What Is Jurisdiction?

Jurisdiction gives a court the power to decide a legal matter

Lawyer arguing a case in court
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Definition

Jurisdiction is the power of the court to hear cases and issue orders.

Key Takeaways

  • Jurisdiction refers in general to a court’s ability and authority to decide a case brought before it.
  • When someone is sued, the court must have personal jurisdiction and subject matter jurisdiction.
  • Personal jurisdiction refers to whether the court has the authority to adjudicate a matter that involves you specifically.
  • Subject matter jurisdiction refers to whether the court has the authority to adjudicate a case with respect to the type of action and the area of law that is involved.
  • While personal jurisdiction can be waived, subject matter jurisdiction cannot.

How Does Jurisdiction Work?

When someone commences a civil lawsuit, as the plaintiff, it is their responsibility to make sure the court in which they are filing their case has jurisdiction. If a court does not have jurisdiction over the person being sued (the defendant) or the reason why they are being sued (the “claim” or “matter”), then it may be grounds for dismissal or removal to a different court.

Example of Jurisdiction in Lawsuits

Picture a retail business owner being sued by a customer who suffered an injury in their store. The plaintiff must commence their action in a court that is appropriately located and before a judge who is authorized to adjudicate the specific claims.

Types of Jurisdiction

Jurisdiction is broken down into two prongs: personal jurisdiction and subject matter jurisdiction. In order for jurisdiction to be proper, both prongs must be satisfied.

Personal Jurisdiction

In order for the court to have personal jurisdiction, the person being sued must reside in that state or have “certain minimum contacts” in the state where the lawsuit was filed. The concept of personal jurisdiction is rooted in fairness and falls back on the idea of whether the defendant can reasonably expect to be hauled into court in a specific state.

Note

Factors that may be used to determine whether the defendant has minimum contacts in the forum state could include if the defendant works, owns a business, or regularly spends time in a state. Personal jurisdiction would also be proper if the event that caused the defendant to be sued occurred in the state in which they are being sued.

Any factor that would make it seem reasonable and fair that the defendant would be sued in that state is fair game for establishing minimum contacts.

It is the defendant’s responsibility to object to the court if they believe there is no personal jurisdiction. The court may then dismiss the case; however, the plaintiff can refile in a court where personal jurisdiction exists. If the defendant does not object, then they are deemed to have consented to personal jurisdiction and let the lawsuit proceedings play out before the current court.

Jurisdiction Over Subject Matter

Subject matter jurisdiction pertains to the court’s ability to hear cases regarding specific types of claims. There are many different types of courts on the trial level, including criminal court, civil court, small claims court, Surrogate’s court, bankruptcy court, and family court. In some cases, it will be obvious which court should hear your claim, but for others, the plaintiff will need to submit their matter to a court that is authorized to hear the claim under the applicable law where the claim is filed.

Note

Claims must be commenced in the appropriate court for subject matter jurisdiction to be proper, and failure to do so could result in the court dismissing the matter.

Understanding Jurisdiction as a Small Business Owner

Operating a small business could potentially open you up to liability in many areas. If you are being sued, suing someone else, or are served with legal papers, you should consult with an attorney. However, some of the most common courts in which you may find yourself are as follows:

Civil Court

Every state has its own civil court, and the federal court system also has its own version of civil court called Federal District Court. You could find yourself in civil court for matters such as:

  • contract disputes
  • labor and employment law matters
  • personal injury claims
  • property disputes and property damage
  • landlord/tenant issues
  • probate and administration (if a business owner dies or becomes incapacitated and the business or its assets need to be controlled by another individual or distributed to heirs)

Small Claims Court

Small claims court is a branch of civil court. However, it is designed to be more accessible to its users and often allows them to seek out a legal remedy without paying an attorney.

State small claims courts have limits on the amount for which you can sue; for example, in New York and California, you may bring a maximum claim of $10,000.

It is imperative to check with the laws of your state if you, as a business owner, are planning to bring an action in small claims court.

Note

Small claims courts might not allow corporations or LLCs to use their services. However, just because a business owner may not be able to bring an action on behalf of their business, does not mean the business cannot be sued in small claims court. Small claims court is a very common place where a small business may be sued.

U.S. Tax Court

The United States Tax Court hears cases by taxpayers who are disputing tax notices received by the Internal Revenue Service. These claims can include the dispute of Notices of Deficiency, Notices of Determination, Worker Classification issues, and Whistleblower actions. You can also elect for a more simplified process at the United States Tax Court —similar to that of small claims court; however, decisions made under this umbrella cannot be appealed by the taxpayer or the IRS.

It should also be noted that issues regarding the IRS and federal taxes can also be brought in the federal district courts. Additionally, state and local tax issues need to be decided by the appropriate state courts or administrative agencies.

Bankruptcy Court

If your business hits a bit of a financial rough patch, you may find yourself in Bankruptcy Court. Bankruptcy proceedings are always conducted in Federal Bankruptcy Courts. These courts aim to assist in dispute resolution, case management, marshaling and distribution of assets, and education of court-users to alleviate the burden of the process and help prevent future financial distress.

The United States Bankruptcy Court for the Southern District of New York states that its mission is to “provide, economically, a fair, consistent, and effective forum for the protection and marshaling of assets, the discharge or adjustment of debts, and timely distribution of property or securities, in accordance with applicable law.”

