Legal Definitions - derivative defense

The derivative-jurisdiction doctrine is a legal principle that applies when a lawsuit is moved, or "removed," from a state court to a federal court. It states that the federal court's authority to hear the removed case is entirely dependent on whether the original state court had the proper legal authority (known as "subject-matter jurisdiction") to hear that type of case in the first place.

In simpler terms, if a state court lacked the power to hear a particular kind of case, then a federal court cannot gain jurisdiction over that case simply by having it removed. The federal court's jurisdiction in such a situation is "derived" from the state court's, and if the state court had no jurisdiction, the federal court also has none, even if the federal court would normally have been able to hear that type of case if it had been filed there directly.

Here are some examples illustrating this doctrine:

• Example 1: Exclusive Federal Jurisdiction

  Imagine a company sues the United States government in a state court, seeking a refund for federal taxes it believes were wrongly collected. Federal courts have exclusive subject-matter jurisdiction over such claims; state courts are not authorized to hear them. If the U.S. government then attempts to "remove" this case to a federal court, the derivative-jurisdiction doctrine would apply. Because the state court never had the legal authority to hear a federal tax refund case against the U.S. government, the federal court, upon removal, also lacks jurisdiction. Even though federal courts *do* hear federal tax cases, they cannot "derive" jurisdiction from a state court that had none to begin with. The federal court would dismiss the case.

• Example 2: Patent Infringement Claims

  Suppose a small inventor files a lawsuit in a state court, claiming that a large corporation has infringed upon their federally registered patent. Cases involving patent infringement fall under the exclusive subject-matter jurisdiction of federal courts. If the corporation tries to remove the case to a federal district court, the derivative-jurisdiction doctrine would come into play. Since the state court had no legal power to hear a patent infringement claim, the federal court, despite being the proper forum for patent cases, cannot accept the case on removal. The federal court's jurisdiction would be "derived" from the state court's, which was nonexistent for this type of claim, leading to the case's dismissal.

• Example 3: State Court with Limited Authority

  Consider a situation where a plaintiff mistakenly files a complex bankruptcy proceeding in a state's small claims court, which is designed only for minor monetary disputes and has very limited subject-matter jurisdiction. If the defendant then attempts to remove this bankruptcy case to a federal bankruptcy court, the derivative-jurisdiction doctrine would be invoked. Even though federal bankruptcy courts have exclusive jurisdiction over bankruptcy matters, the state small claims court never had the authority to hear such a complex federal case. Therefore, the federal bankruptcy court cannot "derive" jurisdiction from the state court and would have to dismiss the removed case, as the initial filing was in a court without the proper subject-matter jurisdiction.