Chapter 2 – The Resolution of Private Disputes

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The Nature of LawThe Resolution of Private Disputes

Business and The ConstitutionBusiness Ethics, Corporate Social

Responsibility, Corporate Governance, and Critical Thinking

The Resolution of Private Disputes

In case of dissension, never dare to judge till you have heard the other side.

Euripides

Learning Objectives

State courts and their jurisdictionFederal courts and their

jurisdictionCivil ProcedureAlternative Dispute Resolution

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)

The U.S. Judicial System

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.

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)

State Court Hierarchy

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

General vs. Limited 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)

Subject-Matter 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

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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In Personam or In Rem Jurisdiction

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?

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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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Holding: In personam jurisdiction exists. Trial court

decision reversed and case remanded.

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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

Federal Court Jurisdiction

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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

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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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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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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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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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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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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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Jury Selection Voir Dire or

Jury Questioning

Opening Statement from each party

Civil Trial Procedure

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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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Closing argument or summation from each party

Jury verdict

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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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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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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)

Civil Post-Trial Procedure

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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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Civil Post-Trial Procedure

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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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

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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

Why Choose ADR?

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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

Preston v. Ferrer

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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

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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.

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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

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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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Thought Question

If you were served with a lawsuit, what would you do about it?

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Chapter 2 – The Resolution of Private Disputes

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