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Bringing Business Claims in Federal Court

In business, everyday issues give rise to a countless variety of claims. Depending on the character of the issue, it may give rise to a claim that you must bring in federal court in order to protect your business. This can be a scary proposition if you aren't familiar with the process, and in certain circumstances should be avoided.

But, don't be afraid. Given the choice, bringing a federal claim instead of a state based claim can sometimes significantly impact the remedies available to your business, and even reduce the costs associated with bringing the claim.

In order to bring a claim in federal court, you have to show the court has jurisdiction to hear the claim. This essentially means the claim has to fit into a category of claims the federal court is willing to hear. At least one of two such categories more than likely applies to your business dispute.

The first category is claims involving violations of federal law. Issues such as patent infringement or securities fraud give rise to claims most appropriate for federal court because they involve federal law violations. Bringing these types of claims in federal court may be the only way to receive a money judgment for your business.

The second category of federal cases is diversity cases. These involve any claims that:

  • (1) seek $75,000 or more in damages; and
  • (2) are between "diverse" parties (parties from different states); and
  • (3) involve any violation of state or federal laws.

This second category can be confusing so let's attach it to an example. A small business in Oregon could bring any claim against a company headquartered in Washington, in Federal Court, so long as it involves $75,000 or more in damages. This allows the Oregon business to consider the cost of bringing the case in either Oregon or Washington, and the remedies each state's laws provide, and choose the most advantageous place to file the claim.

If you're not sure about which type of claim would be most advantageous for your business to bring, you should contact a local business attorney to help you determine the best options for your business's claims.

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