In sports, a home court is always the preferred venue for any team. Having familiar surroundings and a guaranteed advantage with friendly fans can help a team perform at its best and become successful.
Business litigation will never be confused with a sporting event, but there are some similarities. And home court advantage may be a reality in the courtroom. This brings up the important topic of jurisdiction.
Jurisdiction is a court’s ability to hear a case. Without jurisdiction, a court cannot address any substantive issues in your case. In the U.S., jurisdiction is often controlled by where the parties live, and state and federal courts have specific requirements for their courts to have jurisdiction in a particular case.
Pleadings must demonstrate why jurisdiction is proper in the first stage of a case, to conserve judicial resources and prevent the court from wasting time on a matter that it cannot decide.
In many business cases, jurisdiction is decided in advance, as the transactional documents will explicitly state where potential litigation can be heard. A contract from a Detroit-based business may include a forum selection clause that states any disputes will be heard in the U.S. District Court for the Eastern District of Michigan.
However, there must be some nexus between the parties and the court for jurisdiction to be valid, such as the physical presence of the company or it is where it is incorporated. For individuals, if they both live in the same state, the state courts will have jurisdiction.
For the federal courts to have jurisdiction, the parties typically need to be from different states and meet the statutory minimum “amount in controversy,” or the dollar value of the case.
Jurisdiction can be extraordinarily simple, but when it gets complex, the discussion can begin to sound like medieval scholastics discussing the number of angels sitting on the head of a pin.
Your attorneys can explain how you can add forum selection clauses to many of your transactions to prevent jurisdiction matters from becoming this complex.
Source: crainsdetroit.com, “Detroit or D.C.: How important is setting for Quicken-Justice Department loan dispute?” Chad Halcom, October 21, 2015
