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Courts, Sources of Law, and Dispute Resolution 1 Take Quiz 2.

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1 Courts, Sources of Law, and Dispute Resolution 1 Take Quiz 2

2 Sources Of American Law Statutory Law Federal State Local Case Law and Common Law Doctrines Constitutional Law Federal State Administrative Law 2

3 The Common Law Tradition King’s Courts. The Common Law originated in medieval England with the creation of the king’s courts and the development of a body of rules that were applied throughout the land. Year Books Stare decisis. A doctrine under which judges “stand on decided cases,” or follow the rule of precedent, in deciding cases. This is the cornerstone of the common law tradition. – Brown v. Board of Education (p.72) – Leegin Creative Leather Products (p.73) Discuss - Why so important to U.S. system? Leegin Belt

4 Civil Law versus Common Law 4

5 Constitutional Law Supreme Law of the Land States have Constitutions – State constitutions are supreme within state borders to the extent that they do not violate the U.S. Constitution or a federal law. 5 CASE 3.2 Board of Education of Independent School District No. 92 of Pottawatomie County v. Earls (2002). P. 69 Random drug testing of athletes is constitutional in Tecumseh Oklahoma school district.

6 Statutory Law Created by Legislative Bodies. Laws or ordinances created by federal, state, and local legislatures and governing bodies. Cannot Violate U.S. Constitution. None of these laws can violate the U.S. Constitution or the relevant state constitutions. 6

7 Administrative Law Federal Administrative Agencies. Federal administrative agencies are created by enabling legislation enacted by the U.S. Congress. Administrative Law. The rules, orders, regulations, and decisions of federal, state, or local government administrative agencies. Agency functions include: – Rulemaking – Investigation and enforcement – Adjudication 7

8 Authority Hierarchy Which law wins? 1. US Constitution 2. Federal Law 3. State Constitution 4. State Law 5. Case Law Which source of law takes priority in the following situations, and why? – A federal statute conflicts with the U.S. Constitution. – A federal statute conflicts with a state constitution. – A state statute conflicts with the common law of that state. – A state constitutional amendment conflicts with the U.S. Constitution. – A federal administrative regulation conflicts with a state constitution. 8

9 Finding and Analyzing the Law - terminology you will need to know US Statutes at Large/ USC Federal Case Law (federal reporters based on location) State Statutory and Case Law (see right) Regulatory Law (CFR) Plaintiffs and Defendants Appellants and Appellees Opinions (unanimous, majority, concurring, dissenting) Case Cite Meaning Williams v. Dominion Technology Partners, LLC, 576 S.E.2d 752 (Virginia, 2003). Williams is the Plaintiff. Dominion Technology is the Defendant. Case was decided by the Virginia Supreme Court. Reported in Volume 576, page 752 of the Southeast 2 nd Reporter. Symbols for Plaintiff = π Defendant = Δ 9

10 Classifications of Law Substantive vs. Procedural law Civil vs. Criminal law Federal vs. State law National vs. International law Private vs. Public law 10 Uniform Commercial Code (UCC)

11 International Law Defined. A body of written and unwritten laws observed by independent nations and governing the acts of individuals as well as governments. Sources of international law include: – National laws – Customs – Treaties – International organizations and conferences Treaties – NAFTA – GATT – EU International Organizations – UN – NATO 11

12 Courts 12

13 The Judiciary’s Role in American Government Courts -- interpret and apply the law. Judicial review—determining the constitutionality of laws—the judicial branch acts as a check on the executive and legislative branches of government – Marbury v. Madison (Marbury appointed as a federal judge by President John Adams. James Madison was to deliver the documents. Thomas Jefferson won presidential election and ordered that the remaining writs not be delivered. Judge Elena Kagan Confirmation Hearings Extent of Commerce Clause Bush v. GoreBush v. Gore (u-Tube clip) Justice Breyer on the US Supreme Court 13 We will come back to the “commerce clause” Elena Kagan: Confirmation Hearings 'Vapid and Hollow Charade'

