Powerpoint from textbook Business Law - the ethical, global, and e-commerce environment to accompany BA 330 course at the University of Alaska Fairbanks.
3. Learning Objectives
State courts and their jurisdiction
Federal courts and their jurisdiction
Civil Procedure
Alternative Dispute Resolution
2-3
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)
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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. 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)
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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 court
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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)
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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 authority
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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 sale
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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. 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 contacts
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13. Bombliss v. Cornelsen
Holding:
In personam jurisdiction exists. Trial court
decision reversed and case remanded.
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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 States
2 - 14
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 exists
2 - 15
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 granted
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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 defendant
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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 settlement
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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 case
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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!
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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 concerns
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22. Civil Trial Procedure
Jury Selection
Voir Dire or Jury
Questioning
Opening Statement
from each party
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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)
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24. Civil Trial Procedure
Closing argument or
summation from
each party
Jury verdict
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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)
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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 facts
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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)
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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 begins
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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 resolution
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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 tribunal
2 - 30
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. Ferrer
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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 agency
2 - 32
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 dispute
2 - 33
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. 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 above
2 - 35
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 begins
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37. Thought Question
If you were served with a lawsuit, what
would you do about it?
2 - 37
Editor's Notes
This is a well-known dog breeder case. In Bombliss v. Cornelsen, the Oklahoma defendants’ Internet use helped lead to a conclusion that the courts of Illinois could properly exert in personam jurisdiction over the defendants. As Bombliss illustrates, Internet activities of a nonresident defendant frequently play a key role in the determination of whether a state or federal court’s exertion of in personam jurisdiction over that defendant is legally permissible.
Compare the Bombliss case to the Internet Solutions case, which illustrates the application of diversity jurisdiction and in personam jurisdiction principles in the federal court system.
Internet Solutions Corp. (ISC), a Nevada corporation, has its principal place of business in Orlando, Florida. ISC, which operates various employment recruiting and internet advertising websites, sued Tabatha Marshall, a resident of the State of Washington, in the U.S. District Court for the Middle District of Florida. In its lawsuit, ISC alleged that on her website, Marshall made false and defamatory statements asserting that ISC engaged in ongoing criminal activity, scams, and phishing. According to ISC, these statements caused injury to ISC’s business in Florida. Marshall filed a motion to dismiss the case because, in her view, neither subject matter nor in personam jurisdiction existed. Court: “whether the district court has subject matter jurisdiction in the case at bar [and the question] whether the district court can exercise in personam jurisdiction over the nonresident defendant pursuant to [Florida law] and the Due Process Clause of the U.S. Constitution…A district court’s determination of in personam jurisdiction over a nonresident defendant generally entails a two-part inquiry. First, the court must determine whether the exercise of jurisdiction is appropriate under [the state’s] longarm statute. Second, the court must determine whether there are sufficient minimum contacts with the forum state to satisfy the Due Process Clause of the U.S. Constitution and traditional notions of fair play and substantial justice…. Marshall has not adequately rebutted ISC’s allegation of long-arm jurisdiction based on the claim that the tort was committed in Florida and that injury resulted in Florida. …Therefore, the court finds that ISC has satisfied its [first] burden and assumes that there is jurisdiction under Florida’s long-arm statute for the purposes of deciding the instant motion…. [D]ue process requires that in order to subject a defendant to a judgment in personam [in a state in which she does not reside, she must] have certain minimum contacts with [the forum state, so that] the maintenance of the suit does not offend traditional notions of fair play and substantial justice…. three-part test to determine whether the minimum contacts requirement has been satisfied. First, “the contacts must be related to the plaintiff ’s cause of action.” Second, “the contacts must involve some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum.” Third, “the defendant’s contacts with the forum must be such that the defendant should reasonably anticipate being haled into court there.”…Marshall has not made Florida-specific contacts. The mere fact that Marshall’s website was accessible to residents everywhere and a resident of Florida responded does not amount to purposeful availment…. ISC has failed to meet its burden of establishing sufficient minimum contacts, . . . [Therefore,] in personam jurisdiction over the nonresident defendant in this court would be improper. Defendant’s motion granted and case dismissed.
A district court’s determination of in personam jurisdiction over a nonresident defendant generally entails a two-part inquiry. First, the court must determine whether the exercise of jurisdiction is appropriate under [the state’s] longarm statute. Second, the court must determine whether there are sufficient minimum contacts with the forum state to satisfy the Due Process Clause of the U.S. Constitution and traditional notions of fair play and substantial justice…. Marshall has not adequately rebutted ISC’s allegation of long-arm jurisdiction based on the claim that the tort was committed in Florida and that injury resulted in Florida. …Therefore, the court finds that ISC has satisfied its [first] burden and assumes that there is jurisdiction under Florida’s long-arm statute for the purposes of deciding the instant motion…. [D]ue process requires that in order to subject a defendant to a judgment in personam [in a state in which she does not reside, she must] have certain minimum contacts with [the forum state, so that] the maintenance of the suit does not offend traditional notions of fair play and substantial justice…. three-part test to determine whether the minimum contacts requirement has been satisfied. First, “the contacts must be related to the plaintiff ’s cause of action.” Second, “the contacts must involve some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum.” Third, “the defendant’s contacts with the forum must be such that the defendant should reasonably anticipate being haled into court there.”…Marshall has not made Florida-specific contacts. The mere fact that Marshall’s website was accessible to residents everywhere and a resident of Florida responded does not amount to purposeful availment…. ISC has failed to meet its burden of establishing sufficient minimum contacts, . . . [Therefore,] in personam jurisdiction over the nonresident defendant in this court would be improper. Defendant’s motion granted and case dismissed.
