10.1 Federal Court Structure and Jurisdiction

Federal Court System Structure

The federal court system is organized into three tiers: district courts, circuit courts of appeals, and the Supreme Court. Each level serves a distinct function, from conducting trials to reviewing legal questions on appeal. Understanding this hierarchy is essential for separation-of-powers analysis because Article III of the Constitution vests "the judicial Power" in these courts and sets the boundaries of what they can decide.

Levels of the Federal Court System

U.S. District Courts are the trial courts of the federal system. There are 94 district courts spread across every state, the District of Columbia, and U.S. territories. They hold original jurisdiction over most federal civil and criminal cases, meaning this is where lawsuits are filed, evidence is presented, witnesses testify, and juries render verdicts.

U.S. Circuit Courts of Appeals sit above the district courts. There are 13 circuits, each covering a specific geographic region. The Ninth Circuit, for instance, covers the western states including California and Washington. These courts review district court decisions and rulings by federal administrative agencies. They do not hold new trials; instead, they examine whether the lower court applied the law correctly.

The U.S. Supreme Court sits at the top of the federal judiciary and has the final word on questions of federal law. It can review decisions from both lower federal courts and state courts (when a federal issue is involved). The Supreme Court exercises discretionary jurisdiction, meaning it chooses which cases to hear. A party requests review by filing a writ of certiorari. The Court grants "cert" in only a small fraction of petitions each term, typically around 70–80 cases per year.

Specialized Federal Courts

Beyond the three main tiers, Congress has created specialized courts to handle particular categories of disputes:

• The U.S. Court of International Trade hears cases involving international trade disputes and customs issues.
• The U.S. Court of Federal Claims handles monetary claims against the federal government, such as contract disputes and tax refund suits.
• The U.S. Court of Appeals for the Armed Forces reviews court-martial convictions under military law.
• The U.S. Court of Appeals for Veterans Claims reviews decisions by the Department of Veterans Affairs on benefits claims.

These courts exist because Congress determined that certain subject areas benefit from judges with specialized expertise. Their decisions can typically be appealed into the regular federal appellate system.

Original vs. Appellate Jurisdiction

The distinction between original and appellate jurisdiction determines where a case begins and how higher courts interact with it. This matters for separation-of-powers questions because the Constitution itself allocates these powers in Article III, § 2.

Original Jurisdiction

Original jurisdiction is a court's authority to hear a case for the first time. The facts are found, evidence is introduced, and the initial decision is made at this level.

• U.S. district courts have original jurisdiction over the vast majority of federal cases.
• The Supreme Court has original jurisdiction in a narrow set of cases defined directly by Article III: disputes between two or more states, cases involving ambassadors and other foreign diplomats, and certain cases in which a state is a party. For example, if Texas and Oklahoma dispute water rights along a shared river, that case goes straight to the Supreme Court.

The Supreme Court's original jurisdiction cannot be expanded or restricted by Congress because it is set by the Constitution itself. This principle was established in Marbury v. Madison (1803).

Appellate Jurisdiction

Appellate jurisdiction is the authority to review a lower court's decision for legal error. Courts exercising appellate jurisdiction generally do not hear new evidence or witness testimony. Instead, they work from the record built in the trial court.

The appellate process typically follows these steps:

1. A party unhappy with a district court ruling files an appeal with the appropriate circuit court.
2. The circuit court reviews the lower court record, reads written briefs from both sides, and may hear oral argument.
3. The circuit court issues a decision affirming, reversing, or remanding (sending back) the case.
4. If a party is still dissatisfied, they may petition the Supreme Court for certiorari. The Court is not obligated to take the case.

Congress has broad power under Article III to regulate the Supreme Court's appellate jurisdiction, a point with significant separation-of-powers implications.

Subject Matter Jurisdiction in Federal Courts

Subject matter jurisdiction refers to a court's authority to hear cases involving specific types of legal issues. Unlike state courts, which are courts of general jurisdiction (they can hear almost anything), federal courts are courts of limited jurisdiction. They can only hear cases that fall within the categories authorized by the Constitution and federal statutes.

Types of Subject Matter Jurisdiction

Federal question jurisdiction (28 U.S.C. § 1331) allows federal courts to hear cases "arising under" the U.S. Constitution, federal statutes, or treaties. A case involving an alleged violation of the First Amendment or a federal civil rights statute like Title VII would qualify. The federal question must appear on the face of the plaintiff's well-pleaded complaint; a federal defense alone is not enough.

Diversity jurisdiction (28 U.S.C. § 1332) allows federal courts to hear cases between citizens of different states, or between U.S. citizens and foreign nationals, when the amount in controversy exceeds $\$75{,}000$. The purpose is to protect out-of-state parties from potential local bias in state courts. (More detail on diversity jurisdiction below.)

Supplemental Jurisdiction

Supplemental jurisdiction (28 U.S.C. § 1367) allows a federal court that already has jurisdiction over a claim to also hear closely related state-law claims that arise from the same case or controversy. This promotes judicial efficiency by keeping related claims in a single proceeding.

For example, suppose a plaintiff sues her employer in federal court for violating a federal employment discrimination statute. She also has a related breach-of-contract claim under state law based on the same set of facts. The federal court can hear both claims together under supplemental jurisdiction, even though the state-law claim alone would not qualify for federal jurisdiction.

Diversity Jurisdiction in Federal Courts

Diversity jurisdiction deserves closer attention because its requirements generate frequent litigation and raise important questions about the boundary between federal and state judicial power.

Requirements for Diversity Jurisdiction

Two requirements must both be met:

1. Complete diversity of citizenship. No plaintiff can be a citizen of the same state as any defendant. If even one plaintiff shares state citizenship with one defendant, complete diversity is destroyed and the federal court lacks diversity jurisdiction. This rule comes from Strawbridge v. Curtiss (1806).
2. Amount in controversy exceeds $\$75{,}000$. The claimed damages must be more than $75,000, exclusive of interest and costs. This threshold prevents federal courts from being flooded with minor disputes.

Citizenship for Diversity Purposes

Determining "citizenship" is straightforward for individuals (it's their state of domicile), but corporations require a special rule. A corporation is considered a citizen of:

• The state where it is incorporated, and
• The state where it has its principal place of business (often determined by the "nerve center" test from Hertz Corp. v. Friend (2010), which looks at where the corporation's high-level officers direct and control its activities).

This dual-citizenship rule makes it harder for corporations to manufacture diversity by incorporating in a different state from where they actually operate.

In class action lawsuits, the Class Action Fairness Act (CAFA) modifies the usual rules. Under CAFA, minimal diversity (at least one class member is diverse from one defendant) and an aggregate amount in controversy exceeding $5 million can establish federal jurisdiction.

Removal Jurisdiction

Removal allows a defendant who has been sued in state court to transfer the case to federal court, provided federal jurisdiction exists (typically diversity or federal question jurisdiction). The logic is that if the case could have been filed in federal court originally, the defendant should not be forced to litigate in state court simply because the plaintiff chose to file there.

Key rules for removal:

• The defendant must file a notice of removal in the appropriate federal district court within 30 days of receiving the initial complaint or summons.
• In diversity cases, a defendant who is a citizen of the state where the lawsuit was filed cannot remove the case. This is called the "home-state defendant" rule, and it makes sense: the whole point of diversity jurisdiction is to protect against local bias, which is not a concern when the defendant is local.
• If removal was improper, the federal court must remand the case back to state court.