14 Citizens United v. Federal Election CommissionCitizens United v. Federal Election Commission Group 1 = limit campaign spending Group 2 = allow speech 14 Explain law. Questions: (1)Is corp speech the same as individual speech and therefore worthy of the same First Amendment protections - why or why not. (2)Obama reacted by stating this is a "a major victory for big oil, Wall Street Banks, health insurance companies and other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans." Evaluate that statement. (3)Newt Gingrich reacted by saying this is a victory for America's middle class. Evaluate that statement Group Presentation

15 Basic Judicial Requirements Before a lawsuit can be brought before a court, certain requirements must first be met. These include: Jurisdiction Federal State Subject Jurisdiction Federal State Subject Venue Standing to Sue 15

16 16 Federal Question jurisdiction exists when a dispute concerns federal law, statutes, or administrative regulation or treaties of the United States. Diversity Jurisdiction exists in lawsuits between citizens of different states and the amount in controversy, exclusive of interest and all costs, exceeds $75,000. The “Erie Doctrine” set forth in Erie Railroad v. Tompkins, 304 U.S. 64 (1938). Federal Jurisdiction

17 17 Federal Jurisdiction Natural person citizenship is legal residence or domicile. Corporations may have dual citizenship based on: – Nerve Center Test; – Place of Operations Test; or – Total Activity Test. Federal Courts have jurisdiction over United States.

18 18 Personal jurisdiction: court has legal authority over the parties to the suit. – Court can have jurisdiction based on: Defendant’s Residence, Defendant’s Act(s) or Location of Property in question. “Long Arm” Statutes and the “Minimum Contacts” Test for jurisdiction over non- resident defendant if it purposefully availed itself of privilege of conducting business in forum state. Personal Jurisdiction Amazon Pulls Out of Colorado. Personal Jurisdiction on the Web, p. 70 Amazon cuts ties to all Colorado sales associates based on new Colorado online sales tax update: Amazon sever ties with 10,000 small businesses in CA to avoid collecting CA sales tax.

19 19 Choice of Forum What forum governs? What happens when there are conflicts among different jurisdictions? Forum Non Conveniens. – CASE 3.3 Radeljak v. Daimler-Chrysler Corp. (2006). Granted defendant’s motion to dismiss and did not force DCC to litigate in Croatia.

20 Venue Venue has to do with the most appropriate location for a trial, which is usually the geographical area in which the event leading to the dispute took place or where the parties reside. 20

21 Standing to Sue A requirement that a party must have a legally protected and tangible interest at stake sufficient to justify seeking relief through the court system. – Plaintiff must be the proper person. – Plaintiff must have a personal interest in the outcome. – Plaintiff will benefit from a favorable ruling. The controversy at issue must also be a justifiable controversy, one that is real and substantial, as opposed to hypothetical or academic. Auto Plant Subsidy Case 21 CASE 3.1 ACLU v. National Security Agency (2007). Case dismissed for lack of jurisdiction because plaintiffs had no standing to challenge the wireless wiretap program.

22 Trial Courts State courts: Courts of general jurisdiction may be called by a variety of names. Courts of limited jurisdiction include: – Divorce courts – Probate courts – Traffic courts – Small claims courts Federal courts: Court of general jurisdiction is the U.S. District court. Courts of limited jurisdiction include: – U.S. Tax Court – U.S. Bankruptcy Court – U.S. Court of Federal Claims Intermediate Appellate Courts Supreme Courts 22

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24 Following a Case Through the State Courts A sample civil court case in a state court would involve the following: The Pleadings The Pleadings Pretrial Motions Pretrial Motions Discovery Pretrial Conference Pretrial Conference Trial Post trial Motions Post trial Motions The Appeal 24

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26 Adversarial System Attorney Represents Client as an Adversary Judge is Unbiased, Serves to Enforce Rules Work-Product

27 The Pleadings Complaint: – Filed by the plaintiff with the court to initiate the lawsuit; served with a summons on the defendant. – Default judgment Answer: – Admits or denies allegations made by the plaintiff; – may assert a counterclaim or – an affirmative defense. Motion to dismiss: – A request to the court to dismiss the case for stated reasons, such as the plaintiff’s failure to state a claim for which relief can be granted. 27

