1. © 2005 West Legal Studies in Business A Division of Thomson Learning 1 Food for Thought of the Day “The paradox of education is precisely this - that as one begins to become conscious one begins to examine the society in which he is being educated.” -James Baldwin

2. © 2005 West Legal Studies in Business A Division of Thomson Learning 2 Welcome to Introduction to Business BUS 002 Agenda – February 7, 2008 (Th), February 13, 2008 (Wed) TOPIC: Judicial Branch – Jurisdiction, Traditional and Online Dispute Resolution Check-Ins: Questions, Comments, Reflections, AhHa Moments Article – “Supreme Court denies hearing for fired ‘honk for peace’ teacher” source: S.F. Chronicle Understanding the Judicial Branch of Government –Jurisdiction –Court Systems (Federal and State) Understanding Traditional and Online Dispute Resolution Emancipate

3. © 2005 West Legal Studies in Business A Division of Thomson Learning 3 What is judicial review? How and when was the power of judicial review established? Before a court can hear a case, it must have jurisdiction. Over what must it have jurisdiction? How are the courts applying traditional jurisdictional concepts to cases involving Internet transactions? What is the difference between a trial court and an appellate court? How are online forums being used to resolve disputes? Learning Objectives

4. © 2005 West Legal Studies in Business A Division of Thomson Learning 4 Jurisdiction = The power to speak the law. The authority of the court to hear and decide a specific action. Judicial Review = The process by which a court decides on the constitutionality of legislative enactments and actions of the executive branch. Long Arm Statute = A state statute that permits a state to obtain personal jurisdiction over nonresident defendant. A defendant must have “minimum contacts” (enough contacts) with that state for the statute to apply or for the state to have jurisdiction over the defendant. Minimum Contacts = Doing business within the jurisdiction. Enough contact. Docket = List of cases on the court’s calendar Appeal = To review the decision of the original court. Vocabulary/Terms/Phrases

5. © 2005 West Legal Studies in Business A Division of Thomson Learning 5 Judicial Court Systems Judicial Branch of Government Fifty-Two (52 Court Systems) –One for each of the 50 States –One for the District of Columbia (D.C.) –One Federal Court System

6. © 2005 West Legal Studies in Business A Division of Thomson Learning 6 Jurisdiction Jurisdiction - The authority of a court to hear and decide a specific action. The power of a court to hear a dispute and to “speak the law” into a controversy and render a verdict that is legally binding on the parties to the dispute. Jurisdiction has many dimensions, including: –Jurisdiction over Persons: The authority of a court to hear and decide a dispute involving the particular parties residing or doing business within the geographic area. (ex. Business office in one state, but headquartered in another) –Jurisdiction over Property: The court can exercise jurisdiction over property that is located within its boundaries. (ex. Boat owner lives in one state, but docked boat in another state) –Subject Matter Jurisdiction: The authority of a court to hear and decide the particular dispute (ex. Probate Court, Bankruptcy Court). –Original Jurisdiction: The authority of a court to hear and decide a dispute in the first instance. (ex. Trial courts) –Appellate Jurisdiction: The authority of a court to review a prior decision in the same case made by another court. (ex. Appeals courts)

7. © 2005 West Legal Studies in Business A Division of Thomson Learning 7 Jurisdiction –Jurisdiction of Federal Courts = Federal courts have limited jurisdiction. The authority of a court to hear cases involving the U.S. Constitution, treaty, or federal law. –Concurrent Jurisdiction = When more than one court have the power to hear a case (ex. Federal and State court) –Exclusive Jurisdiction = When a case can only be heard in a particular court or type of court. –Jurisdiction in Cyberspace = When business activity occurs via the Internet in a certain geographic region. (ex. Most of the business activity is occurring online in a particular state) See Example 3.4 p. 80 –International Jurisdiction = When business activity occurs via the Internet internationally (between U.S. and other Countries). Must comply with the laws in any jurisdiction in which it targets customer for its products or services. Minimum contact applies.

8. © 2005 West Legal Studies in Business A Division of Thomson Learning 8 Jurisdiction Over Persons Power of a court to compel the presence of the parties (including corporations) to a dispute to appear before the court and litigate. Courts use long-arm statutes for non- resident parties based on “minimum contacts” with state. –Cole v. Mileti (1998). p. 77

9. © 2005 West Legal Studies in Business A Division of Thomson Learning 9 Jurisdiction Over Property Power to decide issues relating to property, whether the property is real, personal, tangible, or intangible. A court generally has jurisdiction over any property situated within its geographical borders.

