1. © 2007 by West Legal Studies in Business / A Division of Thomson Learning CHAPTER 3 Courts and Alternative Dispute Resolution

2. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 2 The Judiciary’s Role in American Government The role of the courts in the American government is to interpret and apply the law. Through the process of judicial review—determining the constitutionality of laws—the judicial branch acts as a check on the executive and legislative branches of government.

3. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 3 The power of judicial review was established by Chief Justice John Marshall in Marbury v. Madison, well after the Constitution had established the other checks and balances within the federal government. What might result if the courts could not exercise the power of judicial review? Judicial Review: Marbury v. Madison

4. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 4 Basic Judicial Requirements Before a lawsuit can be brought before a court, certain requirements must first be met. These include: Jurisdiction Venue Standing to Sue

5. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 5Jurisdiction Before a court can hear a case, it must have jurisdiction over the person(s) against whom the suit is brought or the property involved in the suit, as well as jurisdiction over the subject matter.

6. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 6 Subject Matter Jurisdiction Limited jurisdiction: Exists when a court is limited to a specific subject matter, such as probate or divorce. General jurisdiction: Exists when a court can hear any kind of case.

7. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 7 Original vs. Appellate Jurisdiction Original jurisdiction: Exists with courts that have authority to hear a case for the first time (trial courts). Appellate jurisdiction: Exists with courts of appeals, or reviewing courts. Generally appellate courts do not have original jurisdiction.

8. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 8 Federal Jurisdiction A federal court can exercise jurisdiction: –When a federal question is involved (when the plaintiff’s action is based, at least in part, on the U.S. Constitution, a treaty, or a federal law). –When a case involves diversity of citizenship (citizens of different states, for example) and the amount in controversy exceeds $75,000.

9. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 9 Because of diversity jurisdiction, federal courts spend a good deal of time deciding issues that arise under state law. As federal courts become increasingly overburdened with cases, some have proposed to significantly limit (or eliminate) diversity jurisdiction. Are the benefits of diversity jurisdiction worth its costs to the federal court system? Diversity Jurisdiction

10. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 10 Exclusive v. Concurrent Jurisdiction Concurrent jurisdiction: Exists when two different courts have authority to hear the same case. Exclusive jurisdiction: Exists when only state courts or only federal courts have authority to hear a case.

11. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 11 Exclusive v. Concurrent Jurisdiction

12. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 12 Jurisdiction in Cyberspace “Sliding Scale” Standard Case 3.1 Bird v. Parsons (2002). No Depends Yes Substantial Business Interaction Passive Website

13. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 13Venue 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.

14. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 14 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. The controversy at issue must also be a justifiable controversy, one that is real and substantial, as opposed to hypothetical or academic.

15. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 15 The State and Federal Court Systems

16. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 16 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

17. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 17 Intermediate Appellate Courts Courts of appeals, or reviewing courts, generally do not have original jurisdiction. Such courts in the federal system are called the U.S. Circuit Courts of Appeals. The U.S. Courts of Appeals are divided into twelve circuit courts (next slide) which hear appeals from federal district courts located in their jurisdictions. A thirteenth circuit, called the federal circuit, hears appeals in certain special types of cases.

18. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 18 U.S. Courts of Appeal

19. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 19 Supreme Courts Each state has a supreme court, although it may be called by some other name, whose decisions are final on questions of state law. Appeals from a state supreme court to the U.S. Supreme Court is possible only if a federal question is involved. The U.S. Supreme Court is the highest court in the federal system and the final arbiter of the Constitution and federal law.

20. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 20 Following a State Court Case A sample civil court case in a state court would involve the following: The Pleadings Pretrial Motions Discovery Pretrial Conference Trial Post trial Motions The Appeal

21. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 21 The Pleadings Complaint: –Filed by the plaintiff with the court to initiate the lawsuit; served with a summons on the defendant. Answer: –Admits or denies allegations made by the plaintiff; may assert a counterclaim or an affirmative defense.

22. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 22 The Pleadings 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.

23. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 23 25 Typical Complaint

24. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 24 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.

25. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 25Discovery 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).

26. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 26 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.

27. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 27 Jury Selection The jury selection process, also known as voir dire, consists of questions directed to prospective jurors to assess potential bias.

28. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 28 At the Trial The typical course of a trial can be diagrammed as follows: OpeningStatements Plaintiff’s Introduction of Evidence Defendant’s Introduction of Evidence ClosingArguments

29. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 29 Opening Statements An opening statement sets forth the facts which the attorneys expect to prove during the trial. Note that such statements are not themselves evidence, but instead an argument as to what the evidence will show.

30. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 30 Introduction of Evidence The plaintiff’s case may consist of relevant documents, exhibits, and testimony of witnesses. The defense is then given the chance to challenge any of the plaintiff’s evidence and cross-examine his witnesses. Unless a motion for a directed verdict is made, the defense is then given a similar opportunity to present its case.

31. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 31 Closing Arguments After the defense concludes the presentation of its case, the attorneys present their closing arguments to the jury. Attorneys use the evidence established at trial to urge the jury to render a verdict in favor of his or her client.

32. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 32 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.

33. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 33 Post Trial Motions 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.

34. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 34 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.

35. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 35 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.

36. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 36 Courts Adapt to the Online World Courts are experimenting with electronic media, including CD-ROMs, electronic filings and docketing. E- filing is now an option in over 300 courts in Colorado. Virtual visitation rights? Case 3.2 Phansalkar v. Anderson, Weinroth, & Co. (2004).

37. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 37 Alternative Dispute Resolution Alternative dispute resolution methods differ in the degree of formality involved and the extent to which third parties participate in the process. What is the primary difference between negotiation and mediation?

38. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 38 Negotiation and Mediation Negotiation: The parties come together, with or without attorneys to represent them, and try to reach a settlement without the involvement of a third party. Mediation: The parties themselves reach an agreement with the help of a third party, called a mediator, who proposes solutions.

39. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 39Arbitration A more formal method of ADR in which the parties submit their dispute to a neutral third party, the arbitrator, who renders a decision, which may or may not be legally binding, depending on the circumstances.

40. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 40Arbitration Some courts refer certain cases for arbitration before allowing the cases to proceed to trial; in most cases, this kind of arbitration is nonbinding on the parties. Case 3.3 Buckeye Check Cashing, Inc. v. Cardegna (2006).

41. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 41 Employment Arbitration Courts generally hold that mandatory arbitration clauses in employment contracts are enforceable. Federal Arbitration Act excludes workers in “interstate commerce.” Supreme Court held that FAA applies to most employment contracts. See Circuit City Stores, Inc. v. Adams (2001).

42. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 42 The Federal Arbitration Act The FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves. The FAA covers any arbitration clause in a contract that involves interstate commerce— even where the business activities may have remote connections or minimal effects on interstate commerce.

43. THE LEGAL ENVIRONMENT TODAY Miller Cross 5 th Ed. © 2007 by West Legal Studies in Business / A Division of Thomson Learning 43 Online Dispute Resolution Negotiation Services. Mediation Providers. Arbitration Programs. –Virtual Magistrate. –Resolution Forum.