28 Pretrial Motions Motion for judgment on the pleadings: Will be granted if the parties agree on the facts and the only question is how the law applies to the facts. The judge bases the decision solely on the pleadings. Motion for summary judgment: Will be granted if the parties agree on the facts. The judge applies the law in rendering a judgment. The judge can consider evidence outside the pleadings when evaluating the motion. Motion for Judgment Notwithstanding the verdict 28

29 Discovery The process of gathering evidence concerning the case. Discovery involves: – Depositions (sworn testimony by a party or a witness) – Interrogatories (written questions by one party towards the other made with assistance from the attorneys) – Various requests (for admissions, documents, medical exams) Rudy Giuliani Rudy Giuliani – I do not recall 29 Ethical Consideration, p. 98 Ethical to bury opposing attorney in paper-work in response to a discovery request? Deposition Clinton Clinton – What “is” is.

30 30 Corporate documents, both tangible and intangible (computer hard drives and ) can be discovered and used to find the company liable. Managers must have document retention policies in place. Necessary Elements of a Document Retention Program:  Well-planned and systematic.  No destruction in the face of a potential lawsuit.  No selective destruction.  Sarbanes-Oxley – felony punishable by up to 20 years in prison Document Retention and Destruction To: David B. Duncan Cc: Michael C. WO: Richard WO Date: 10/16/ :39 PM From: Nancy A. Temple Subject: Re: Press Release draft Attachments: ATT&ICIQ; 3rd qtr press release memo.doc Dave - Here are a few suggested comments for consideration. -I recommended deleting reference to consultation with legal group and deleting my name on the memo. Reference to the legal group consultation arguably is a waiver of attorney-client privileged advice and if my name is mentioned it increases the chances that I might be a witness, which I prefer to avoid. -I suggested deleting some language that might suggest we concluded the release is misleading. -In light of the "non-recurring" characterization, the lack of any suggestion that this characterization is not in accordance with GAAP, and the lack of income statements in accordance with GAAP. I will consult further within the legal group as to whether we should do anything more to protect ourselves from potential Section 10A issues. Nancy

31 Pretrial Conference Either party or the court can request a pretrial conference to: – Identify the matters in dispute after discovery has taken place, or – To plan the course of the trial

32 Jury Selection Case Group 3 = JEB Group 4 = TB 32 Group Presentation

33 Jury Selection The jury selection process, also known as voir dire, consists of questions directed to prospective jurors to assess potential bias. Jury video Jury video – McMahon, Philadelphia DA Training Video – 33

34 Trial The typical course of a trial can be diagrammed as follows: Opening Statements Opening Statements Plaintiff’s Introduction of Evidence Defendant’s Introduction of Evidence Closing Arguments Closing Arguments 34

35 35 Class Actions If defendant’s actions affected a group of people, case may be brought as class action. Written notice to all potential class members. (But a member may “opt out.”) Advantages in product liability cases  A product liability class action suit has the following advantages: – Settlement binds present and future claimants, – Standardized payment schedules, – Some claimants can be excluded, and – Filing and settlement can occur in the same day. Facebook sued in 2008 for allegedly improperly sharing customer information. Facebook offered $9.5 million to settle – plaintiff’s attorneys' get 30% rest goes to a Foundation to promote privacy rights. Foundation established by Facebook. “Paying itself to get out of a broad range of legal issues.” Are class actions good/bad? 2011 Supreme Court Case WallMart Class action not allowed for 1.6 million female workers.