Allstate Indemnity Co. v. Ruiz: One month after securing insurance coverage from Allstate Indemnity Co. for their Chevrolet Blazer, Joaquin and Paulina Ruiz purchased an Oldsmobile Cutlass. They instructed Allstate agent Paul Cobb to add that vehicle to the policy. Cobb added the Cutlass to the policy but mistakenly deleted the Blazer. The Ruizes were not notified that the Blazer was no longer covered under their insurance policy. Joaquin Ruiz was later involved in an accident while driving the Blazer. When the Ruizes submitted a claim for collision coverage, Allstate denied payment, asserting that the Blazer was not covered under the policy. The Ruizes filed suit, alleging that Cobb and Allstate had been negligent in deleting the Blazer from the insurance policy, and that Allstate had engaged in bad faith and unfair claim settlement practices in violation of a Florida statute. After the filing of the lawsuit, Allstate admitted its obligation to provide collision coverage. Even though the basic coverage issue was resolved, the bad faith claim remained pending. In connection with the bad faith claim, the Ruizes sought discovery of certain documents, including Allstate’s claim and investigative file and materials, Allstate internal manuals, and Cobb’s file regarding the bad faith claim. Allstate refused to supply the requested documents, so the Ruizes asked the trial court to compel production of them. After reviewing the documents sought by the Ruizes, the trial judge ordered that the documents be provided to them because the documents contained relevant information regarding Allstate’s handling of the underlying insurance claim. The judge also determined that the requested documents did not constitute work product or attorney-client communications and thus were not exempt from disclosure during the discovery process. (Because communications between an attorney and his or her client are privileged, they are not subject to discovery. Work product is a term used to describe documents and materials prepared by an attorney and his or her client in anticipation of litigation. In general, work product is not subject to discovery.) Allstate appealed to Florida’s intermediate court of appeals, arguing that the dispute over the Ruizes’ insurance coverage was immediately apparent when Allstate refused to make payment, that litigation was anticipated at all pertinent times, and that all of the material sought by the Ruizes was nondiscoverable work product. The appellate court concluded that several requested items were not protected work product and therefore were properly discoverable, including: Cobb’s statement of January 7, 1997; computer diaries and entries from the date Joaquin Ruiz reported the accident on December 28, 1996, through January 10, 1997; and a January 7, 1997, memorandum from an Allstate insurance adjustor to her boss. However, the appellate court determined that the balance of the documents sought by the Ruizes were prepared by Allstate in anticipation of litigation and were thus nondiscoverable work product. Both parties were dissatisfied with the appellate court’s decision, the Ruizes because some of what they sought was held nondiscoverable and Allstate because some of what it sought to withhold was held discoverable. The Supreme Court of Florida granted Allstate’s request for review.
The hyperlink is to the case and information on the Oyez.org website. The irony of this case is that the case involved a contract dispute between Judge Alex Ferrer, currently arbitrating disputes on the Fox Channel television show as “Judge Alex.” His lawyer and manager, Arnold Preston, worked as personal manager for entertainers. In June 2005, Preston began arbitration proceedings with American Arbitration Association claiming fees due from Ferrer’s earnings from “Judge Alex” under a contract the parties signed in 2002 that had an arbitration agreement. The agreement provided that disputes about the validity of the contract would be decided by arbitration. Ferrer filed a motion to stay the arbitration, arguing that under the California Talent Agencies Act (TAA ), the dispute should first be heard by the California Labor Commission. Specifically, Ferrer argued that Preston was working as an unlicensed talent agent when their contract was signed, thus the contract was invalid under the TAA (requires that talent agents be licensed). Supporting "Judge Alex" in the case were the Screen Actors Guild and the American Federation of Television & Radio Artists. The dispute really was about who got to decide whether Preston was an unlicensed talent agent or an unregulated personal manager. The Court of Appeal in a 2-1 decision held that the Labor Commissioner had authority to resolve the dispute about Preston’s status under the TAA and that the FAA did not preempt the TAA, basing this second decision on U.S. Supreme Court precedence in Buckeye Check Cashing, Inc. v. Cardegna . Preston appealed the decision to the California Supreme Court, which denied review, and then he appealed to the U.S. Supreme Court. The Supreme Court promptly heard the case and issued its decision a mere one month later. Apparently, the U.S. Supreme Court read Buckeye very differently from the California court because it found Preston v. Ferrer to be essentially controlled by its prior decision in Buckeye.
True False. General jurisdiction refers to a court that may hear a wide variety of cases, but limited jurisdiction refers to a court that may only hear specific types of cases, such as tax, traffic, probate, or family disputes. True.
True. False. The burden of proof begins with the plaintiff, but once a plaintiff proves a prima facie (on its face) case, the burden may shift to the defendant. For example, in an auto accident case, the plaintiff may prove the prima facie case by showing a police report that places the fault of the accident on the defendant and showing that the accident caused plaintiff’s injuries (property damage, physical injury). The burden then shifts to the defendant, who may raise a defense, such as contributory negligence. False. Only a judge may determine a matter of law. A judge OR jury may act as the trier of fact.
The correct answer is (c) The correct answer is (d)
The correct answer is (b) The correct answer is (a). Post-verdict motions include remittitur, motion for new trial, motion for judgment notwithstanding the verdict.