It would be wise to consider making a federal case of it

June 1, 2010
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As President Obama announces desired appointments to federal judicial positions such as the U.S. Supreme Court and federal appellate benches, a common question asked about litigation is whether it should be filed in state or federal court.

Some people fear that "making a federal case of it" means a drawn out, highly technical and expensive lawsuit. However, this is not necessarily true. There are good business reasons to consider having a lawsuit resolved in federal court.

Many business disputes can be heard in federal court. Unlike Michigan state courts, which can hear nearly any lawsuit involving a Michigan citizen or company, federal courts may only hear three types of cases: (1) lawsuits alleging a violation of the U.S. Constitution; (2) lawsuits alleging a violation of federal law; or (3) lawsuits between citizens or companies from different states with more than $75,000 in dispute.

With the growth of federal legislation and regulation and the continuing expansion of interstate and international commerce, many business disputes now qualify to be heard in federal court.

There are a number of potential benefits to having a lawsuit heard in federal court — benefits that can potentially decrease the cost associated with litigation and increase the likelihood of an acceptable result.

Streamlined discovery procedures. The most significant expense in most civil lawsuits is the discovery process, through which the parties request documents from one another, ask written interrogatories or requests for admission of one another, and take depositions.

In federal court, unlike in state court, the parties are automatically required to disclose to adversaries at the outset of the lawsuit key information, such as the names of all relevant witnesses, a description of all significant documents and a description of all alleged damages. This can speed up the discovery process substantially and help reduce costs.

The federal rules also limit the number of written interrogatories that can be issued and the number of depositions that can be taken without permission from the judge. The federal rules also generally limit the length of a deposition to a single day. These protections can further streamline the discovery process.

Alternative dispute resolution. Federal courts, particularly in West Michigan, have led efforts to resolve lawsuits through means other than by trial. The Western District of Michigan has had tremendous success with its Voluntary Facilitative Mediation program, through which an impartial mediator attempts to facilitate a settlement. Approximately two-thirds of cases that have gone through Voluntary Facilitative Mediation have been successfully settled, at a substantial economic savings to the parties when contrasted with the cost of trial.

  • Resolution of pretrial disputes. Federal courts are sometimes better positioned to resolve the inevitable issues that arise throughout a lawsuit for several reasons.

First, federal judges have the support of magistrate judges, who assist with many day-to-day matters — such as discovery disputes — that can make civil litigation expensive. Our magistrate judges in West Michigan are excellent and can usually resolve such disputes in an efficient and timely manner.

Second, the typical state court judge in Michigan has many times more cases than a federal court judge because of the large number of criminal matters, family law matters and other matters that can be heard only in state court. Thus, your lawsuit is more likely to get more attention from the judge in federal court.

Finally, federal judges have the benefit of more legal research support than state court judges. Thus, particularly in complex cases, federal courts sometimes provide a quicker decision on issues that arise, which can result in a faster, less costly resolution of a lawsuit.

Ask your attorney in what court your case should be heard. Most cases are filed in state court for good reason, as our state courts are well equipped to handle almost any type of lawsuit. However, federal court is not something to be afraid of, and in some circumstances may be the best place for a lawsuit involving you or your business.

Bryan Walters is a partner with the law firm of Varnum LLP in Grand Rapids.

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