1. Class II - 2013 Charles University – Law Faculty October 2013 © Peter Kolker 2013

2. How does the dispute begin:  Contract between U.S. and Czech Company for Czech Tech to produce and send to U.S. high tech automotive radios:  What are the contract terms? What’s “the deal” Class II - 20132

3.  Before there can be a Breach of Contract, there must be a Contract. What does it take to prove there is a contract?  “Offer” - the request to the other side to buy or sell something.  “Acceptance” – the agreement to the offer; that is to, buy or sell something.  Must match exactly the offer. This results in:  “Meeting of the Minds” on what is being bought or sold. Class II - 20133

4.  A description of the product or service that is clear.  Time for the sale to take place or service to be provided.  Quantity – how many? – Can be a variable number – “requirements contract”.  Price and delivery terms.  Warranty or other post-sale agreements.  Often, an agreement on how and where to resolve disputes.  Is there “consideration” to each side?  A benefit each side receives? Class II - 20134

5.  In writing or otherwise clearly agreed?  By people who are legally capable of agreeing.  Not a child or someone who is not able to agree.  Breach of the Contract: violation of its terms.  A “substantial” violation, not a minor error  Remedy: Damages – money to correct the breach.  Sometimes, an injunction may be granted;  An injunction prevents a party to the contract from doing something, or requires the performance of something. Example: sale of a house or other unique property Class II - 20135

6.  An injunction is often given before the case is decided finally – it is a “preliminary” remedy.  What if it should not have been given?  The party who obtained the injunction must post a bond to repay the other party, if the injunction should not have been given.  So, there is a danger in seeking an injunction. But it is an important opportunity.  Apple’s injunction against Samsung; $95 Million bond Class II - 2013 6

7.  Not all disputes are worth fighting about:  Costs of the dispute may be too high  Damage to the relationship by bringing the suit: even if it is right, it is not getting any new orders from a customer it just sued;  Damage to its reputation if it is known to fight with its customers – who wants to do business with such a company  But, if it is worth fighting about – a lot of money or an important principle, then how is a law suit handled in the U.S.?  We will later consider if there is another way:  A lternative  Dispute  Resolution Class II - 20137

8. U.S. Company: “we’re going to Court in the U.S.“ Very expensive for Czech Company. Why? What is the process in U. S.? Class II - 20138

9.  How will this work:  First, the Complaint (claim) is filed.  Then, the defense to the claim is filed.  Now, both sides know what the case is about.  But what is the evidence ? What is the proof? How is it obtained? Class II - 20139

10.  Unlike cases in the Czech Republic, or in the E.U. generally (except for the U.K.), cases in the U.S. allow extensive and expensive “discovery”. What is that ?  Pre-trial testimony from anyone with information about the case (“depositions”).  Document Production: all of your documents, including all of your private emails (except for those with your attorney).  This includes the email that you thought you had deleted.  These can be very damaging – to either side.  Obtaining emails from your opponent may help you prove your case. Expensive, but could be a big help. Class II - 201310

11.  How are documents obtained?  A “document” is a piece of paper BUT it is also an electronic record: “Electronically Stored Information”  A lot of volume  Think about the emails or SMS sent between you and your friend to arrange a meeting  How many people receive the same email?  The emails requested will go back for years.  Problems of collecting and producing them.  Problems of reviewing them when produced  A very expensive process. Class II - 201311

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13.  Now you have the documents: but what will the witness say about them?  In U.S. litigation, you can take a “deposition”  A deposition is the sworn testimony of a witness as if given in a court room, but it is taken privately, recorded and with a transcript.  It is a “preview” of how the witness will testify at trial.  It is a record that will limit the witness afterwards Class II - 201313

14.  The Trial  U.S. courts allow jury trial, or trial without juries. - 6 or 12 persons decide the facts; the judge instructs the jury on what the law is:  What each side must prove to win. - Juries are difficult to predict and can reach a result based on emotional responses. - This is dangerous for both sides, but juries often favor the “home team” – the person or company from that area. - Jury trials take longer and are more expensive. Class II - 201314

15.  Or, cases in the U.S. can be decided by a judge alone, without a jury.  If tried by a judge, he or she then decides the facts and applies the law.  Attorney’s fees are usually paid by each side, regardless of who wins.  If the loser pays legal fees for both sides, it raises the cost of bringing suit.  Good cases might be eliminated  Also, bad cases might be eliminated  Appeals after trial: not a second trial, but an opportunity to correct a legal error: did the trial judge make a mistake? Class II - 201315

