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If a consumer files a lawsuit in state court, a defendant credit card company may seek to move the lawsuit to federal court.  Federal court has very strict procedural rules, and it may be more difficult to litigate in federal court.

California state courts have “general jurisdiction.”  Federal courts have limited jurisdiction.  A federal court may hear a case only if Congress has passed a law giving the court jurisdiction.

If the lawsuit involves a “federal question,” such as the FDCPA or the FCRA.  In these cases there is a presumption of concurrent state court and federal court jurisdiction.  A plaintiff may file in either state or federal court.  Concurrent jurisdiction is presumed, but it is a rebuttable presumption.  Gulf Offshore v Mobil Oil (1981) 453 US 473, 478.  Some courts have held that federal law has pre-empted state law in certain areas, such as portions of the Fair Credit Reporting Act.  RICO is also a basis for federal court jurisdiction.  18 U.S.C. 1961.

Diversity of Citizenship.  This is based upon Article III of the United States Constitution.  If a citizen of one state sues a citizen of another state, the defendant may have the right to have the case heard in federal court.  This is more complicated when there is more than one plaintiff or more than one defendant.  A corporation may be a citizen of several states for purposes of determining diversity citizenship.  Also, many credit card companies operate through subsidiaries.  Therefore, if the credit card company operates through a subsidiary that is a citizen of California, and that subsidiary was involved in the subject transaction, naming a subsidiary as one of the defendants may prevent the credit card company from removing a state court FDCPA case to federal court.  If only one of the defendants is a citizen of California, none of the defendants may seek removal to federal court on the basis of diversity.

Residency is not the same as citizenship.  A large bank may have thousands of branches in California, but if it is incorporated in Delaware, it may be a “foreign citizen” and be able to claim diversity jurisdiction.  If one of several served defendants is a citizen of California, the defendants cannot move the case out of state court and into federal court.  28 U.S.C. 1441(b).  Spencer v U.S. District Court.  In order for there to be Diversity Jurisdiction in federal court, the amount in controversy must be at least $75,000.00.

There is a 30 day time limit when a defendant may remove a state court action to federal court.  This time period starts when the first pleading is served, and this 30 day period cannot be extended by stipulation of the parties.  Ortiz v General Motors.  However, the grounds for removal must be clear on the face of the pleadings.  Remember to allege “domicile” as well as “residency” in your complaint.

If a case is removed to federal court, the federal court has “supplemental jurisdiction” to decide claims arising under state law if the state law claims are “closely related” to the federal claims.  Not all claims, and counter claims are “closely related”, so it is possible for a defendant to remove a lawsuit filed in state court to federal court, but have some of the claims or counter claims, such as a credit card company’s counter claim for the underlying debt, remanded back to state court.

In federal court, Article III judges are appointed for life.  A case is assigned to one judge for all purposes.  All filings in federal court must be done over the internet.  Each judge has his/own rules peculiar to his courtroom.

In federal court, a unanimous jury verdict is required.  In California state court, 9 of 12 jurors can agree upon a verdict. 

WARNING.  If you want a jury trial that has been removed to federal court, you must file a “Demand for Jury Trial” right away.  In some situations, the deadline is 10 days after the defendant files the removal. 

In federal court you cannot serve discovery until after there has been a Rule 26 conference.