Making the right choice when it comes to selecting whether to file your commercial litigation complaint in state or federal court is very important. Obviously, you must assess which of the two will be the place where your interests are best protected, but that analysis and assessment are of no value if the court you picked lacked subject matter jurisdiction. Choosing the wrong court can cost you money and time and potentially damage your case. A skillful South Florida commercial litigation attorney can help you make certain the selection you make is the best one.
One way your opponent can potentially harm your case if it believes you’ve filed in the wrong court is by filing a motion to dismiss. To get an idea of how your business can successfully defeat this kind of motion, look at this recent commercial litigation action from here in South Florida. The party bringing the lawsuit was a software development firm that had purchased an exclusive license to a set of patents that involved the exchange of “reward” or “loyalty” points from one program to another. (For example, taking your airline miles and putting them toward a stay at a hotel.)
After the software company brought its new products to market, it discovered a problem, which was that many hotel franchisees had already begun using point-sharing software that, according to the software company, violated its exclusive license rights. In order to protect its position of exclusivity, the software firm launched a series of lawsuits in state court circuits around South Florida, including the Eleventh Circuit (Miami-Dade County,) the Fifteenth Circuit (Palm Beach County), and the Seventeenth Circuit (Broward County.)
In the circumstance of this software company, it had done the proper analysis about whether or not it could litigate in state court. Contrary to the defense’s argument that the software company’s state law claims were merely federal “patent infringement claims” disguised as state law claims (which, if true, would mean that the software company could litigate only in federal court,) the state appeals court concluded that the software company did have a valid state court case.
U.S. Supreme Court Precedent Favored the Plaintiff’s Position
The appeals court, in reaching that conclusion, accepted the software company’s argument that a 2013 U.S. Supreme Court case named Gunn v. Minton controlled the outcome. That ruling said that even though a plaintiff asserted state law claims, its case could present an issue of federal law (and require resolution through the federal courts) if “the federal issues within that state law claim are: “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.”
Under this standard, all four factors must be present. That favored the software company in this case because the federal issues were not substantial, meaning that factor #3 was not satisfied. The outcome of the case would not control “numerous other” cases, and the government did not have a direct interest in the dispute.
In the end, the software company’s legal team had done their “homework” – and done it correctly. As a result, the company was able to go forward in state court.
There are numerous critical decisions that must be made in your commercial litigation case. Making even one wrong one can harm or even destroy your case. When it matters the most, count on the South Florida commercial litigation attorneys at Stok Kon + Braverman to provide you with the best possible advice and strongest advocacy to get your business the best possible outcome.
Contact us online or by calling (954) 237-1777 to schedule your consultation.