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Foundations of American Law

1. Foundations of American Law. The Nature of Law The Resolution of Private Disputes Business and The Constitution Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking. McGraw-Hill/Irwin Business Law, 13/e.

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Foundations of American Law

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  1. 1 Foundations of American Law The Nature of Law The Resolution of Private Disputes Business and The Constitution Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

  2. The Resolution of Private Disputes 2 C H E A P T R “In case of dissension, never dare to judge till you have heard the other side.” Euripides

  3. Learning Objectives • State courts and their jurisdiction • Federal courts and their jurisdiction • Civil Procedure • Alternative Dispute Resolution 2 - 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 - 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 - 6

  6. State Court Hierarchy • State Supreme Court (final appellate) •  State Civil Court of Appeals and State Criminal Court of Appeals •  District Courts (trial courts for civil matters over certain $ amount) and Criminal Courts •  County Courts (trial courts for civil matters under certain $ amount) •  Justice of the Peace Courts (small claims and misdemeanor courts) • Limited Jurisdiction Courts (i.e., family, probate, traffic, zoning) 2 - 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 and appeals from these decisions often require a new trial in a court of general jurisdiction • Examples: traffic court, tax court, family court 2 - 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, which are offenses against the public at large • Courts of civil jurisdiction hear and decide issues concerning private rights and duties (e.g., contracts, torts), as well as non-criminal public matters (e.g., zoning, probate) 2 - 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 authority 2 - 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 sale 2 - 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 - 12

  12. Bombliss v. Cornelsen • Analysis and Application to Facts: • Defendant must purposefully avail himself of the privilege of conducting activities within the state such that he would reasonably anticipate being haled into the state’s court • Where a contract exists, minimum contacts shown by negotiations between parties, the course of dealing between parties, and foreseeable future consequences • Existence of a contract, defendants’ interactive website, and contact with potential customers of plaintiffs equate to minimum contacts • Holding: In personam jurisdiction exists. Trial court decision reversed and case remanded. 2 - 13

  13. 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

  14. 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 2 - 15

  15. 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 2 - 16

  16. 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 2 - 17

  17. 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 - 18

  18. Civil Pre-Trial Procedure • Discovery: Obtaining evidence from the other party through interrogatories, requests for admissions, requests for documents, and depositions • The discovery process can be a battleground • See Allstate Indemnity Co. v. Ruiz • Pretrial Conference: where the judge will hear and rule on many evidentiary issues, discovery disputes, and other concerns 2 - 19

  19. Civil Trial Procedure • Jury Selection (Voir Dire) • Opening Statement from each party 2 - 20

  20. 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 - 21

  21. Civil Trial Procedure • Closing Argument or Summation from each party • Jury verdict 2 - 22

  22. 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 (overwhelming prejudice or injustice) or directed verdict (weight of evidence leads to only one conclusion) 2 - 23

  23. 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 2 - 24

  24. Civil Trial Post-Trial Procedure • After the jury verdict, a party may make a motion for new trial, judgment non obstanto verdicto (notwithstanding the verdict) or J.N.O.V., or remittitur (defendant’s request for the judge to reduce the amount of damages the jury recommended; very common) 2 - 25

  25. Civil Trial 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 2 - 26

  26. 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 and appeals) • Also, disputants may choose alternative dispute resolution 2 - 27

  27. 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 - 28

  28. Why Choose ADR? • Less costly, in general • May be more appropriate method of resolution for certain types of cases (e.g., family law disputes, real estate disputes between neighbors, high-tech or trade-secret disputes) • May be required by clause in contract 2 - 29

  29. 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 - 30

  30. 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 - 31

  31. 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 include: • (a) Mediation • (b) Arbitration • (c) Summary jury trial • (d) All of the above 2 - 32

  32. 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 2 - 33

  33. Thought Question • If you were served with a lawsuit, what would you do about it? 2 - 34

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