THE LEGAL ENVIRONMENT OF BUSINESS A Critical Thinking Approach Fourth Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne Nancy K. Kubasek Bartley A. Brennan M. Neil Browne © 2006 Prentice Hall Ch. 3-1

CHAPTER 3 The American Legal System © 2006 Prentice Hall Ch. 3-2 THE LEGAL ENVIRONMENT OF BUSINESS

Jurisdiction Definition The power of a court to hear and render a binding decision on the parties © 2006 Prentice Hall Ch. 3-3 THE LEGAL ENVIRONMENT OF BUSINESS

Classifications of Jurisdiction Original: Trial level court Appellate: Reviewing court In Personam: Court power over a person In Rem: Jurisdiction over property of the defendant Subject Matter Jurisdiction: Power to hear certain types of cases © 2006 Prentice Hall Ch. 3-4 THE LEGAL ENVIRONMENT OF BUSINESS

Service of Process Methods of Service: Personal On responsible person at home On agent for service By mail Procedures for providing defendant with notice and opportunity to be heard via copy of summons and complaint © 2006 Prentice Hall Ch. 3-5 THE LEGAL ENVIRONMENT OF BUSINESS

Case 3-1: Volkswagen v. Woodson  Long-arm jurisdiction: In-state court’s jurisdiction over nonresident defendant  Limits imposed by the Due Process Clause  “Minimum Contacts” Test Protects against suits in distant statesProtects against suits in distant states Limits state courts’ powersLimits state courts’ powers © 2006 Prentice Hall Ch. 3-6 THE LEGAL ENVIRONMENT OF BUSINESS

State v. Federal Jurisdiction State Courts Extensive jurisdiction over cases not exclusive to federal courts State Courts Extensive jurisdiction over cases not exclusive to federal courts Federal Courts Limited jurisdiction under federal statutes or diversity cases Federal Courts Limited jurisdiction under federal statutes or diversity cases Concurrent Jurisdiction Both state and federal courts can hear these cases under federal question or diversity Concurrent Jurisdiction Both state and federal courts can hear these cases under federal question or diversity © 2006 Prentice Hall Ch. 3-7 THE LEGAL ENVIRONMENT OF BUSINESS

Federal Question Jurisdiction is based on a federal statute, U.S. Constitution, or federal treaty © 2006 Prentice Hall Ch. 3-8 THE LEGAL ENVIRONMENT OF BUSINESS

Diversity Jurisdiction Complete diversity of citizenship Amount in controversy must exceed $75,000 © 2006 Prentice Hall Ch. 3-9 THE LEGAL ENVIRONMENT OF BUSINESS

Venue Not the same as jurisdiction Concerned with geographic location of the court Motions for change of venue Forum non conveniens Unlike removal, granting of motion for change of venue is discretionary with trial judge © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Case 3-2: Gafford v. General Electric Co. Corporations are “citizens” For diversity purposes, they are citizens of The state of incorporation Principal place of business For multistate corporations, look to the state of “centralized general supervision of its business” © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

The Court System Federal Courts Trial Court: U.S. District Court Appellate: U.S. Circuit Courts of Appeals Court of Last Resort: U.S. Supreme Court State Courts: Similar Structure and Function State Courts: Similar Structure and Function SupremeTrialAppellate © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Who’s Who in the Legal System? The Attorney Legal Assistants Investigators Process Servers The Judge ClerksBailiffs The Jury The Parties © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

The Adversary Process Based on medieval concept of trial by combat Each party vigorously advocates its position, presenting facts and law in support The fact finder (judge or jury) determines the facts The court applies the law and renders a decision The judge ensures that the rules are followed, but does not dictate the outcome THE LEGAL ENVIRONMENT OF BUSINESS © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

PretrialNegotiations Service of Process Pleadings  Complaint  Answer  Affirmative Defenses  Counterclaims Discovery: Interrogatories, Depositions Motions Civil Litigation 1 © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

The Trial Jury Selection: Voir Dire Opening Statements Direct and Cross-Examination Jury Instructions Closing Arguments Posttrial Motions Civil Litigation 2 © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Case 3-3: J.E.B. v. Alabama, ex rel. T.B. Paternity suit: All female jury finds against male defendant State appellate court found no violation of Equal Protection Clause in jury selection process Equal protection clause restricts ability of state actors to exercise peremptory jury challenges on the basis of gender Dissent: decision undermines peremptory right to strike © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Appellate Procedure Assignment of error Filing the appeal Remedies: Affirm, Modify, Reverse, Remand Practical Issues: Costs, Time, Value as Precedent Appeals to State Supreme Court Appeals to U.S. Supreme Court: Discretionary Civil Litigation 3 © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Class Action Cases Involve multiple parties Class must be certified by the court Often used in defective product cases where there are many injured plaintiffs, each with small claims Also used in discrimination cases Often results in negotiated settlements of all claims THE LEGAL ENVIRONMENT OF BUSINESS © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS

Global Dimensions Increasing global trade will generate more international disputes Legal systems, procedures, rights and remedies differ widely from country to country Choice of jurisdiction, law, venue, forum, and method of dispute resolution common in international contracts © 2006 Prentice Hall Ch THE LEGAL ENVIRONMENT OF BUSINESS