10. © 2005 West Legal Studies in Business A Division of Thomson Learning 10 Jurisdiction over Subject Matter This is a limitation on the types of cases a court can hear, usually determined by federal or state statutes. For example, bankruptcy, family or criminal cases. Limited jurisdiction.

11. © 2005 West Legal Studies in Business A Division of Thomson Learning 11 Original and Appellate Jurisdiction Courts of original jurisdiction is where the case started (trial). Courts of appellate jurisdiction have the power to hear an appeal from another court.

12. © 2005 West Legal Studies in Business A Division of Thomson Learning 12 Federal Court Jurisdiction “Federal Question” cases in which the rights or obligations of a party are created or defined by some federal law. Arises if a case involves an alleged violation of the U.S. Constitution, federal statute or regulation, or a treaty between the U.S. and one or more foreign countries. “Diversity” Jurisdiction (Article III, Section 2 Constitution) cases where: –The parties are not from the same state, and –The amount in controversy is greater than $75,000. –the lawsuit is between citizens of different states, a corporation is a citizen of both: (1) its state of incorporation, and (2) the state of its principal place of business, if the two are not the same. – a foreign country and citizens of one or more states

13. © 2005 West Legal Studies in Business A Division of Thomson Learning 13 Jurisdiction in Cyberspace “Sliding Scale” Standard. When does a court have jurisdiction? Bird v. Parsons (2002). P. 80 No Yes Substantial Business Interaction Passive Website

14. © 2005 West Legal Studies in Business A Division of Thomson Learning 14 Venue Venue is concerned with the most appropriate location for the trial. Generally, proper venue is whether the injury occurred.

15. © 2005 West Legal Studies in Business A Division of Thomson Learning 15 Standing to Sue In order to bring a lawsuit, a party must have “standing” to sue. Standing is sufficient “stake” in the controversy; party must have suffered a legal injury. Must be justifiable controversy (a controversy that is real and substantial, as opposed to hypothetical or academic)

16. © 2005 West Legal Studies in Business A Division of Thomson Learning 16 Federal Courts & State Court Systems Supreme Court of the United States U.S. Courts of Appeals Federal Administrative Agencies U.S. District Courts (Trail Courts of General & Limited Jurisdiction) Specialized U.S. Courts Bankruptcy Courts Court of Federal Claims Court of International Trade Tax Court Highest State Courts (State Supreme Court) State Courts of Appeals State Trial Courts of General Jurisdiction Local Trial Courts of Limited Jurisdiction (Small Claims, Traffic) State Administrative Agencies (Board of Equalization)

17. © 2005 West Legal Studies in Business A Division of Thomson Learning 17 State Court Systems Trial (District) Courts –Trial courts are where all litigation (other than that conducted through administrative agencies) begins. –Small Claims Court – Civil matter, No attorneys needed, $5000 or less Appellate Courts –Every state has at least one appellate court, to which a litigant who was unsuccessful at the trial court may appeal for relief. Some states have intermediate appellate courts (akin to the U.S. Courts of Appeals) which are subject to review by the state’s supreme court or “court of last resort.” –Other states have only a supreme court. Highest State Court –Usually called the State Supreme Court –Has discretionary review – they decide whether or not they will hear a case

18. © 2005 West Legal Studies in Business A Division of Thomson Learning 18 State and Federal Courts Ct. Criminal Appeals Ct. Criminal Appeals Supreme Court Supreme Court Court of Appeals Court of Appeals District Court County Court Municipal (City/Town) Court Municipal (City/Town) Court Justice Court Justice Court Texas Courts U.S. Supreme Court U.S. Supreme Court Circuit Courts of Appeals Circuit Courts of Appeals U.S. District Court U.S. District Court Federal Courts

19. © 2005 West Legal Studies in Business A Division of Thomson Learning 19 Boundaries of the U.S. Courts of Appeals & U.S. District Courts

20. © 2005 West Legal Studies in Business A Division of Thomson Learning 20 What do you think? In groups of 3 or 4, respond to the following: 1.You receive a ticket driving a business vehicle, you want to dispute it, which court will hear your case? Explain 2.You own a business in California, but most of your business transactions occur in Texas. A customer in Texas brings a case against you, which court and which state has jurisdiction over the case? Explain

21. © 2005 West Legal Studies in Business A Division of Thomson Learning 21 Trial courts have either general jurisdiction – meaning that they are empowered to consider any matter before them – or limited jurisdiction – meaning that they are only empowered to hear certain types of cases Trial courts of general jurisdiction, –each state (as well as the District of Columbia and certain other U.S. territories and possessions) has at least one “district,” –and some states have as many as four, with each district divided administratively among one to several judges. Trial Courts

22. © 2005 West Legal Studies in Business A Division of Thomson Learning 22 Appellate Courts Called Middle level of the court systems. Cover twelve geographic regions, with a thirteenth court, the Federal Circuit, empowered to hear appeals from any district court involving patent law, cases in which the United States is a defendant, and other specified types of cases. Review proceedings conducted in the trial court to determine whether the trial was according to the procedural (process) and substantive (define) rules of law. Generally, appellate courts will consider questions of law (Has a law been violated), but not questions of fact.

