1. CHAPTER 6 DISPUTE RESOLUTION DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)

2. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 2 DISPUTE RESOLUTION Introduction. Introduction. – Chapter discusses questions: What is done? What is done? Why it is done? Why it is done? How it all ties together within the workings of the judicial system in a civil suit? How it all ties together within the workings of the judicial system in a civil suit?

3. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 3 COSTS OF LITIGATION Before pursuing litigation, an individual or business should consider the costs. Before pursuing litigation, an individual or business should consider the costs. There are direct and indirect costs. There are direct and indirect costs. Amount of fees vary depending on the type of litigation. Amount of fees vary depending on the type of litigation. Parties should consider alternate dispute resolution. Parties should consider alternate dispute resolution. Before pursuing litigation, an individual or business should consider the costs. Before pursuing litigation, an individual or business should consider the costs. There are direct and indirect costs. There are direct and indirect costs. Amount of fees vary depending on the type of litigation. Amount of fees vary depending on the type of litigation. Parties should consider alternate dispute resolution. Parties should consider alternate dispute resolution.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 4 CLIENT’S INTERVIEW WITH A LAWYER Consult your local bar association to refer you to an attorney. Consult your local bar association to refer you to an attorney. Once having an attorney ask him/her questions. Once having an attorney ask him/her questions. – Including payment terms. – Opportunities to negotiate or arbitrate a settlement. Discuss, read, and sign the client-attorney contract. Discuss, read, and sign the client-attorney contract. Consult your local bar association to refer you to an attorney. Consult your local bar association to refer you to an attorney. Once having an attorney ask him/her questions. Once having an attorney ask him/her questions. – Including payment terms. – Opportunities to negotiate or arbitrate a settlement. Discuss, read, and sign the client-attorney contract. Discuss, read, and sign the client-attorney contract.

5. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 5 INVESTIGATION OF THE FACTS Lawyer gathers information concerning the case. Lawyer gathers information concerning the case. Once all the information is in the file, the preliminary investigation is finished. Once all the information is in the file, the preliminary investigation is finished. Lawyer determines if there is basis for a suit. Lawyer determines if there is basis for a suit. Lawyer gathers information concerning the case. Lawyer gathers information concerning the case. Once all the information is in the file, the preliminary investigation is finished. Once all the information is in the file, the preliminary investigation is finished. Lawyer determines if there is basis for a suit. Lawyer determines if there is basis for a suit.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 6 NEGOTIATION OF A SETTLEMENT Letter of notice is sent to the defendant. Letter of notice is sent to the defendant. Defendant negotiates a settlement with the plaintiff. Defendant negotiates a settlement with the plaintiff. Plaintiff can accept or reject the settlement. Plaintiff can accept or reject the settlement. If plaintiff rejects settlement can initiate a suit by filing a complaint before the statute of limitation expires. If plaintiff rejects settlement can initiate a suit by filing a complaint before the statute of limitation expires. Letter of notice is sent to the defendant. Letter of notice is sent to the defendant. Defendant negotiates a settlement with the plaintiff. Defendant negotiates a settlement with the plaintiff. Plaintiff can accept or reject the settlement. Plaintiff can accept or reject the settlement. If plaintiff rejects settlement can initiate a suit by filing a complaint before the statute of limitation expires. If plaintiff rejects settlement can initiate a suit by filing a complaint before the statute of limitation expires.

7. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 7 A CIVIL SUIT Filing the Suit. Filing the Suit. Pretrial Proceedings. Pretrial Proceedings. The Trial. The Trial. Post-Trial Proceedings. Post-Trial Proceedings. A Comment on Finality. A Comment on Finality. Filing the Suit. Filing the Suit. Pretrial Proceedings. Pretrial Proceedings. The Trial. The Trial. Post-Trial Proceedings. Post-Trial Proceedings. A Comment on Finality. A Comment on Finality.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 8 A CIVIL SUIT Filing the Suit: Filing the Suit: – Complaint should be definite and contain sufficient information for the defendant to understand the nature of the litigation. – The defendant is served with a copy of the complaint. – If defendant does not answer the complaint, the court will enter a default judgement. Defendant files an answer, trial process begins. Filing the Suit: Filing the Suit: – Complaint should be definite and contain sufficient information for the defendant to understand the nature of the litigation. – The defendant is served with a copy of the complaint. – If defendant does not answer the complaint, the court will enter a default judgement. Defendant files an answer, trial process begins.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 9 A CIVIL SUIT Pretrial Proceedings: Pretrial Proceedings: – Depositions. – Interrogations. – Production of Documents and Things. – Physical or Mental Examination. – Request for Admission. – The Result of Discovery. – Pretrial Conferences. – Demurrer. – Motion to Dismiss. – Motion for a Summary Judgment. Pretrial Proceedings: Pretrial Proceedings: – Depositions. – Interrogations. – Production of Documents and Things. – Physical or Mental Examination. – Request for Admission. – The Result of Discovery. – Pretrial Conferences. – Demurrer. – Motion to Dismiss. – Motion for a Summary Judgment.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 10 A CIVIL SUIT The Trial: The Trial: – Jury Selection. – Removal of Judges. – Opening Statements. – Direct Examination. – Expert Witnesses. – Cross-examination. – Motion for a Directed Verdict. – Closing Arguments. – The Verdict. – Judgment. The Trial: The Trial: – Jury Selection. – Removal of Judges. – Opening Statements. – Direct Examination. – Expert Witnesses. – Cross-examination. – Motion for a Directed Verdict. – Closing Arguments. – The Verdict. – Judgment.

11. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 11 A CIVIL SUIT Post-Trial Proceedings: Post-Trial Proceedings: – Motion for a New Trial. – Appeal. A Comment on Finality: A Comment on Finality: – All appeals have been exhausted. – The court issues a final judgement. – The subject matter of the lawsuit is finally decided between both parties. Post-Trial Proceedings: Post-Trial Proceedings: – Motion for a New Trial. – Appeal. A Comment on Finality: A Comment on Finality: – All appeals have been exhausted. – The court issues a final judgement. – The subject matter of the lawsuit is finally decided between both parties.

12. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 12 NEED FOR ALTERNATIVES TO A CIVIL SUIT Lawsuits are expensive and time- consuming. Lawsuits are expensive and time- consuming. Businesses may prefer an alternative form of dispute resolution. Businesses may prefer an alternative form of dispute resolution. Lawsuits are expensive and time- consuming. Lawsuits are expensive and time- consuming. Businesses may prefer an alternative form of dispute resolution. Businesses may prefer an alternative form of dispute resolution.

13. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 13 ADRADR ADR: Methods of resolving disputes other than traditional litigation. ADR: Methods of resolving disputes other than traditional litigation. Involves various alternatives. Involves various alternatives. Allowing parties to settle legal disputes without courts. Allowing parties to settle legal disputes without courts. Generally voluntary, but often written into contract language. Generally voluntary, but often written into contract language. Legislatures and some courts require ADR procedures for settling differences. Legislatures and some courts require ADR procedures for settling differences. ADR: Methods of resolving disputes other than traditional litigation. ADR: Methods of resolving disputes other than traditional litigation. Involves various alternatives. Involves various alternatives. Allowing parties to settle legal disputes without courts. Allowing parties to settle legal disputes without courts. Generally voluntary, but often written into contract language. Generally voluntary, but often written into contract language. Legislatures and some courts require ADR procedures for settling differences. Legislatures and some courts require ADR procedures for settling differences.

14. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 14 ADR: BENEFITS Lessens burden of judicial system. Lessens burden of judicial system. Quicker and less expensive than litigation. Quicker and less expensive than litigation. May help businesses avoid becoming adversaries. May help businesses avoid becoming adversaries. Encourages partnering and building better business relationships. Encourages partnering and building better business relationships. Lessens burden of judicial system. Lessens burden of judicial system. Quicker and less expensive than litigation. Quicker and less expensive than litigation. May help businesses avoid becoming adversaries. May help businesses avoid becoming adversaries. Encourages partnering and building better business relationships. Encourages partnering and building better business relationships.

15. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 15 ADR: OPTIONS Negotiation. Negotiation. Mediation. Mediation. Arbitration. Arbitration. Negotiation. Negotiation. Mediation. Mediation. Arbitration. Arbitration.

16. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 16 NEGOTIATIONNEGOTIATION Earliest and simplest form of ADR. Earliest and simplest form of ADR. Involves discussion and resolution of controversy. Involves discussion and resolution of controversy. Requires parties to recognize logic in handling dispute without resorting to the courts. Requires parties to recognize logic in handling dispute without resorting to the courts. Demands compromise and finding common ground. Demands compromise and finding common ground. Parties must be willing to negotiate. Parties must be willing to negotiate. Earliest and simplest form of ADR. Earliest and simplest form of ADR. Involves discussion and resolution of controversy. Involves discussion and resolution of controversy. Requires parties to recognize logic in handling dispute without resorting to the courts. Requires parties to recognize logic in handling dispute without resorting to the courts. Demands compromise and finding common ground. Demands compromise and finding common ground. Parties must be willing to negotiate. Parties must be willing to negotiate.

17. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 17 MEDIATIONMEDIATION Involves the use of a third party. Involves the use of a third party. Helps parties reach mutually acceptable resolution to dispute. Helps parties reach mutually acceptable resolution to dispute. Listens and coaches parties in finding compromise. Listens and coaches parties in finding compromise. Usually involves an impartial third party without financial or professional ties to the parties to the dispute. Usually involves an impartial third party without financial or professional ties to the parties to the dispute. Involves the use of a third party. Involves the use of a third party. Helps parties reach mutually acceptable resolution to dispute. Helps parties reach mutually acceptable resolution to dispute. Listens and coaches parties in finding compromise. Listens and coaches parties in finding compromise. Usually involves an impartial third party without financial or professional ties to the parties to the dispute. Usually involves an impartial third party without financial or professional ties to the parties to the dispute.

18. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 18 MEDIATION METHODS Caucusing: mediator meets with each party to the dispute separately. Caucusing: mediator meets with each party to the dispute separately. Shuttle Mediation: parties to the dispute are physically separated and mediator runs messages between them. Shuttle Mediation: parties to the dispute are physically separated and mediator runs messages between them. Confidentiality critical for mediation methods to succeed. Confidentiality critical for mediation methods to succeed. Caucusing: mediator meets with each party to the dispute separately. Caucusing: mediator meets with each party to the dispute separately. Shuttle Mediation: parties to the dispute are physically separated and mediator runs messages between them. Shuttle Mediation: parties to the dispute are physically separated and mediator runs messages between them. Confidentiality critical for mediation methods to succeed. Confidentiality critical for mediation methods to succeed.

19. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 19 MEDIATION Standards of Conduct: Standards of Conduct: – Model standards of conduct for mediators has been drafted. – Standards are non-binding. – Standards concentrate on the similarities between the approaches. Compensation: Compensation: – No hard-and-fast rule regarding the compensation of mediators. Standards of Conduct: Standards of Conduct: – Model standards of conduct for mediators has been drafted. – Standards are non-binding. – Standards concentrate on the similarities between the approaches. Compensation: Compensation: – No hard-and-fast rule regarding the compensation of mediators.

20. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 20 ARBITRATIONARBITRATION Out of court procedure for settling dispute. Out of court procedure for settling dispute. Dispute submitted to one or more neutral parties referred to as an arbitrator. Dispute submitted to one or more neutral parties referred to as an arbitrator. Arbitrator’s decision is binding and is called an award. Arbitrator’s decision is binding and is called an award. Parties can not appeal arbitrator’s decision. Parties can not appeal arbitrator’s decision. Should party fail to comply with award, other party files petition with court seeking enforcement. Should party fail to comply with award, other party files petition with court seeking enforcement. Out of court procedure for settling dispute. Out of court procedure for settling dispute. Dispute submitted to one or more neutral parties referred to as an arbitrator. Dispute submitted to one or more neutral parties referred to as an arbitrator. Arbitrator’s decision is binding and is called an award. Arbitrator’s decision is binding and is called an award. Parties can not appeal arbitrator’s decision. Parties can not appeal arbitrator’s decision. Should party fail to comply with award, other party files petition with court seeking enforcement. Should party fail to comply with award, other party files petition with court seeking enforcement.

21. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 21 ARBITRATIONARBITRATION Controls on Arbitration: Controls on Arbitration: – States have developed their own individual approaches and laws to address arbitration issues. – Federal Arbitration Act covers all transactions involving interstate commerce. – EEOC v. Waffle House (2002). Controls on Arbitration: Controls on Arbitration: – States have developed their own individual approaches and laws to address arbitration issues. – Federal Arbitration Act covers all transactions involving interstate commerce. – EEOC v. Waffle House (2002).

22. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 22 ARBITRATIONARBITRATION Statutory Coverage: Statutory Coverage: – Arbitration is not exclusively applied to state-law issues. – Arbitration is applicable at state, national, and international levels. – Statutory law is clarified by judicial interpretation at all levels. – Federal Arbitration Act provides federal guidelines to follow. – At the international level, arbitration regulated by UN Convention on Recognition and Enforcement of Arbitral Awards. Statutory Coverage: Statutory Coverage: – Arbitration is not exclusively applied to state-law issues. – Arbitration is applicable at state, national, and international levels. – Statutory law is clarified by judicial interpretation at all levels. – Federal Arbitration Act provides federal guidelines to follow. – At the international level, arbitration regulated by UN Convention on Recognition and Enforcement of Arbitral Awards.

23. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 23 ARBITRATIONARBITRATION Organizations: Organizations: – Numerous organizations which support arbitration and provide forum for arbitration to occur and the arbitrator. – These include American Arbitration Association, Judicial Arbitration and Mediation Services, Federal Mediation and Conciliation Board, and the International Chamber of Commerce. Organizations: Organizations: – Numerous organizations which support arbitration and provide forum for arbitration to occur and the arbitrator. – These include American Arbitration Association, Judicial Arbitration and Mediation Services, Federal Mediation and Conciliation Board, and the International Chamber of Commerce.

24. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 24 MINITRIALMINITRIAL Procedure to settle dispute between companies. Procedure to settle dispute between companies. Informal, out-of-court procedure. Informal, out-of-court procedure. Conducted by neutral advisor. Conducted by neutral advisor. Involves shortened case presentation. Involves shortened case presentation. Senior executives from both parties dispute, who try to reach mutually agreeable settlement. Senior executives from both parties dispute, who try to reach mutually agreeable settlement. Procedure to settle dispute between companies. Procedure to settle dispute between companies. Informal, out-of-court procedure. Informal, out-of-court procedure. Conducted by neutral advisor. Conducted by neutral advisor. Involves shortened case presentation. Involves shortened case presentation. Senior executives from both parties dispute, who try to reach mutually agreeable settlement. Senior executives from both parties dispute, who try to reach mutually agreeable settlement.

25. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 25 RENT-A-JUDGE TRIAL Procedure entails parties to dispute hiring a judge. Procedure entails parties to dispute hiring a judge. Judge hears their case and renders judgment. Judge hears their case and renders judgment. Quicker and less expensive than normal trial. Quicker and less expensive than normal trial. Proceedings are private and do not become part of the public record. Proceedings are private and do not become part of the public record. Typically decisions made through this alternative can be appealed to public appellate courts. Typically decisions made through this alternative can be appealed to public appellate courts. Procedure entails parties to dispute hiring a judge. Procedure entails parties to dispute hiring a judge. Judge hears their case and renders judgment. Judge hears their case and renders judgment. Quicker and less expensive than normal trial. Quicker and less expensive than normal trial. Proceedings are private and do not become part of the public record. Proceedings are private and do not become part of the public record. Typically decisions made through this alternative can be appealed to public appellate courts. Typically decisions made through this alternative can be appealed to public appellate courts.

26. © 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW: Cases & Principles Davidson Knowles Forsythe 8 th Ed. 26 SMALL CLAIMS COURT Relatively quick and inexpensive way of resolving small legal disputes. Relatively quick and inexpensive way of resolving small legal disputes. Do not utilize legalese and standard rules of evidence. Do not utilize legalese and standard rules of evidence. Public courts with limited subject matter jurisdiction Public courts with limited subject matter jurisdiction Relatively quick and inexpensive way of resolving small legal disputes. Relatively quick and inexpensive way of resolving small legal disputes. Do not utilize legalese and standard rules of evidence. Do not utilize legalese and standard rules of evidence. Public courts with limited subject matter jurisdiction Public courts with limited subject matter jurisdiction