Venue

Once a plaintiff has determined that they are filing a lawsuit, in addition to obtaining jurisdiction, they must also file their complaint in the appropriate venue.

Note

Venue means the location—which district or county in a state or the U.S.—where the lawsuit will take place. Venue is typically decided by the law, but will most often be where the events leading up to the claim took place.

For example, the plaintiff could have correctly determined that a state civil court has subject matter jurisdiction, but if they file their matter in a court hours away on the other side of the state it may create a logistical nightmare for the parties and relevant witnesses. In this instance, the defendant could make a motion to move the matter to a more appropriate venue.

With so many businesses operating online, jurisdiction and venue may be appropriate in multiple areas. Courts will often evaluate several factors to determine appropriate venue, some of which may include the county where the person being sued lives or does business, where the dispute arose, and where it is most convenient for the parties and the witnesses.

Federal vs. State Jurisdiction

In addition to the types of courts listed above, the Plaintiff must choose whether to file their case in federal or state court. One can only file a matter in federal court if one or more of the following criteria are met:

  • The United States is a party.
  • The matter involves a violation of constitutional or federal law (often referred to as a “Federal Question Jurisdiction”).
  • The matter involves crimes committed on federal land.
  • Bankruptcy cases
  • The parties are from different states and the amount in controversy is over $75,000 (also known as “Diversity Jurisdiction”).

For a business owner, the most common reasons why you may be hauled into federal court are based on Diversity Jurisdiction or Federal Question Jurisdiction.  Federal Question issues that employers may most commonly face are typically grounded in labor and employment laws, including:

  • The Americans With Disabilities Act (ADA)
  • Age Discrimination Enforcement Act (ADEA)
  • Title VII of the Civil Rights Act, which includes discrimination based on race, color, religion, sex, or national origin, or the Family Medical Leave Act (FMLA).
  • Fair Labor Standards Act (FLSA)

This list is not exhaustive, and there are a host of other federal laws that govern labor and employment law.

It should also be noted that most matters, even those that involve a Federal Question or meet the criteria for diversity jurisdiction, may be filed and heard in state court. The defendant, however, has the right to make a motion to remove the matter to federal court if appropriate.

Note

The concept of two or more courts having the power to hear the same matter is referred to as concurrent jurisdiction.

Other Courts and Jurisdictions

Appellate Courts

If a party is unhappy with a judgment rendered on the trial level, their remedy is to appeal the decision in the appropriate appellate court. A decision handed down in state court generally should be appealed in state court, unless the state court decided on a Federal Question—in which case, it may be appealed in federal court.

The United States Supreme Court

Once all appropriate appellate options are exhausted, a party may petition to the United States Supreme Court to hear their matter. Typically, the U.S. Supreme Court will hear cases only after they have been decided by the U.S. Court of Appeals or the highest court in any state, and 4 out of 9 justices must be in support of hearing it.

Frequently Asked Questions (FAQs)

What does original jurisdiction mean?

Original jurisdiction is a court’s power to hear and decide a case for the first time before it has been appealed. That means a trial court has original jurisdiction over any matter before it can be heard by any higher appellate court.

Which type of jurisdiction do federal trial courts have?

Federal trial courts can only hear cases that arise under the United States Constitution, federal statutes, or certain matters involving diversity jurisdiction where parties reside in different states.

What is diversity jurisdiction?

Diversity jurisdiction allows a case to be heard in federal court if the parties are from different states and the amount in controversy is $75,000 or greater. It should be noted that a corporation that is a party to a lawsuit is said to be a citizen of both its state of incorporation and the state that it considers its principal place of business.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. American Bar Association. "How Courts Work.”

  2. Cornell Law School Legal Information Institute. "Subject Matter Jurisdiction."

  3. Cornell Law School Legal Information Institute. “Minimum Contacts.”

  4. Cornell Law School Legal Information Institute. "Personal Jurisdiction.”

  5. California Courts, the Judicial Branch of California. "Types of Cases."

  6. New York State Unified Court System. "New York City Small Claims Court."

  7. United States Tax Court. “Information About Filing a Case in the United States Tax Court.”

  8. IRS. “Part 34. Chief Counsel Directives Manual Litigation in District Court, Bankruptcy Court, Court of Federal Claims, and State Court.”

  9. United States Bankruptcy Court, Southern District  of New York. "Home Page, Mission Statement."

  10. Cornell Law School Legal Information Institute. "Venue."

  11. California Courts, the Judicial Branch of California. "Jurisdiction and Venue: Where To File a Case."

  12. United States District Court, Northern District of Florida. "What Kinds of Cases Are Handled in Federal Court?"

  13. Cornell Law School Legal Information Institute. "Concurrent Jurisdiction."

  14. United States District Court, District of Arizona. “Can the Federal Court Overrule a Decision by the State Court?"

  15. United States Courts. "Supreme Court Procedures."

  16. Cornell Law School Legal Information Institute. "Original Jurisdiction."

  17. United States Department of Justice, Offices of the United States Attorneys. "Introduction to the Federal Court System."

  18. Congress.Gov. "ArtIII.S2.C1.15.1 Overview of Diversity Jurisdiction."

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