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In the United States, law and government are interdependent. The Constitution establishes the basic framework of government and imposes certain limitations on the powers of government.
In turn, the various branches of government are intimately involved in making, enforcing, and interpreting the law. Today, much of the law comes from Congress and the state legislatures. But it is in the courts that legislation is interpreted, and prior case law is interpreted and applied.
CASE STUDY: World-Wide Volkswagen Corp. v. Woodson
Harry and Kay Robinson purchased a new Audi automobile from Seaway Volkswagen, Inc. (Seaway) in Massena, New York in 1976. The following year, the Robinson family, who resided in New York, left that state for a new home in Arizona. As they passed through Oklahoma, another car struck their Audi in the rear, causing a fire that severely burned Kay Robinson and her two children.
Later on, the Robinsons brought a products-liability action in the District Court for Creek County, Oklahoma, claiming that their injuries resulted from the defective design and placement of the Audi’s gas tank and fuel system. They sued numerous defendants, including the automobile’s manufacturer, Audi NSU Auto Union Aktiengesellschaft (Audi); its importer, Volkswagen of America, Inc. (Volkswagen); its regional distributor, World-Wide Volkswagen Corp. (World-Wide); and its retail dealer, Seaway.
Although it is sometimes said that there are two separate court systems, the reality is more complex. There are, in fact, fifty-two court systems:
First, state courts must honor federal law where state laws are in conflict with federal laws (under the supremacy clause of the Constitution).
Second, claims arising under federal statutes can often be tried in the state courts, where the Constitution or Congress has not explicitly required that only federal courts can hear those kinds of claims.
Third, under the full faith and credit clause of the Constitution, each state court is obligated to respect the final judgments of courts in other states.
EXAMPLE
A contract dispute resolved by an Arkansas court cannot be re-litigated in North Dakota when the plaintiff wants to collect on the Arkansas judgment in North Dakota.Fourth, state courts often must consider the laws of other states in deciding cases involving issues where two states have an interest, such as when drivers from two different states collide in a third state. Under these circumstances, state judges will consult their own state’s case decisions involving conflict of laws and sometimes decide that they must apply another state’s laws to decide the case.
As state courts are concerned with federal law, so federal courts are often concerned with state law and with what happens in state courts. Federal courts will consider state-law-based claims when a case involves claims using both state and federal laws. Claims based on federal laws will permit the federal court to take jurisdiction over the whole case, including any state issues raised.
In those cases, the federal court is said to exercise pendent jurisdiction over the state claims. Also, the U.S. Supreme Court will occasionally take appeals from a state Supreme Court where state law raises an important issue of federal law to be decided.
EXAMPLE
A convict on death row may claim that the state’s chosen method of execution using the injection of drugs is unusually painful and involves cruel and unusual punishment, violating the Eighth Amendment of the Constitution.There is also a broad category of cases heard in federal courts that concern only state legal issues— namely, cases that arise between citizens of different states. The federal courts are permitted to hear these cases under their diversity of citizenship jurisdiction, or simply diversity jurisdiction.
EXAMPLE
A citizen of New Jersey may sue a citizen of New York over a contract dispute in federal court, but if both were citizens of New Jersey, the plaintiff would be limited to the state courts.The Constitution established diversity jurisdiction because it was feared that local courts would be hostile toward people from other states and that they would need separate courts. In 2018, nearly a third of all civil suits filed in federal court were based on diversity of citizenship. In these cases, the federal courts were applying state law, rather than taking federal question jurisdiction, where federal law provided the basis for the lawsuit or where the United States was a party (as plaintiff or defendant).
In addition to diversity of citizenship between parties, diversity jurisdiction has a monetary threshold of $75,000. If the amount in controversy is less than $75,000, then the case cannot be heard in federal court based on diversity alone.
Why are there so many diversity cases in federal courts? Defense lawyers believe that there is sometimes a “home-court advantage” for an in-state plaintiff who brings a lawsuit against a nonresident in his local state court. The defense attorney is entitled to ask for removal to a federal court where there is diversity. This fits with the original reason for diversity jurisdiction in the Constitution— the concern that judges in one state court would favor the in-state plaintiff rather than a nonresident defendant.
Another reason there are so many diversity cases is that plaintiffs’ attorneys know that removal is common and that it will move the case along faster by filing in federal court to begin with. Some plaintiffs’ attorneys also find advantages in pursuing a lawsuit in federal court.
Federal court procedures are often more efficient than state court procedures, so that federal dockets are often less crowded. This means a case will get to trial faster, and many lawyers enjoy the higher status that comes in practicing before the federal bench. In some federal districts, judgments for plaintiffs may be higher, on average, than in the local state court.
In short, not only law but also legal strategy factor into the popularity of diversity cases in federal courts.
Source: THIS TUTORIAL HAS BEEN ADAPTED FROM (1) "BUSINESS LAW AND THE LEGAL ENVIRONMENT" VERSION 1.0 BY DON MAYER, DANIEL WARNER, GEORGE SIEDEL, AND JETHRO K. LIEBERMAN. COPYRIGHT 2011. ISBN 978-1-4533-3050-0. (2) "THE LEGAL AND ETHICAL ENVIRONMENT OF BUSINESS" VERSION 1.0 BY TERENCE LAU AND LISA JOHNSON. COPYRIGHT 2012. ISBN 978-1-4533-2750-0 (LICENSEE PRODUCT: BUSINESS LAW), BOTH SOURCES REPRINTED WITH PERMISSION FROM FLATWORLD.