36 Post Trial Motions After a jury has rendered its verdict, either party may make a post trial motion. These include: – Motion for judgment N.O.V. (Notwithstanding the verdict) will be granted if the judge is convinced that the jury was in error. – Motion for a new trial will be granted if the judge is convinced that the jury was in error, or there was newly discovered evidence, misconduct by the participants during the trial, or error by the judge. 36 Ferlito v. Johnson & Johnson Products, Inc. Mr. and Mrs. Ferlito went to a Halloween party dressed as Little Bo Peep (Mrs) and a sheep (Mr.) Mr. Ferlito’s sheep costume made from J&J cotton balls Mr. Ferlito lit a cigarette and his cotton balls caught on fire causing third degree burns. Jury awarded $550,000 Not actual picture of Mr.Ferlito

37 The Appeal Either party can appeal the trial court’s judgment to an appropriate court of appeals. After reviewing the record on appeal, the abstracts, and the attorneys’ briefs, the appellate court holds a hearing and renders its opinion.

38 Enforcing the Judgment Securing a verdict does not mean there are assets to pay the judgment. One of the primary factors to decide before filing suit is whether the defendant has resources or assets to pay a judgment.

39 Roles of an Attorney Adviser – advises a client on steps to take to avoid possible legal problems. Drafter – writes contracts and other documents for clients. Negotiator – persuades, argues, or settles with another party on a client’s behalf. Advocate – presents a client’s position in court. Attorney-Client Privilege. Attorney-client privilege prevents a court and other government bodies from compelling disclosure of the information. (WORK PRODUCT – NOT DISCOVERABLE) 39

40 Legal Representation and Alternative Dispute Resolution 40

41 Question You owned 100 acres of valuable undeveloped residential real estate. You entered into a contract with a developer to develop the land on August 30, The developer agreed to pay you as follows: You owned 100 acres of valuable undeveloped residential real estate. You entered into a contract with a developer to develop the land on August 30, The developer agreed to pay you as follows: – $10,000 down, (paid August 30, 2009) – $100,000 on the one year anniversary, (paid August 30, 2010) – $500,000 on the two year anniversary and (due August 30, 2011) – $1,000,000 payment on the third anniversary. The developed just called you and said it will not make the $500,000 payment. The developed just called you and said it will not make the $500,000 payment. The developer has put in roads and plotted the land but has failed to sell any lots. The land is currently worth less than the remaining contract payments. The developer has put in roads and plotted the land but has failed to sell any lots. The land is currently worth less than the remaining contract payments. Would you sue? What do you do? 41

42 Decision to File a Lawsuit Decision to File Factors include: – Whether the law provides a remedy. – Whether the person can expert to prevail. – Whether the expected benefit will compensate for expenses and other costs, including any business lost as a result of the lawsuit and accompanying publicity. Decision to Defend Factors include: – Relationship Risk – Publicity Risk – Cost Risk (settlement may be cheaper) 42

43 The Search for Alternatives to Litigation Alternative dispute resolution (ADR) Less costly Less time-consuming Private 43

44 The Search for Alternatives to Litigation Forms of ADR include: Negotiation Summary Jury Trial Mediation Mini-trial Rent-a- Judge Rent-a- Judge Arbitration 44

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46 Negotiation Exercise Joan works as a paralegal at a 50 person law firm (30 attorneys and 20 support staff). Her immediate supervisor, Jim, tells sexual jokes that bother Joan. Once he showed her an x-rated cartoon that he thought was funny. Jim also ogles Joan and asks Joan to shut the door when they work together in his office. He sometimes touches her shoulder or pushes their chairs so close together their legs touch. This makes Joan uncomfortable. He also uses double entendres around her with one example being the time Joan said “it’s going to be a long hard night” (referring a tough case they are working on) and Jim replied “that’s what she said” and laughed. Assume Jim’s overall behavior amounts to illegal sexual harassment. Joan talks to Jim about this and he tells her to lighten up and try to have some fun. Jim says he is just trying to reduce tension in an often stressful work environment. Joan sues for sexual harassment. You are on one side to settle the case. Take 3-4 minutes to plan strategy and then 6-8 minutes to negotiate a settlement. See additional confidential facts. Joan: Groups Jim Groups If you represent Jim, move your spot to do the negotiating (Joan teams stay put) Group 3 and 1 join together against group 8

47 How much money should she get? Text word “HOWMUCH” space and then an amount (i.e. “HOWMUCH $1”). What else? 47 Text HOWMUCH plus amount to Or submit HOWMUCH plus message to

