically different demographic than that of, say, Downtown San Diego.
A federal court, meanwhile, will draw jurors from throughout the county where the case is heard rather than a single concentrated area. There are fewer federal courthouses than state courthouses in California, usually one federal courthouse for each county, although that one courthouse may have dozens of courtrooms. Litigators need to be cognizant of which jury pool will be best suited for their client, among many other factors.
Choosing a California Business Attorney
Where you file can be just as pivotal as what you file; seek counsel from the San Diego business attorneys at Gehres Law Library Our team is extremely familiar with both the state and federal court systems, and can explain to you the potential risks and benefits of each option. It is worth every bit of our time and energy to consider the court that will give you the greatest advantage and/or the least disadvantage in your case. Schedule a free consultation today.