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Chapter 2 - The Resolution of Private Disputes


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Chapter 2 - The Resolution of Private Disputes

  1. 1. The Nature of Law The Resolution of Private Disputes Business and The Constitution Business Ethics, Corporate SocialResponsibility, Corporate Governance, and Critical Thinking © 2010 The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. The Resolution of Private DisputesIn case of dissension,never dare to judge tillyou have heard theother side. Euripides © 2010 The McGraw-Hill Companies, Inc. All rights reserved.
  3. 3. Learning Objectives State courts and their jurisdiction Federal courts and their jurisdiction Civil Procedure Alternative Dispute Resolution2-3
  4. 4. The U.S. Judicial System The United States has a federal court system and each state has a court system A Court is established by a government to hear and decide matters before it and redress past or prevent future wrongs Jurisdiction (the power to hear and speak) may be original (trial) or appellate (reviews trial court)2-4
  5. 5. Federal Court Hierarchy U.S. Supreme Court (appellate jurisdiction; final review and final decision)  Courts of Appeals (appellate jurisdiction)  District Courts (trial courts; original jurisdiction) or Statutory Courts (original limited jurisdiction), such as Tax Court, Court of Int’l Trade, Court of Federal Claims, etc.2-5
  6. 6. State Court Hierarchy State Supreme Court (final appellate)  State Civil or Criminal Courts of Appeals  District Courts (trial courts for civil matters over certain $ amount) and Criminal Courts  County Courts (civil trial courts for matters under certain $ amount)  Justice of the Peace Courts (small claims and misdemeanor courts) Limited Jurisdiction Courts (e.g., family, traffic)2-6
  7. 7. General vs. Limited Jurisdiction General jurisdiction courts (i.e., trial courts) hear most types of cases  Levels generally classified according to dollar amount of damages or location  Examples: county courts, district courts Limited jurisdiction courts hear specialized types of cases; appeals from decisions often require new trial in general jurisdiction court  Examples: traffic court, tax court, family court2-7
  8. 8. Subject-Matter Jurisdiction Subject-matter jurisdiction refers to a court’s authority to hear a particular type of dispute Courts of criminal jurisdiction hear trials of crimes and misdemeanors  Offenses against the public at large Courts of civil jurisdiction hear and decide issues concerning private rights and duties (e.g., contracts, torts), and non-criminal public matters (e.g., zoning, probate)2-8
  9. 9. In Personam or In Rem Jurisdiction In addition to subject-matter jurisdiction, a court must have either in personam or in rem jurisdiction In personam jurisdiction requires that the defendant be a resident of, located within, or have committed acts within the physical boundaries of the court’s authority2-9
  10. 10. In Personam or In Rem Jurisdiction In rem jurisdiction applies when property that is the subject of the dispute is located within physical boundaries of the court’s authority  Example: a dispute over a house sale2 - 10
  11. 11. Bombliss v. Cornelsen Facts & Procedural History:  Illinois residents sued Oklahoma residents in Illinois court and the Oklahoma defendants moved to dismiss for lack of in personam jurisdiction  Trial court dismissed complaint and Plaintiffs appealed Issue: Does the Illinois long-arm statute permit state courts to exercise jurisdiction over Oklahoma defendants?2 - 11
  12. 12. Bombliss v. Cornelsen Analysis and Application to Facts:  Defendant must purposefully avail self of privilege of conducting activities within the state so he would reasonably anticipate being haled into state’s court  Where a contract exists, minimum contacts shown by negotiations between parties, course of dealing between parties, and foreseeable consequences  Existence of a contract, defendants’ interactive website, and contact with potential customers of plaintiffs equate to minimum contacts2 - 12
  13. 13. Bombliss v. Cornelsen Holding:  In personam jurisdiction exists. Trial court decision reversed and case remanded.2 - 13
  14. 14. Federal Court Jurisdiction Federal courts must have jurisdiction based on diversity or federal question Diversity jurisdiction exists when the dispute is between citizens of different states and amount in controversy exceeds $75,000 Federal question jurisdiction exists when the dispute arises under the Constitution, laws, or treaties of the United States2 - 14
  15. 15. Internet Solutions Corp. v. Marshall Issue for Motion to Dismiss:  Whether court has subject matter jurisdiction and whether court can exercise in personam jurisdiction Reasoning:  Subject matter jurisdiction proper in federal court when there is a matter in controversy over $75,000 between citizens of different states  In this case, subject matter jurisdiction exists2 - 15
  16. 16. Internet Solutions Corp. v. Marshall Reasoning and Holding:  In personam jurisdiction has two parts: does Florida have a long-arm statute and is defendant afforded protection of the Due Process Clause of the U.S. Constitution  Florida’s long-arm statute grants such jurisdiction  Due process requires that defendant have “sufficient minimum contacts” with the state (purposeful availment)  Marshall’s website that may be viewed by Florida residents doesn’t meet minimum contacts standard  Motion to dismiss granted2 - 16
  17. 17. Civil Procedure  A set of rules establishing how a lawsuit proceeds from beginning to end  In an adversarial system, the plaintiff bears the burden of proof to prove his/her case by a preponderance of the evidence  Once the plaintiff has made a prima facie case (i.e., proved the basic case), the burden of proof may shift to the defendant2 - 17