23. © 2005 West Legal Studies in Business A Division of Thomson Learning 23 The Federal Court System U.S. Supreme Court: The “highest court in the land,” the U.S. Supreme Court exercises discretionary review over all federal appellate courts, as well as, in some circumstances, state supreme and appellate courts. –Most cases reach the U.S. Supreme Court on writ of certiorari, which requires that at least four justices agree the case merits the Court’s review.

24. © 2005 West Legal Studies in Business A Division of Thomson Learning 24 The Federal Court System U.S. District Courts: –Trial courts of general jurisdiction, each state (as well as the District of Columbia and certain other U.S. territories and possessions) has at least one “district,” and some states have as many as four, with each district divided administratively among one to several judges. U.S. Courts of Appeals: Appellate courts review cases from litigants in the U.S. District Courts with an automatic right to appeal. –In the case of the D.C. Circuit, they hear from federal administrative agency decisions. –These courts also hear appeals from U.S. Bankruptcy Courts and other specialized courts and, in the case of the D.C. Circuit, from federal administrative agency decisions. –These courts cover twelve geographic regions, with a thirteenth court, the Federal Circuit, empowered to hear appeals from any district court involving patent law, cases in which the United States is a defendant, and other specified types of cases.

25. © 2005 West Legal Studies in Business A Division of Thomson Learning 25 Electronic Filing. Courts Online (websites, court dockets). Cyber Courts and Online Dispute Resolution (Michigan legislation). Online Dispute Resolution (ODR). –Negotiation. –Mediation. –Arbitration (employment contracts). Courts Adapt to the Online World

26. © 2005 West Legal Studies in Business A Division of Thomson Learning 26 Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved. Alternative Dispute Resolution

27. © 2005 West Legal Studies in Business A Division of Thomson Learning 27 ADR Alternative Dispute Resolution ADR describes any procedure or device for resolving disputes other than the traditional judicial process. Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. Most common: negotiation, mediation, arbitration.

28. © 2005 West Legal Studies in Business A Division of Thomson Learning 28 Arbitration Many employment contracts have binding arbitration clauses. Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official. Disadvantages of Arbitration Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. Arbitrators do not have to issue written opinions. Generally, no discovery available. See p. 102 Circuit City Stores, Inc. v. Adams

29. © 2005 West Legal Studies in Business A Division of Thomson Learning 29 Arbitration Process Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award. Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

30. © 2005 West Legal Studies in Business A Division of Thomson Learning 30 Other Forms of ADR Negotiation: Informal settlement talks between the parties, with or without counsel. Mediation: Non-binding procedure utilizing the services of a neutral third party to assist negotiations and recommend a resolution of the parties’ dispute. Mediation is non- adversarial and tends to reduce antagonism. Neutral Case Evaluation: A third party agreed to by the parties evaluates each side’s position and informs the parties of their strengths and weaknesses. Mini-Trial: A short-form trial presented to a “judge” whose decision is not legally binding, but may assist the parties in evaluating their claims or defenses. Summary Jury Trial: A short-form trial presented to a “jury” whose decision is not legally binding, but may assist the parties in evaluating their claims or defenses. Online Dispute Resolution: An increasing number of companies and organizations offer dispute-resolution services online.

31. © 2005 West Legal Studies in Business A Division of Thomson Learning 31 Providers of ADR Services Non-profit organizations: –American Arbitration Association.American Arbitration Association –Better Business Bureau.Better Business Bureau For Profit: –JAMS-ADR.com(Flash enabled).JAMS-ADR.com

32. © 2005 West Legal Studies in Business A Division of Thomson Learning 32 What do you think? View the Video “Jurisdiction in Cyberspace” Does Wizard Internet do Business in Montana?” In groups of 3-4, answer the following questions? What contact has Wizard Internet had with customers in Montana? Are those contacts enough to give Montana jurisdiction in this case? How are minimum-contact standards for corporations applied when the corporation advertises its products on the Internet?

33. © 2005 West Legal Studies in Business A Division of Thomson Learning 33 Reflection How might today’s content impact my practice in business? What implications might today’s content have on the local, state, national, and global communities? What have I learned about judicial system and business that will influence my practice?