New Jersey Sends Legal Malpractice Plaintiff Back to Federal Court

This is an unusual result in a legal malpractice case. The plaintiff was a member of a class that obtained a recovery in a securities class action. The class action had been pending in the United States District Court for the Eastern District of Michigan. Upon receiving a recovery of 3 cents, Ms. Loures sued the lawyers for the class for legal malpractice. She brought her lawsuit in New Jersey.

The lawyer defendants moved to dismiss on the ground that the court lacked personal jurisdiction over them. A motion to dismiss for lack of personal jurisdiction essentially argues that the defendant has insufficient ties to New Jersey to expect to litigate in that state.

The New Jersey court declined to exercise jurisdiction on the ground that the Eastern District of Michigan retained exclusive jurisdiction to enforce the securities class action settlement. In sum, the court dismissed the case and instructed the plaintiff to refile it in the Eastern District of Michigan. The court said that the plaintiff could refile in New Jersey if the federal court declined to exercise jurisdiction.

What makes this case so unusual is that it is almost always the federal court that declines to exercise jurisdiction. State courts are courts of general jurisdiction and almost never decline to hear a justiciable matter. This outcome of this case is extremely rare and worth noting for that reason.

Source: LOURES v. WOLF HALDENSTEIN ADLER FREEMAN & HERZ, LLP, NJ: Appellate Div. 2016 – Google Scholar

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