Subject Matter and Personal Jurisdiction
In order to hear a case, courts must have subject matter jurisdiction over the type of dispute and personal jurisdiction over the parties.
Subject Matter Jurisdiction
As discussed earlier, subject matter jurisdiction is the legal authority to hear and decide a case or controversy. The court must dismiss a case if it lacks either form of jurisdiction.
The vast majority of civil lawsuits are filed in state courts, including lawsuits involving state laws such as property, contracts, probate law, and torts. State laws also involve most criminal cases and domestic issues such as divorce and child custody. Torts are any civil wrong other than a breach of contract and include a variety of situations in which people and businesses suffer legal injury. Some states are friendlier toward torts than others, and the resulting patchwork of tort laws means that companies that do business across the nation need to know the different standards they are held to, based on the state their customers live in.
Given the wide array of subject areas regulated by state law, most businesses deal with state courts. Federal court subject matter jurisdiction is generally limited to federal question jurisdiction. In other words, federal courts hear cases involving the Constitution or a federal law. Cases involving the interpretation of treaties to which the United States is a party are also subject to federal court jurisdiction. Finally, lawsuits between states can be filed directly in the U.S. Supreme Court.
Sometimes, a federal court may hear a case involving state law. These cases are called diversity jurisdiction cases, and they arise when all plaintiffs in a civil case are from different states than all defendants, and the amount claimed by the plaintiffs exceeds seventy-five thousand dollars. For example, a citizen of New Jersey may sue a citizen of New York over a contract dispute in federal court. But if both were citizens of New York, the plaintiff would be limited to the state court of New York. Diversity jurisdiction cases allow one party who feels it may not receive a fair trial where its opponent has a “home court advantage” to seek a neutral forum to try the case.
Federal Question
Cases involving the U.S. Constitution, treaties, or federal laws & regulations
None
Federal law
Diversity of Citizenship
Cases brought between citizens of different states
$75,000
State law
Personal Jurisdiction
Personal jurisdiction is the power of the court to compel the parties to appear in court. Personal jurisdiction requires litigants to have some form of minimum contacts with the state where the case is filed. Personal jurisdiction seeks to avoid inconvenient litigation, even if the case has merit.
A court obtains personal jurisdiction over the plaintiff when the plaintiff files a lawsuit. The court obtains personal jurisdiction over a defendant when he or she is served with process or waives service.
Obtaining personal jurisdiction over the defendant requires some connection between the defendant and the state where the court is located. Businesses that incorporate, have a physical location, or do business in a state create personal jurisdiction through their actions within the state. Owning property in a state also creates personal jurisdiction.
Personal jurisdiction, like standing, is a constitutional requirement. Most states have long-arm statutes that set forth the procedure by which out-of-state defendants can be required to appear before a court. The statutes provide for how service of process occurs.
Service of process is the process by which a defendant is notified that it is being sued. Service of process typically requires a copy of the notice to appear before a court to be personally delivered to the defendant or the defendant’s agent. In the case of businesses, service of process is usually delivering a copy of the notice to appear to their registered agent. Service can be more challenging with individuals.
Consent
A business or individual agrees to the jurisdiction of the court
Residence
A business or individual resides in the state
Service of Process
The defendant is served a summons and complaint within the state
Long-arm Statute
A resident business or individual was involved in an incident in another state; or
A non-resident business or individual was involved in an incident within the state
Attributions and Licensing
Except where otherwise noted, this page's content is adapted from Federalism and Subject Matter and Personal Jurisdiction in Fundamentals of Business Law by Melissa Randall (2020), used under CC BY-NC-SA 4.0. This page is licensed under CC BY-NC-SA 4.0. 
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