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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Presentation on theme: "©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part."— Presentation transcript:

1 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Meiners, Ringleb & Edwards The Legal Environment of Business, 12 th Edition T RIALS AND R ESOLVING D ISPUTES

2 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Trial Procedures Procedures and Processes of Litigating a Dispute Remedies in Civil Litigation Appellate Stage Enforcement Stage Alternative Dispute Resolution (ADR) Arbitration Negotiation-Settlement Mediation

3 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T HE J UDICIAL S YSTEM T HE J UDICIAL S YSTEM The court system is adversarial in nature. Parties have the responsibility for bringing a lawsuit, shaping issues and presenting evidence. Lawyers represent the parties’ claims. Judges don’t investigate. Court applies legal rules to facts presented. Trials are often costly and uncertain. Complex facts, extensive evidence, mountains of business records involved. Juries tend to be less sympathetic to businesses

4 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. B ASIC T RIAL P ROCEDURES Pleading Stage Discovery Stage Pretrial Stage Trial Stage Appellate Stage Enforcement Stage See Exhibit 3.2

5 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T HE P LEADINGS S TAGE Formal statements made to the court by the parties Jurisdiction needed over subject matter & parties Notice given of lawsuit by service of process through summons Complaint Alleges facts for jurisdiction & remedy/remedies Requests remedy(ies) Responses to Complaint Motion to Dismiss (Demurrer)  By defendant Answer (may include affirmative defenses – usually by defendant) Counterclaim Reply See Exhibit 3.1 (Casino owner pokes a hole in a Picasso, and sues Lloyds of London for compensation for losses under his insurance policy with them.)

6 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. P URPOSE OF D ISCOVERY (Legal Tools to Obtain Evidence) Rules of Civil Procedure set guidelines & limits to the process Purposes to (1) preserve evidence, (2) limit element of surprise, (3) encourage settlement Depositions of parties and witnesses (including experts) – sometimes videotaped Interrogatories of the parties Use of Expert Witnesses Requests for Admissions Orders of Production of Documents Physical/Mental Examinations Impacts on business – expensive & time-consuming Court may sanction a party who fails to comply with discovery requirements. Default Judgment Contempt of court (fines, pay costs to the other party)

7 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. C ASE C ASE B ARABIN V. A STEN J OHNSON, I NC. Henry Barabin was exposed to asbestos from Mostly worked at a paper mill that used dryer felts containing asbestos Suppler was AstenJohnson In 2006 Barabin was diagnosed with rare lung cancer; cause was exposure to asbestos He sued AstenJohnson moved to exclude expert testimony of Barabin’s Dr. Cohen because he had “dubious credentials and his lack of expertise with regard to dryer felts and paper mills.” District Court chose not to hold a Daubert hearing to determine if Cohen was qualified expert Jury was to determine if Cohen’s testimony was credible Jury found for Barabin Awarded damages of $10,200,000 AstenJohnson appealed. (Continued)

8 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. District court determines relevance and reliability of expert testimony Admission or exclusion under Daubert rests on scientific reliability/relevance of expert testimony Expert’s opinion must be deduced from a “scientific method” to be admissible Test under Daubert is not correctness of expert’s conclusions: Rather the “soundness of expert’s methodology” Factors in assessing reliability of expert testimony: (1) whether scientific theory/technique can be (has been) tested (2) whether theory/technique has been subjected to peer review & publication (3) whether there is a known or potential error rate, and (4) whether the theory/technique is generally accepted in the relevant scientific community HELD: District erred. New Trial is provided. Because no Daubert hearing was conducted, District Court failed to assess if Dr. Cohen applied scientific methodologies, reasoning or principles Court merely allowed parties to submit experts’ unfiltered testimony to the jury District court abused discretion when denying AstenJohnson’s motions for new trial C ASE C ASE B ARABIN V. A STEN J OHNSON, I NC.