48 How much money should she get? Text word “HOWMUCH” space and then an amount (i.e. “HOWMUCH $1”). What else? 48

49 Negotiation and Mediation Negotiation – With or without attorneys – Simple and fast – No third party Mediation – Third party involved – With or without attorney – usually no attorneys Arbitration – More formal – Third party involved – Generally binding Key is to know what you want and when to you are better off walking away - Negotiation Exercise 49 Start here week 3 MBA Information Session Looking for Volunteers (4-5) September 6:30

50 50 Establish Best Alternative to a Negotiated Agreement (BATNA). Establish your interests versus your position. Evaluate each negotiating issue. Negotiation: Planning

51 51 In many ways, mediation is an extension of the parties’ negotiations. History of Mediation. Selecting a Mediator. – Society of Professionals in Dispute Resolution (SPDR). – American Mediation Council (AMC). Mediation

52 52 Mediation Confidentiality. When to Use Mediation. Mediation Process. Dangers.

53 Current Events Report – Arbitration Clauses Vaseem Shaikh Angela Sorenson 53

54 The Federal Arbitration Act (FAA) Provides Enforcement for Arbitration Decisions. FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves. FAA Covers Arbitration Clauses in Interstate Commerce. The FAA covers any arbitration clause in a contract that involves interstate commerce Contract Between Parties 54 CASE 3.4 County of Chautauqua v. Civil Service Employees Association (2007). Court granted county’s petition for permanent stay of arbitration as to which employees to lay off, but granted union’s motion to compel arbitration of bumping. Law requires municipalities engaging in layoffs to first decide which positions are essential to providing services and then to protect senior employees offering those services. Cannot comply with the collective bargaining agreement that provides must look solely at seniority and not need.

55 Question 5, P volunteer to cover Changing rates for AT&T contract Arbitration or Litigation? 55 AT&T Case – Nov 9, 2010 AT&T Mobility v. Conepcion US Supreme Court Case $30.22 sales tax on “free phone” Arbitration clause prevents class action lawsuits Plaintiffs argue the clause is “unconscionable” Arbitration Clause Details AT&T must pay a minimum of $7,500 if it loses AT&T pays all arbitration fees AT&T v. Ting (2003) US Supreme Court Case AT&T required to establish contracts with its customers AT&T included binding arbitration clause in its contracts AT&T’s own study concluded that most customers would stop reading the contract and toss it. Contract sent was automatically accepted if not cancelled. Frank Boomer received a contract in the mail from his long distance carrier, AT&T. Automatically accepted if no action – must call to object Boomer did nothing Later sued in a class-action for overcharging him

56 Arbitration Clauses in Employment Contracts Why Employers Like Arbitration for Employee Disputes. Arbitration is easier, faster, and less costly than litigation. Therefore, more businesses are including arbitration clauses in their contracts. What happens if a potential employee objects to the clause? Is this mandatory condition enforceable? Is that a Problem? Why might victims of employment discrimination prefer to litigate their claims in a judicial forum rather than having them arbitrated, even assuming that arbitration proceedings would be unbiased and would not violate due process rights? 56 What about for medical procedures? Hooters case

57 The Arbitration Process The three steps of arbitration are: 57

58 Setting Aside an Arbitration Award Crime or Contrary to Public Policy. No award will be enforced if compliance with the award would result in commission of a crime or would violate public policy. An arbitration award may also be set aside because of defects in the arbitration process. Bias or Corruption. – Award was result of corruption, fraud, etc. – The arbitrator exhibited bias or corruption. – The arbitrator’s actions substantially prejudiced the rights of one of the parties. – The arbitrator exceeded his or her powers. Merits of the Case – will not be reviewed – Sufficiency of evidence – Arbitrator’s reasoning 58

59 Disadvantages to Arbitration Arbitration has some disadvantages: – Unpredictable, since arbitrators are not required to follow prior precedents, but must only follow whatever rules have been provided by the parties. – Expensive, sometimes as expensive as litigation. – Time consuming, since discovery is often unavailable, the parties may have to call more witnesses than they would in litigation. 59

