Federal courts are the national judicial system created by Article III of the U.S. Constitution to decide cases involving federal law, the Constitution, and certain disputes between parties from different states. They operate separately from the state court systems and can only hear the specific categories of cases that the Constitution and Congress have assigned to them. That built-in limit is what makes federal courts different from state courts, which can hear almost any kind of legal dispute.
Where Federal Courts Get Their Authority
Article III of the Constitution places the judicial power of the United States “in one supreme Court” and lets Congress create lower courts as needed.1Congress.gov. U.S. Constitution – Article III Every federal district court, every court of appeals, and the Supreme Court itself trace their power back to that single provision.
Article III also protects judicial independence. Federal judges serve “during good Behaviour,” which in practice means a life appointment ending only with resignation, retirement, or impeachment. Their salaries cannot be reduced while they are in office.2United States Courts. About the Supreme Court A judge who knows their pay cannot be cut as retaliation has one less reason to shade a ruling toward the politically convenient outcome. These protections apply to all Article III judges, from a newly confirmed district judge to a Supreme Court justice.
The Three Levels of Federal Courts
The federal judiciary is organized in three tiers. Cases begin at the trial level, and a party who loses can ask the next level up to review what happened.
U.S. District Courts
District courts are the trial courts. This is where federal lawsuits start, where evidence is presented, and where juries hear cases. There are 94 federal judicial districts spread across the country, with at least one in every state, the District of Columbia, and U.S. territories including Puerto Rico, Guam, and the U.S. Virgin Islands.3United States Courts. About U.S. District Courts District courts handle both civil cases and federal criminal prosecutions.
Much of the daily work in a district court is handled by U.S. magistrate judges, who issue search warrants, run initial appearances and arraignments, preside over pretrial motions, and can try civil cases if the parties agree.4United States Courts. Types of Federal Judges Magistrate judges serve renewable terms rather than holding life tenure.
U.S. Courts of Appeals
A party who loses in district court can appeal to one of 13 courts of appeals. Twelve are organized by geographic region, called circuits, and each covers several states. The thirteenth, the U.S. Court of Appeals for the Federal Circuit, hears appeals in specialized subject areas like patent law and government contract disputes no matter where the case started.5United States Courts. About the U.S. Courts of Appeals
Appeals courts do not retry cases. No witnesses, no new evidence, no jury. A panel of three judges reviews the written record from the trial court and the parties’ legal arguments to decide whether the lower court made an error. Pure legal questions get reviewed from scratch. Factual findings and discretionary rulings get much more latitude and are usually left alone unless they were clearly unreasonable.6The United States Government Manual. United States Courts of Appeals
The U.S. Supreme Court
The Supreme Court sits at the top of the federal judiciary and has the final word on what the Constitution and federal law mean. Most of its work is appellate, reviewing decisions from the circuit courts and, in some cases, from state supreme courts when a federal question is involved. The Court controls its own docket almost entirely. Parties ask for review by filing a petition for a writ of certiorari, and the Court grants roughly 100 to 150 of the more than 7,000 petitions it receives each year.7United States Courts. Supreme Court Procedures
The cases the Court agrees to hear tend to involve conflicting rulings from different circuits on the same question, major constitutional issues, or lower-court decisions with broad national consequences. When the Supreme Court decides a case, every federal and state court in the country is bound by that ruling on the legal issue involved.
What Cases Federal Courts Can Hear
Federal courts have what lawyers call “limited jurisdiction.” A state court of general jurisdiction can hear almost any type of case. A federal court cannot. If a case does not fit into one of the categories Congress has authorized, the federal court must dismiss it, no matter how important the underlying dispute. The two main categories are federal question jurisdiction and diversity jurisdiction.
Federal Question Jurisdiction
Federal district courts have jurisdiction over any civil case “arising under the Constitution, laws, or treaties of the United States.”8Office of the Law Revision Counsel. 28 USC 1331 – Federal Question In practical terms, the plaintiff’s claim itself must be based on federal law. Employment discrimination claims under federal civil rights statutes, challenges to federal regulations, and claims that a government action violated the Constitution all qualify. There is no minimum dollar amount for a federal question case.
Diversity Jurisdiction
Federal courts can also hear cases between citizens of different states, or between a U.S. citizen and a citizen of a foreign country, when the amount in dispute exceeds $75,000. This is called diversity of citizenship jurisdiction.9Office of the Law Revision Counsel. 28 U.S. Code 1332 – Diversity of Citizenship; Amount in Controversy; Costs The idea is that a party sued in another state’s courts might face hometown bias, so federal court provides a neutral forum. The $75,000 threshold is measured by the plaintiff’s good-faith claim at the time of filing, not by what a jury eventually awards.
Most diversity cases require complete diversity, meaning no plaintiff can be a citizen of the same state as any defendant. If a New York plaintiff sues two defendants and one of them also lives in New York, diversity jurisdiction fails and the case stays in state court.