9 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. I NTERNATIONAL P ROSPECTIVE I NTERNATIONAL P ROSPECTIVE “BRITISH COURTROOM PROCEDURE” Both British & U.S. court proceedings based on adversarial model However, significant differences in the implementation of the model British bar divides into solicitors and barristers Solicitors handle advising commercial and private clients on business/property matters Barristers do mostly litigation Much more specialization in the U.S. than in the British system British Courts: “a more civil & cooperative atmosphere” than the U.S. Barristers don’t walk around the court while questioning witnesses In UK, most objections re: evidence raised outside the presence of the jury – resolved before the witness is called Barristers rely on judge to object to evidence Jury in Britain sees continuous flow of information and less maneuverings by attorneys as in the U.S. At end of evidence, in British court, judge summarizes evidence for the jury. In U.S. judges do not discuss evidence with jury. (Continued)

10 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Order of trial is different In UK defense starts the opening statement at the end of the plaintiff’s/prosecution’s evidence Some say British trials are superior Others worry re: active role the judge takes Concern that one party is prejudiced by judge’ non-verbal behavior (sighing, frowning, etc.) U.S. Court of Appeals have actually overturned trial verdicts based on such a judge’s behavior. General agreement from social science experiment of tapes of trials shown to people: Shown trials conducted under U.S. and UK rules UK version more civil & view judge more positively than in the U.S. However participants still prefer the U.S. procedure overall I NTERNATIONAL P ROSPECTIVE I NTERNATIONAL P ROSPECTIVE “BRITISH COURTROOM PROCEDURE”

11 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. P RETRIAL S TAGE Summary Judgment – either party may request Judge renders it Pretrial Conference – either party or court may request Usually attorneys and judge attend Simplify issues Plan course of the trial Judges get parties to drop certain parts of case Helps to focus on key issues Judges often encourage parties to reach out-of-court settlement o See “Test Yourself”

12 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. J URY S ELECTION J URY S ELECTION 6 th and 7 th Amendments gives right to a jury in certain cases If no use of jury, judge becomes trier of fact Selection of jury involves voir dire Attorneys allowed limited number of challenges to reject prospective jurors without stating reason – peremptory challenges Usually 12 persons on jury panel Some states have fewer – such as 6 jurors

13 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T RIAL S TAGE Opening Statements by attorneys Presentation of Direct Testimony Direct Examination, Cross Examination, Redirect Examination, Re- Cross Examination Closing arguments Instructions to Jury (also called charges) Verdict by jury. Judgment may be set aside for jury misconduct. Example: Juror in Florida used Facebook to friend a defendant in a personal-injury case  Juror was sentenced 3 days in jail Example: Murder conviction in Arkansas thrown out  Juror tweeted information about trial despite warning by judge not do Motions For A Verdict Motion For A Directed Verdict/Motion For Judgment As A Matter of Law/Judgment on the Pleadings  Cases have been presented, but before going to jury, either party requests entering judgment in its favor Motion for Judgment As A Matter of Law/Motion For Judgment Notwithstanding the Verdict (N.O.V.)

14 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. R EMEDIES IN C IVIL L ITIGATION R EMEDIES IN C IVIL L ITIGATION (See Exhibit 3.4) Monetary damages Compensatory Punitive or exemplary Nominal o See Naples v. Keystone Case o See Pre-Paid Legal Services, Inc. v. Cahill Equitable remedies Specific performance Injunction  Permanent  Temporary  Preliminary

15 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. C ASE C ASE N APLES V. K EYSTONE B UILDING AND D EVELOPMENT C ORP. The Naples contracted with Keystone to build their new home. Work was warranted. Cost was $620,000. Major problems occurred soon after they moved in. Crews were sent several times to do repair work. Problems continued Expert, Dykins, was hired to evaluate the home. Said extensive work would be needed. Estimated costs of repairs: $113,511 + painting for $15, 819. Naples sued Keystone for the amount. Trial court held for the Naples, awarding them only $59,140. Stated that a higher damage figure had “not been established with a sufficient degree of certainty.” Naples appealed. (Continued)

16 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. General rule: Place the party entitled to compensation in position it would have been if there had been no breach In unfinished construction damages are measured by (1) Reasonable cost of construction & completion, if this does not involve “unreasonable economic waste” OR (2) Difference between value contracted for and value of performance that was received (without involving “unreasonable economic waste”) Repairs, however, may not result in improvements on the property – as such repairs would be above the work that was warranted. The court did not point to conflicting evidence or explanation why it elected to discredit some portions of the estimate (trim, siding + repair & paint portions of interior) while accepting others verbatim. Trial court’s award was therefore illogical. HELD: Trial court was in error. New trial ordered and limited to issue damages to compensate plaintiffs adequately. C ASE C ASE N APLES V. K EYSTONE B UILDING AND D EVELOPMENT C ORP.

