© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Chapter 3: Courts and Alternative Dispute Resolution

2 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives 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? What is discovery, and how does electronic discovery differ? What are three alternative methods of resolving disputes?

3 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Judicial Review was established by the U.S. Supreme Court in Marbury v. Madison (1803) where Chief Justice Marshall wrote: “It is emphatically the province and duty of the judiciary to say what the law is….” The Judiciary’s Role in American Government

4 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Jurisdiction Jurisdiction: “Juris” (law) “diction” (to speak) is 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.

5 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Jurisdiction Over Persons Also called “in personam” jurisdiction. Power of a court to compel the presence of the parties (including corporations) to a dispute to appear before the court and litigate.

6 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Jurisdiction Over Property Also called “in rem” jurisdiction. Power to decide issues relating to property, whether the property is real, personal, tangible, or intangible. A court generally has in rem jurisdiction over any property situated within its geographical borders.

7 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Long-Arm Statutes Courts use long-arm statutes for non- resident parties based on “minimum contacts” with state. –See International Shoe Co. v. State of Washington (1945).

8 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. General (unlimited) jurisdiction. Limited jurisdiction.

9 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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.

10 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Federal Court Jurisdiction “Federal Question” cases in which the rights or obligations of a party are created or defined by some federal law. “Diversity” cases where: –The parties are not from the same state, and –The amount in controversy is greater than $75,000.

11 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exclusive vs. Concurrent Jurisdiction

12 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Jurisdiction in Cyberspace “Sliding Scale” Standard. International Jurisdictional Issues. –Yahoo, Inc. v. La Ligue Contre La Racisme et l’Antisemisme (2006). No Yes Substantial Business Interaction Passive Website

13 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Venue Venue is concerned with the most appropriate location for the trial. Generally, proper venue is whether the injury occurred.

14 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. There must be a “justiciable controversy.” Case 3.1 Oregon v. Legal Services Corp. Court dismissed case because Plaintiff did not have standing, was not legally injured.

15 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Ct. Criminal Appeals Supreme Court Court of Appeals District Court County Court Municipal Court Justice Court Texas Courts State Court System (Texas)

16 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “Courts of record”- court reporters. Opening and closing arguments. Juries are selected. Evidence, such as witness testimony, physical objects, documents, and pictures, is introduced. Witnesses are examined and cross- examined. Verdicts and Judgments are rendered. State Trial Courts

17 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. State Appellate Courts Middle level of the court systems. Review proceedings conducted in the trial court to determine whether the trial was according to the procedural and substantive rules of law. Generally, appellate courts will consider questions of law, but not questions of fact.

18 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. State Supreme Courts Also known as courts of last resort. The two most fundamental ways to have your case heard in a supreme court are: –Appeals of Right. –By Writ of Certiorari. See the U.S. Supreme Court and the Texas Supreme Court.U.S. Supreme Court Texas Supreme Court

19 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Federal Court System U.S. Supreme Court Circuit Courts of Appeals U.S. District Courts Federal Courts Equivalent to State Trial Court 13 U.S. Courts of Appeal  Writ of Certiorari to bring case

20 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Exhibit 3.3 U.S. Courts of Appeal

21 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Following a State Court Case Pleadings. –Plaintiff’s Complaint. –Service and Summons. –Defendant’s Answer /Motion to Dismiss. Pre-Trial Motions. –Motion for Judgment on the Pleadings. –Motion for Summary Judgment.

22 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Following a State Court Case Discovery. –Depositions and Interrogatories. –Requests for Documents. –Requests for Admission. –Electronic Discovery. Pre-Trial Conference. Jury Selection (Voir Dire).

23 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Following a State Court Case At the Trial. –Opening arguments. –Plaintiff’s Case in Chief. Defense cross-examines Plaintiff’s witnesses. –Defense Case in Chief. Plaintiff cross-examines Defense witnesses. –Closing Arguments. –Motion for a Directed Verdict. Post-Trial Motions. –Motion for J.N.O.V. –Motion for New Trial.

24 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Following a State Court Case The Appeal. –Filing the Appeal. Briefs pointing out reversible error that require reversal of the trial court’s verdict. –Appellate Review. Courts do not consider new evidence. Only consider briefs and evidence presented at trial. Case 3.2 Evans v. Eaton Corp. Appellate court must give deference to findings of fact made by trial court even if a “better decision-maker” should have been used.

25 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. ADR 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 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Negotiation Less than 10% of cases reach trial. Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. Successful negotiation involves thorough preparation, from a position of strength.

29 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Mediation Involves a neutral 3 rd party (mediator). Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.” –Advantages: few rules, customize process, parties control results (win-win). –Disadvantages: mediator fees, no sanctions or deadlines.

30 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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.

31 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Arbitration Arbitration Clauses and Statutes. –Uniform Arbitration Act of –Federal Arbitration Act. Issue of Arbitrability. Case 3.3 NCR Corp. v. Korala Associates, Ltd. The arbitration clause in the contract regarding software development mandated arbitration of copyright infringement claim.

32 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Arbitration Issues Mandatory Employment Arbitration. –Generally clauses are enforceable. 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.

33 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Other Types of ADR Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement. Expert evaluations. Conciliation: 3 rd party assists in reconciling differences.

34 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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

35 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Online Dispute Resolution Also called ODR. Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. See, e.g.,