Lee v. Chesapeake & Ohio Railway Co.

Background

A Texas resident sued a Virginia-based corporation for $10,000 after being injured while entering one of the company’s passenger trains in Kentucky during an intrastate trip. The lawsuit began in Bracken County, Kentucky state court. Because the parties were citizens of different States, the defendant removed the case to the United States District Court for the Eastern District of Kentucky. The plaintiff asked the federal court to send the case back, arguing that neither party actually lived in that federal district. The federal court denied the motion and entered judgment for the defendant, and the plaintiff sought review here.

Reasoning

The Court examined the Constitution and several sections of the Judicial Code to decide whether the federal court could keep the case. It explained that the federal courts have diversity jurisdiction when parties are citizens of different States and the amount in controversy exceeds the statutory threshold. The Court drew a careful line between a court’s power to hear such cases (jurisdiction) and the separate rules about where a suit should be filed (venue). It held that the venue provision is a personal privilege a defendant may waive and that the removal statute allows defendants to move a state suit into the federal district where the state case is pending. The Court therefore rejected the plaintiff’s remand argument and overruled an earlier conflicting decision.

Real world impact

The decision means defendants in similar diversity cases can remove state suits into the federal district that includes the county where the suit was filed, even if neither party resides in that federal district. Plaintiffs cannot force remand on the sole ground of residency in those circumstances, and the ruling resolves earlier confusion about these removal rules.