1.5 Courts in America

Legal controversies in the United States often result in litigation in the courts. Under the U.S. court system, there are two different court frameworks where disputes may be resolved: federal courts and state courts.

Federal Courts

Under the federal system, the highest court in the land is the U.S. Supreme Court, which sits in Washington, DC. The Supreme Court consists of nine justices who are appointed by the president and confirmed by the Senate and who serve for life. One justice is appointed to serve as the chief justice. The chief justice plays a critical role in assigning which justice will draft the controlling opinion—the decision of the court in a case. The Supreme Court is an appellate court, which hears cases that have already been heard in the lower federal appellate courts and state Supreme Courts. Under the doctrine of judicial review, the Supreme Court has the power to declare any law unconstitutional, or inconsistent with the rules established by the Constitution. Because its decisions are final, the Supreme Court holds great power to shape both law and society.

The federal courts also include “inferior” courts as established by Congress. These inferior courts include the federal appellate courts, known as circuit courts, local U.S. district courts, and courts that hear special cases like admiralty and bankruptcy issues. Below is a chart that shows the structure of the U.S. federal court system.

State Courts

Although it is sometimes said that there are two separate court systems—the federal and state schemes—the reality is more complex. There are, in fact, 52 court systems: those of the 50 states, the local court system in the District of Columbia, and the federal court system. At the same time, these are not entirely separate; they all have several points of contact. State and local courts must honor both federal law and the laws of the other states.

The interplay between federal and state courts can be summarized as follows.

First, under the Supremacy Clause of the Constitution, state courts must honor federal law when state laws are in conflict with federal laws. However, state laws may be stricter than federal laws. For example, under federal employment law, employees must be paid overtime if they work more than 40 hours in a week. There is no daily standard. However, California state law requires that overtime be paid to workers if they work more than 8 hours in a day, even if they have worked less than 40 hours total for the week. California would be able to enforce this law since it complies with federal law but sets a stricter standard for overtime. On the other hand, if California passed a law that required overtime pay only after an employee worked 50 hours per week, this law would be invalid because it would violate the federal statute. State law cases often deal with this type of interplay between state and federal laws.

Second, claims arising under federal statutes can often be tried in the state courts, as long as the Constitution or Congress has not explicitly required that only federal courts can hear that kind of claim.

Third, under the Full Faith and Credit Clause of the Constitution, each state court is obligated to respect the final judgments of courts in other states. Thus, a contract dispute resolved by an Arizona court cannot be relitigated in New Mexico if the plaintiff wants to collect on the Arizona judgment in New Mexico. The decision made in the Arizona court must be honored by New Mexico courts.

Fourth, state courts often must consider the laws of other states in deciding cases that involve issues where two states have an interest, such as when drivers from two different states collide in a third state. Under these circumstances, state judges will consult their own state’s case decisions involving conflicts of laws and may sometimes decide that they must apply another state’s laws to decide the case.

As state courts are concerned with federal law, so federal courts are often concerned with state law and with what happens in state courts. Federal courts will consider claims based on state law when a case involves claims using both state and federal law. Claims based on federal laws will permit the federal court to take jurisdiction over the whole case, including any state issues raised. In those cases, the federal court is said to exercise pendent jurisdiction over the state claims.

In the early years of the United States, federal courts were not as active or important as state courts. States had jurisdiction—the power to make and enforce laws—over the most important aspects of business life (discussed in the “Court Jurisdiction” section). The power of state law has historically included governing contract, tort, corporation, partnership, and agency issues and laws claims, along with many more. Over the past century, however, federal law has become increasingly important in many of these areas, including banking, securities, and environmental law. Nevertheless, the majority of civil lawsuits in the United States are filed in state courts. Most business law issues are covered by state law, and business conflicts that reach the litigation stage are resolved in state courts.

State courts are usually set up in a manner similar to the federal court system. Each state has a supreme court that is the final arbiter of state law. Most states have one or more intermediate appellate courts that review decisions arising out of the local district courts. However, even this varies between states. For example, California has six intermediate appellate courts, with 105 justices serving, while the state of Wyoming has no appellate courts. Local state district courts include courts of general jurisdiction and also courts that have a special purpose, like courts that exclusively handle family law or small claims matters.