16.  Selection of Judges in the U.S.: is it fair?  Almost all have practiced law privately or with the government before becoming a judge  Not specially trained to be a judge – they learn “on the job”  Federal judges are appointed by the U.S. President  They serve for life  State judges may be elected for 5 years, or more; or  State judges may be appointed by the governor  Either way, they are subject to influence  But they may be more democratic Class II -201316

17.  Judges in the Czech Republic are in career positions  Not having served as lawyers first, they may not see the case in the same way as the lawyers do.  If the judge is not good, or does not work hard, can he be replaced?  There is no (or limited) pre-trail discovery: you will hear the positions for the first time during the trial, limiting your ability to prepare for it.  You will not have access to the documents from the other side, so you may not know the full story.  Attorney’s fees will be paid by the losing side. Class II -201317

18.  Cost and uncertainty of Litigation cause parties to look for other methods of resolving disputes: what are they and how do they work?  A. Arbitration  Agreement to resolve disputes through a private, but binding method of resolving a dispute  Provided for by the contract: specific provision instead of litigation.  How is a disputed arbitrated in the U.S. ? (International arbitrations are somewhat different and will be discussed later). Class II - 201318

19.  Arbitration resolves a dispute outside of court, but in a binding way.  Both sides must agree to arbitration instead of litigation.  Can be done in the initial contract, before there is a dispute, or can be agreed after the dispute arises.  If there is an agreement to arbitrate, the US Courts will enforce that and will decline to litigate the case, so the arbitration will decide the case, not the court.  Usually, the parties agree on an organization to conduct the arbitration and to be bound by their rules  For example, the American Arbitration Association Class II - 201319

20. Class II - 201320 Different Rules for different types of disputes: Complex cases vs. simple cases. Some discovery allowed, but not as much as in litigation, with agreed rules of procedure. Arbitrator(s) is selected from a panel, and agreed to by both sides. Arbitrators are typically lawyers, but may also be non- lawyer specialists with expertise in their fields: Engineers, Doctors, Architects, Construction specialists In arbitration, a party may be able to compel witnesses to attend, but not as much authority to do so as in federal court.

21.  Arbitrator(s) will set a schedule for case, allow time for limited discovery and then schedule a “hearing”, similar to a trial  Witnesses will appear, documents will be considered, and hearing will proceed more quickly than trial in court  Arbitrators are required to apply the law; they cannot substitute their own views.  Written decision (“award”) is issued quickly after the evidence is admitted – often 30 days  Can be a “reasoned decision” or just the result. Class II21

22.  Arbitrator can order payment of winner’s attorney’s fees to be paid by losing party.  Contrast with litigation in US where normally loser does not pay winner’s attorney’s fees  Some exceptions to that rule  This makes the cost of arbitration potentially much greater.  Selection of Arbitrator is controlled by the parties.  Contrast with litigation where judge is selected at random and usually cannot be changed. Class II22

23.  U.S. Courts enforce agreements to arbitrate and do not interfere with the arbitration  Once an arbitration award is issued, in the U.S., it must be confirmed by the Court so that enforcement can occur.  Intended to be a simple process, but often is an invitation to overturn the award by claiming improper actions of the arbitrators.  If arbitration award is confirmed, then judgment can be enforced anywhere in the U.S. Class II23

24.  Limited Right of Review:  An Award can not be appealed in the same way as a judgment in a trial court can be appealed.  The only basis for resisting an arbitration Award after it has been entered in the U.S. are:  If the arbitrator(s) did not reveal a relationship with the parties when requested to do so at the beginning; or  If the arbitrator(s) exceeded their authority by entering an award that went beyond the request; or  If there was improper conduct during the arbitration (for example: an arbitrator met with one of the lawyers in private during the arbitration).  If no basis to challenge, the Award will be entered as a judgment, and then collection can proceed in the US. Class II -201324

25.  Some types of disputes may still be presented to Court if they are described in the agreement to arbitrate:  Example: where urgent remedy is needed – someone is taking your intellectual property and is about to put it on the internet.  One of your former employees has taken customer files, copied them and is about to give them to a competitor.  Arbitration, while usually fast, does not have the same immediate remedy measures as litigation in court has available.  So contracts to arbitrate provide for exceptions for court filing for some situations. Class II - 201325