17 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. C ASE C ASE P RE -P AID L EGAL S ERVICES, I NC. V. C AHILL Pre-Paid Legal Services, Inc. (PPLSI) sells legal service plans. Members pay a monthly fee May call a toll-free number to be connected to law firms that contracted with PPLSI Firms provide free or discounted legal assistance Cahill was a successful sales rep. for PPLSI – rose to a senior position Had access to sales records of all representatives Knew the top performers in the country Signed an agreement with PPLSI prohibiting use of such information outside PPLSI Cahill met with top sales associates, including Cabradilla. Told them he was going to work with another company, Nerium Wanted the sales associates to come with him Cahill resigned; posted material about Nerium on PPLSI private website Posting seen only by top sales associates Cahill’s access to PPLSI materials & websites was terminated PPLSI sued Cahill for breach of contract and in tort. It would be some time before dispute would go to arbitration & PPLSI requested the court to issue a preliminary injunction Injunction would prohibit Cahill from exploiting information he had learned from PPLSI Magistrate Judge reviewed request, issued a report & recommendation to be reviewed by the District Judge (Continued)

18 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CASE DECISION: Preliminary Injunction is extraordinary remedy – exception rather than the rule Purpose of preliminary injunction is to preserve status quo – pending outcome of the case In order for court to grant this kind of injunction, request must meet 4-part test. Requesting party must demonstrate (1) there is a substantial likelihood it will prevail on the merits of case; (2) it will suffer irreparable harm unless injunction is issued; (3) the threatened injury outweighs the harm the injunction might cause the opposing party; AND (4) preliminary injunction if issued will not adversely affect he public interest If Cahill is permitted to breach the non-solicitation agreement, PPLSI will suffer irreparable harm Cahill continued to send text messages to Cabradilla after he rejected his offer to go to Nerium PLUS engaged in another multi-level marketing company Defendant will need to recruit sales associates to Nerium shows PPLSI faces “significant risk” that Cahill will solicit PPLSI associations if not enjoined from contacting them Harm to Cahill being enjoined is minimal He can still recruit sales associates to Nerium & build his business Only restriction Cahill will face is that he abides by the contract provisions that he agreed to when he started with PPLSI Public interest is promoted through enforcement of valid contracts HELD: PPLSI has satisfied the four requirements HELD: Preliminary injunction should be issued barring Cahill contacting PPLSI sales associates for them to join Nerium HELD: PPLSI entitled to preliminary injunction until issues can be presented to arbitrators C ASE C ASE P RE -P AID L EGAL S ERVICES, I NC. V. C AHILL

19 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A PPELLATE S TAGE A PPELLATE S TAGE (Appeal Based on Error of Law) Arguments before the court Written Briefs Oral Arguments Decisions by the court Majority opinion Concurring opinions Dissenting opinions Outcomes of decisions Affirmed Modified Reversed Remanded See “German Trial Procedure” re: a different country’s system

20 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E NFORCING J UDGMENTS If no further appeal is available, judgment becomes final It is res judicata Enforcement of judgment is through writ of execution Court orders an official (i.e. sheriff) to satisfy judgment through an act (such as seizure of property, garnishment, etc.) A complexity that causes parties to look for alternative dispute resolution In U.S. each side usually responsible for own costs Not in Britain – loser usually pays winner’s legal costs