When Sovereign Immunity Blocks a Case
Even when a case would otherwise fit into federal jurisdiction, sovereign immunity can block it. The Eleventh Amendment prevents private individuals from suing a state government in federal court without that state’s consent. Congress can override this protection in limited situations, and lawsuits against individual state officials seeking injunctive relief often proceed, but a straightforward money-damages claim against a state itself will usually be dismissed. The federal government also enjoys sovereign immunity, though Congress has waived it in specific contexts, including the Federal Tort Claims Act for certain negligence cases and the Tucker Act for contract and money claims heard in the Court of Federal Claims.
Moving a Case From State Court to Federal Court
Not every case that belongs in federal court starts there. A plaintiff who files in state court may have a claim that qualifies for federal jurisdiction, and the defendant can move it. This process is called removal, and the deadlines are strict.
Under 28 U.S.C. § 1441, a defendant can remove any civil case from state court to federal court if the federal court would have had original jurisdiction. For claims based on federal law, removal is allowed regardless of where the parties live. For diversity cases, there is an extra restriction: the defendant cannot remove if any properly served defendant is a citizen of the state where the lawsuit was filed.10Office of the Law Revision Counsel. 28 USC 1441 – Actions Removable Generally
The defendant must file a notice of removal within 30 days of receiving the initial complaint or summons. The Supreme Court confirmed in 2026 that this 30-day window is mandatory and cannot be extended through equitable tolling. If a case was not initially removable but later becomes so through an amended complaint or other development, a new 30-day clock starts from the date the defendant learns the case has become removable. For diversity cases specifically, removal is barred entirely if more than one year has passed since the case was originally filed, unless the plaintiff acted in bad faith to prevent removal.11Office of the Law Revision Counsel. 28 U.S. Code 1447 – Procedure After Removal Generally
If the federal court decides it lacks jurisdiction over a removed case, it must send the case back to state court. This is called remand. A motion to remand based on procedural defects must be raised within 30 days, but a challenge based on lack of subject matter jurisdiction can be raised at any point before final judgment. The court can also order the removing party to pay the other side’s costs and attorney fees caused by the removal.11Office of the Law Revision Counsel. 28 U.S. Code 1447 – Procedure After Removal Generally
Specialized Federal Courts
Congress has created several courts outside the standard three-tier hierarchy for technical or narrowly defined areas of law. These courts draw their authority from Article I rather than Article III, so their judges typically serve fixed terms instead of holding life tenure.
U.S. Bankruptcy Courts
Bankruptcy courts operate as units of the federal district courts and handle all cases filed under the Bankruptcy Code. The constitutional basis is Congress’s power to establish “uniform Laws on the subject of Bankruptcies.”12United States Courts. Process – Bankruptcy Basics Bankruptcy judges are appointed to 14-year terms by the court of appeals for their circuit. Although the district court technically has original jurisdiction over bankruptcy cases, virtually all of them are referred to bankruptcy judges.
U.S. Tax Court
The Tax Court lets taxpayers challenge an IRS determination without paying the disputed amount first. When the IRS issues a notice of deficiency, the taxpayer has 90 days (150 days if outside the country) to file a petition with the Tax Court, and the IRS is generally prohibited from collecting the disputed tax while the case is pending.13United States Tax Court. Guidance for Petitioners – Starting a Case A taxpayer who prefers to pay first can instead sue for a refund in a federal district court or the Court of Federal Claims, but most people would rather not write the check before their day in court.
U.S. Court of Federal Claims
Established in 1855, the Court of Federal Claims exists so people and companies can sue the federal government for money. Its jurisdiction covers contract disputes with federal agencies, military and civilian pay claims, tax refund suits, takings claims where the government has taken private property, vaccine injury claims, and patent disputes, among others.14United States Court of Federal Claims. Frequently Asked Questions The court sits in Washington, D.C., but its judges travel to hear cases around the country. Appeals go to the U.S. Court of Appeals for the Federal Circuit.
Filing Fees and Fee Waivers
Filing a case in federal court is not free. The Judicial Conference of the United States sets fees that apply uniformly across all federal courts. Filing a civil complaint in a U.S. district court costs $405, and filing an appeal in a court of appeals costs $605. Witnesses subpoenaed to testify in federal court receive a statutory attendance fee of $40 per day, plus mileage reimbursement at the rate set for federal employees.15Office of the Law Revision Counsel. 28 U.S. Code 1821 – Per Diem and Mileage Generally; Subsistence
Litigants who cannot afford the filing fee can apply to proceed in forma pauperis, which waives it. Courts decide these applications based on the applicant’s finances. Being granted in forma pauperis status does not guarantee the case will be heard on the merits; the court can still dismiss a case that is frivolous or fails to state a viable claim. It does remove the financial barrier to getting through the courthouse door.