60 Court-Mandated ADR vs. Court- Annexed Arbitration Court-Mandated ADR Most states (and about half the federal courts) have adopted programs to encourage the parties to settle their disputes through ADR. Some courts require parties to submit to ADR before proceeding to trial. Court-Annexed Arbitration Some states require the parties to undergo non- binding arbitration before proceeding to trial. Note that in court- annexed arbitration, either party may reject the award. Court-Related Mediation 60

61 Whole Foods Issue – p. 108 Discuss, if time. 61 By buying [Wild Oats] we will…avoid nasty price wars in Portland (both Oregon and Maine), Boulder, Nashville, and several other cities which will harm [Whole Foods'] gross margins and profitability. By buying [Wild Oats]…we eliminate forever the possibility of Kroger, Super Value, or Safeway using their brand equity to launch a competing natural organic food chain to rival us…[Wild Oats] may not be able to defeat us but they can still hurt us….[Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever. Should U.S. sue to stop this? What is the relevant market ? How damaging is Whole Foods CEO John Mackey? “eliminate a competitor” and “avoid nasty price wars.” "Rahodeb“ his blog name on Yahoo " The end game is now underway for OATS.... Whole Foods is systematically destroying their viability as a business--market by market, city by city." Save for Ankur Nick current events week 4

62 ADR Around the Globe Other countries also encourage mediation, arbitration, and other forms of ADR. Examples: – Japan has recently authorized neutral panels to act as mediators in product liability suits. – China passed an arbitration law in 1995 that spells out what types of disputes are arbitrable, the form and content of valid arbitration clauses, etc., all of which should make it simpler for disputes to be settled through ADR. Article on China as Location for arbitration. 62

63 Constitutional Authority to Regulate Business

64 Constitutional Basis for Business Regulation The commerce clause (next slide) The contracts clause (retroactive adjustment of pay for executives?, Special treatment of unions/others in GM and Chrysler) Bill of Rights Freedom of Speech (commercial advertising, business lobbying, business political contributions) Due Process Compensation for a taking (recent changes to MN Law) 64

65 65 The Commerce Clause “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” The breadth of the commerce clause: – Gibbons v. Ogden (1824) – ferry between NY and NJ “substantially affected commerce” Exclusive right to navigate ferry in NY waters – Wickard. V. Filburn (1942) – farmer growing wheat for own use – CASE 4.1 Heart of Atlanta Motel v. United States (1964). Local hotel that had 75% out-of-state guests refused to rent rooms to blacks in violation of federal law and sued to have the law unconstitutional – United States v. Lopez (1995). School gun free zone law – Health Reform – Commerce? Huge part of economy – but is doing nothing (i.e. not buying insurance) commerce? Can you think of any businesses in today’s economy that are purely local in charter? Anything the federal government cannot regulate?

66 66 The Supremacy Clause The U.S. Constitution provides that the Constitution, laws, and treaties of the United States are “the supreme law of the land.” Whenever a state law directly conflicts with a federal law, the state law is rendered invalid. Preemption occurs when Congress chooses to act exclusively in a concurrent area. Can a Georgia law require contoured rear fender mud guards when other states require square ones?

67 67 Freedoms guaranteed by the Bill of Rights included the following: Freedom of Speech Freedom from Compelled Self-Incrimination Freedom from Unreasonable Searches and Seizures Freedom of Religion Business and the Bill of Rights

68 68 Freedom of Speech Political speech – Reasonable restrictions Corporate political speech (campaign finance laws). Commercial speech (advertising) – Lower standard false or misleading advertising Central Hudson Test – Substantial Government interest – Law directly advances that interest – Law goes no further than necessary – CASE 4.2 Bad Frog Brewery, Inc. v. New York State Liquor Authority (1998).

69 69 Freedom of Speech Can Government Force Tobacco Companies To Add Graphic Warnings? Requirements of New Law Companies must rotate between 9 images Must be printed on top half – front and back Must constitute 20% of any advertising Companies will have to spend 10s of millions of dollars to comply


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