21 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. I NTERNATIONAL P ERSPECTIVE I NTERNATIONAL P ERSPECTIVE “GERMAN TRIAL PROCEDURE” In Germany judges play a more active role in trial process than U.S. judges Civil procedure is governed by rules called the Zivilprozessordnung (ZPO) In U.S. judge’s role usually limited to applying law to facts of the case In Germany: Judge decides the facts of the case, then applies law to facts Judge, not lawyers, decides which witnesses to call Judge, not lawyers, interrogates witnesses and records their testimony Judges may ask questions only about evidence that parties to the case present themselves What is presented is more limited than typical presentation at U.S. trials German courts want to protect many more confidential relationships than do U.S. courts

22 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A RBITRATION Most widely recognized form of ADR Usually results are faster in resolution of matters 3rd neutral party or panel (usually expert) is arbitrator or arbiter Parties agree upon this ADR in the contract or during a later dispute Federal Arbitration Act (FAA) states agreement to arbitrate must be upheld Arbitrator’s decision is binding Arbitration decision is final and matter usually cannot be litigated again or appealed Usual rule: No right to go to trial (parties to the dispute give up this right) Appeals from these decisions are very specific and limited. Thousands of international disputes go to arbitration each year Uniform Arbitration Act (UAA) upholds the integrity of this process

23 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T HE A RBITRATION A GREEMENT Decided at time of making the contract or after dispute arises Begins when party files a submission Parties agree on arbitrator(s) The hearing procedure Closed door Less restrictive procedural and evidentiary rules than a trial court Procedures include on-line arbitration Arbitration associations have rules that guide participants/arbitrators  Good faith cooperation  Voluntary and prompt exchange of documents  Uncooperative parties may be required to pay fees and compensation by arbitrator Arbitrators are usually attorneys, but need not be – often are experts in a field The award (decision) Usually given in writing within 30 days of close of arbitration hearing Arbitrators have broad powers to decide remedies Appealing the award Attacks on arbitrators are rarely successful Errors of fact or law are usually not reviewable Grounds for overturning appeal: fraud, partiality, serious procedural misconduct, excessive use of power by arbitrator Arbitrators have wide latitude in awards Generally arbitration award is final

24 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. C YBER L AW C YBER L AW “INTERNATIONAL ARBITRATION AND MEDIATION OF DOMAIN NAME DISPUTES” World Intellectual Property Organization (WIPO) in Geneva establishes international rules for trademarks and other forms of intellectual property WIPO has domain name resolution service to protect domains (i.e..mx for Mexico and.edu for education) WIPO has a Uniform Domain Name Dispute Resolution Policy (UDRP) dealing with such problems as “cybersquatting” Parties go to Arbitration and Mediation Center where experts handle disputes Fees are assessed If 1-5 names included in a complaint -- $1,500 If 3 panelists are requested -- $3,000 Over 1,000 disputes/year submitted to the Center

25 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Least formal form of ADR Parties decide to settle matter between themselves Often use lawyers or representatives, though not required Lawyers, etc. are agents of the parties of the dispute Negotiated settlement is usually a contract, which is enforceable, like other contracts, by the courts

26 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. S TAGES OF N EGOTIATION Stage 1: Study issues and information Stage 2: Exchange of information Different styles: i.e.“tough guy” vs. “problem solver” Stage 3: Work your strategy Usually involves compromise Stage 4: Agreement is reached; usually a contract is written Policy of the courts is to enforce negotiated settlements

27 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3rd neutral person (mediator) assists the parties of the dispute Parties mutually decide on a resolution Mediator makes suggestions Mediator’s suggestions are NOT BINDING on the parties Parties may go to trial after this ADR Mediation often helps to maintain the relationship between the parties Mediation also involves labor disputes and marital disputes

28 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T HE M EDIATOR Some states have no requirements at law, but many states are moving toward some licensing Most people prefer a trained or experienced person Usually parties agree to maintain confidentiality If no requirements, the mediator may be the choice of the parties If mediator fails to act professionally, may be subject to liability to one of the parties

29 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. T HE M EDIATION P ROCESS Mediator collects information, outlines key issues, listens, asks questions, observes the parties, discusses options, and encourages compromise Mediator often helps to draft the settlement agreement The settlement agreement is enforceable in court Mediator may assist in deciding the confidentiality of the case If confidentiality is agreed upon, nothing can be said in public Information revealed during negotiation or mediation should not be used as evidence if the dispute goes to a later trial


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