Choosing Federal or State Court
Selecting a Court in Civil Cases
When starting a lawsuit, the plaintiff in the United States must make a choice whether to sue in federal or state court. In many instances the choice will be made for him. Because federal courts are courts of limited jurisdiction, federal courts can only hear certain types of cases.
As a general rule, federal courts have jurisdiction to hear cases between parties from different states (diversity jurisdiction) and cases arising from a federal law or the Constitution (federal question jurisdiction).
Selecting a Court in Criminal Cases
In criminal cases, the government commences the case. If a defendant is accused of violating a federal law, the federal prosecutor will prosecute the case in federal court. If the defendant is accused of violating a state law, the state prosecutor will prosecute the case in a state court. Easy.
Remember, because there are federal laws and state laws (federalism), the same underlying activity might constitute a federal crime and a state crime. Therefore, the defendant could potentially face trial in federal court and also in state court.
Diversity Jurisdiction
When the United States was founded, people were concerned that they could not get a fair trial in the state courts of other states. For example, a plaintiff from New York would be concerned that he could not get a fair trial if he sued a defendant in Rhode Island. To an extent, people have the same concerns today.
As a result, Congress provided federal courts with jurisdiction to hear cases where the plaintiff and the defendant are diverse, meaning they reside in different states. If there is more than one plaintiff and defendant, all plaintiffs must be diverse from all defendants.
In addition to the parties being diverse, the amount in controversy must exceed a minimum amount. Today, for federal courts to assert diversity jurisdiction, the amount in controversy must exceed $75,000.
Returning to our example above, a federal court may assert diversity jurisdiction if a plaintiff from New York sues a defendant from Rhode Island for $75,001 because the parties are diverse and the amount in controversy exceeds $75,000.

Federal courts may assert jurisdiction where the parties are diverse and the amount in controversy exceeds $75,000. 28 USC § 1332
Federal Question Jurisdiction
Federal courts may assert jurisdiction over claims that arise out of federal law or the Constitution. Courts require that the federal statute or the Constitution creates the claim on which the plaintiff relies. It is not enough that the defendant will rely on a federal law as a defense.
For example, if a plaintiff sues a defendant for violating federal antitrust laws, a federal court would have federal question jurisdiction because federal law created the claim.
Why it Matters
Jurisdiction is important because federal courts can only hear cases as authorized by the Constitution and Congress. If a federal court agrees to hear a case and it lacks jurisdiction, the court violated the Constitution. For this reason, Rule 12 of the Federal Rules of Civil Procedure enables a party to move to dismiss for lack of subject matter jurisdiction.
By way of example, let’s say a plaintiff from New York sues a defendant from New York in federal court for breaking a contract. This case does not belong in federal court because the parties are from the same state. They are not diverse. Also, the case is not based on federal law. Because the federal court does not have jurisdiction, the court must dismiss the case.

State Court Jurisdiction
State courts can hear almost any type of case. For this reason, a plaintiff can almost always choose to sue in state court.
There are some exceptions. Congress has provided federal courts with exclusive jurisdiction over certain types of cases. For example, all bankruptcy cases must go to federal court.