  18. 18. Civil Pre-Trial Procedure  Action or event occurs allegedly causes harm   Injured party, known as Plaintiff, files a Petition or Complaint   Sheriff serves process (writ, notice, summons) on Defendant   Defendant Answers Complaint   Case proceeds to trial or settlement2 - 18
  19. 19. Civil Pre-Trial Procedure  Plaintiff’s complaint or petition plus the defendant’s answer or response are known as the pleadings  Defendant may enter a counterclaim against the plaintiff or a cross-complaint against a third party  Other parties may enter the case2 - 19
  20. 20. Civil Pre-Trial Procedure  Motion Practice: some motions ask the judge to decide the result before trial  Motion to dismiss (or demurrer)  Motion for judgment on the pleadings  Motion for summary judgment  Motions should NOT be taken lightly!2 - 20
  21. 21. Civil Pre-Trial Procedure Discovery: Obtaining evidence from other party through interrogatories, requests for admissions, requests for documents, and depositions  Discovery process can be a battleground  See Allstate Indemnity Co. v. Ruiz Pretrial Conference: Where judge will hear and rule on many evidentiary issues, discovery disputes, and other concerns2 - 21
  22. 22. Civil Trial Procedure  Jury Selection  Voir Dire or Jury Questioning  Opening Statement from each party2 - 22
  23. 23. Civil Trial Procedure  Plaintiff’s case through direct examination of witnesses (defendant performs cross- examination) and defendant’s case through direct examination (and plaintiff’s cross- examination)2 - 23
  24. 24. Civil Trial Procedure  Closing argument or summation from each party  Jury verdict2 - 24
  25. 25. Civil Trial Procedure  Trial motions include: motions in limine (motion to limit evidence), voluntary non- suit or dismissal (drop the case), motion for compulsory non-suit or summary judgment  After summation or closing argument, a party may move for a mistrial (injustice or overwhelming prejudice) or directed verdict (weight of evidence leads to only one conclusion)2 - 25
  26. 26. Civil Trial Procedure  Trier of Fact sees material evidence (physical objects, documents), hears testimony of witnesses (who provide factual evidence), and decides outcome of the case based on facts; trier of fact may be judge or jury  Matters of law are issues not of fact, but of law; matters of law decided only by a judge  E.g., whether a statute means X or Y, or one law or another applies to the facts2 - 26
  27. 27. Civil Post-Trial Procedure  After the jury verdict, a party may make a motion for new trial, judgment non obstanto verdicto (notwithstanding the verdict; JNOV) or remittitur (defendant’s request for the judge to reduce the amount of damages the jury recommended; very common)2 - 27
  28. 28. Civil Post-Trial Procedure  After a judgment has been entered, losing party may appeal decision to a higher court  After a judgment, winning party must have the judgment executed (carried out) to obtain money, property, or action ordered by the court  Bottom line: a judgment is issued and enforcement of the judgment begins2 - 28
  29. 29. Point of Procedure Not all dispute resolution mechanisms in the legal system are heard by a judge Disputes with government often resolved by the relevant administrative agency  Administrative agencies generally have a unique dispute resolution process (hearings, appeals) Also, disputants may choose alternative dispute resolution2 - 29
  30. 30. Alternate Dispute Resolution Arbitration: dispute settled by one or more arbitrators selected by the parties to a dispute; relatively formal; Uniform or Federal Arbitration acts typically used Mediation: parties choose neutral party to aid resolution of dispute Reference to Third Party: dispute resolution by rent-a-judge, minitrial, summary jury trial, or association tribunal2 - 30
  31. 31. Why Choose ADR? Less costly, in general May be more appropriate method of resolution for certain types of cases  Example: family law disputes, real estate disputes between neighbors, high-tech or trade-secret disputes May be required by clause in contract  Example: Preston v. Ferrer2 - 31
  32. 32. Preston v. Ferrer Facts and Ruling:  Ferrer entered into contract with Preston  Preston invoked contract’s arbitration clause  Ferrer argued contract was unenforceable because Preston violated state law  U.S. Supreme Court:  When parties agree to arbitrate disputes, FAA controls and dispute must be submitted to arbitration even if state law appears to give initial decision-making authority to a court or an administrative agency2 - 32
  33. 33. Test Your Knowledge True=A, False = B  A trial court has original jurisdiction and an appellate court has appellate jurisdiction  The difference between general jurisdiction and limited jurisdiction is based on the amount in controversy (the damages amount)  Subject-matter jurisdiction refers to a court’s authority to hear a particular type of dispute2 - 33
  34. 34. Test Your Knowledge True=A, False = B  In personam jurisdiction refers to the court’s jurisdiction over the defendant, but in rem jurisdiction refers to the court’s jurisdiction over the property in dispute  The burden of proof solely rests on the plaintiff  Matters of law are determined by either the jury or the judge.2 - 34
  35. 35. Test Your Knowledge Multiple Choice  Diversity jurisdiction refers to: (a) a jury pool that reflects the ethnic makeup of the city (b) a citizen’s lawsuit against the government (c) a lawsuit by a citizen of one state against a citizen of a different state  Methods of alternative dispute resolution: (a) Mediation (b) Arbitration (c) Summary jury trial (d) All of the above2 - 35
  36. 36. Test Your Knowledge Multiple Choice  Discovery refers to: (a) the discovery that a dispute exists (b) the pre-trial process involving interrogatories, requests for admissions, and requests for documents (c) the analysis of fault in a dispute  After the verdict: (a) Either party may make post-verdict motions (b) The trial must end (c) The trial begins2 - 36
  37. 37. Thought Question If you were served with a lawsuit, what would you do about it?2 - 37