By Joel D. Joseph
If you buy a product on the Internet and it is defective or never delivered, it is often difficult to get justice. The seller could be a company in Asia or South America that would be nearly impossible to serve with a summons and complaint. Or the seller could be a domestic company that you cannot locate. I am proposing the establishment of a National Federal Small-Claims Court and a Federal Corporation that will make it easier for an Internet consumer to get compensation when he or she is cheated.
I propose that any corporation conducting interstate commerce on the Internet must register as a federal corporation with the U.S. Commerce Department. Foreign corporations in China or Europe or India must also register before they can sell to consumers and corporations in the United States. In addition, these foreign corporations should be required to be bonded or to have insurance to cover claims.
Congress has the power under the Constitution's commerce clause to regulate interstate and foreign commerce. The commerce clause provides that the United States Congress shall have power "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."
A National Federal Small-Claims Court
In addition to creating a new federal corporation, Congress should create a new Federal Small-Claims Court. Jurisdiction would be limited to $75,000, which nicely meshes with federal diversity jurisdiction of claims of more than $75,000.
The U.S. Department of Commerce would be the home for this court. It would not be an Article III court, and the judges would not be appointed by the President and confirmed by the Senate. The administrator of the National Federal Small Claims Court would appoint judges and mediators for five-year terms. Each judge would be entitled to have one law clerk.
Judges would be required to write a short opinion in every case, which would be reported and published. The opinions would be required to be no more than ten pages in length.
All proceedings before the National Federal Small Claims Court would be conducted virtually thereby reducing everyone's costs. The Court would use a Zoom-like program that would allow all parties to see each other, the witnesses and the judge.
Further, no attorneys would be necessary like in many small claims courts across the country. Filing fees should be low, $10 or $25. The filing fee in federal court was just $10 when I began practicing law in 1973.
Service of papers would be via email. When a federal corporation is formed it would be required to designate an email address for service of process. A company would create an address like
There would be no discovery and no motions. If the defendant claims that the statute of limitations bars the suit, this defense, and all other defenses, would have to be raised in the answer.
Once the complaint is served, the defendant would have three weeks to file an answer. Then, the court would immediately arrange for mediation with a court-appointed, and court paid-for mediator. Too often mediation in other courts is not conducted until the parties have already incurred substantial costs. In many federal and state cases there is no mediation at all. The entire purpose of the National Federal Small Claims Court is to reduce the costs of litigation, to encourage settlements and to provide compensation for plaintiffs who are harmed by a defendant.
If a case is not settled, the court would set a prompt, mutually-acceptable trial date. A few weeks in advance of trial, the parties would exchange documentary exhibits and a witness list by email.
There would be no jury trials. If a party desires a jury trial under the Seventh Amendment to the Constitution, he or she should not file a claim in this court. If the defendant demands a jury trial, the case will be transferred to the appropriate state court where the plaintiff resides.
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