Why am I in Federal Court?

Most people who are injured in an automobile crash in the state of Florida rightly expect to have their lawsuit filed and litigated in Florida state court. In the majority of instance this is in fact where personal injury claims arising from auto crashes will be litigated. However, there are instances when personal injury claimants can find themselves in Federal district court despite their desire to have their claims heard in state court. The law refers to the location of the lawsuit-as between state or federal court-as the “venue” of the lawsuit. 9 times out of 10 a personal injury case arising from an auto crash involves a lawsuit against the driver and owner of the car which caused the crash. The driver and owner are called “tortfeasors” and they are named, individually, as defendants in the lawsuit. As long as the crash took place in Florida the driver and owner of the car causing the crash are subject to the jurisdiction of the state courts of Florida, even if they resided outside the state at the time of the crash.

However, in a large majority of car crashes, the available insurance covering the negligent driver and/or owner are lower than the actual damages of our client. Hopefully, in those instance, the injured client had the foresight to purchase what’s called uninsured/underinsured motorist coverage. In a so called “UM lawsuit” the injured client’s own insurance company is sued under the terms and conditions of the insurance policy (See prior blog-“Do You Have the Right Kind of Insurance?”). Often times the only defendant named in the lawsuit is the insurance company. This occurs , for instance, when the insurance company for the at fault driver and owner paid their insurance limits in settlement prior to filing suit. As a consequence, the actual lawsuit is against the UM insurance company only. From a personal injury plaintiff’s perspective there are innumerable advantages to litigating any lawsuit in state court, as opposed to federal court. Concomitantly, insurance companies know this and see the advantages to themselves in forcing us to litigate in Federal court.

With few exceptions, whenever I sue an insurance company in a UM lawsuit, I always file the suit in Florida state court. However, most of the large insurance companies providing insurance to automobile drivers in this state have their home corporate headquarters in other states. As a consequence, the law considers these insurance companies to be “foreign corporations” simply “doing business “ in the state of Florida. When a foreign insurance company is the only defendant in a lawsuit in Florida state court that foreign corporation may have grounds to change the venue of the lawsuit to Federal court. This is initiated by the defendant insurance company filing a “Notice of Removal to Federal Court”. The mere filing of this Notice legally and unilaterally changes the venue to Federal Court-without a hearing. Within the context of a UM lawsuit the most frequent grounds for doing do so is the doctrine of “diversity” between the Plaintiff and Defendant. Under Federal law, diversity between a Plaintiff and Defendant is said to exist when the Defendant is a foreign person or corporation. The law requires that all of the named defendants in the lawsuit be foreign in order for “diversity jurisdiction” within the Federal courts to exist. This is called “complete diversity”. This is why a Notice of Removal is never successful if the lawsuit includes individual defendants (driver and/or owner) who reside in the state of Florida.

But in order for a foreign insurance company to drag a plaintiff and their lawsuit into federal court one additional criteria must be satisfied under the law. In addition to having complete diversity of the parties as discussed above, the law also requires that the claimed value of the case of the injured plaintiff must equal or exceed $75,000. In other words, in order for a Notice of Removal to be effective, the defendant must be able to plausibly argue that the plaintiff is seeking a verdict of at least $75,000. When I first started practicing law 27 years ago, that valuation threshold was actually $50,000. It is my personal opinion that the $75,000 threshold is long overdue for an increase, and I suspect a number of federal judges would like to see that as well, given the crowded court dockets in the federal district courts today. Nonetheless, the way defendants usually satisfy the $75,000 threshold requirement for removal is by pointing to some written evidence suggesting that the plaintiff has made a settlement demand for $75,000 or more in the past. This can consist of a copy of a pre lawsuit settlement demand letter or by simply totaling the medical bills in the case. If there exists no such evidence, the Plaintiff must file a Motion to Remand the case back to State Court in order to defeat the Removal and get the lawsuit back into state court. If the plaintiff’s Motion to Remand is granted, then the entire lawsuit is sent back by the Federal district court to the original state court in which we first filed it, and the defendant t must pay the costs incurred for having to fight that issue. Otherwise, the case remains in Federal court for its duration. Thus, in the cases with damages of $75,000 or more, in which the only defendant is the injured parties own UM insurance company, a plaintiff can find themselves involuntarily fighting for their just compensation before a jury in Federal court-like it or not.


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