Legal and Ethical Environment of Business (Mgmt 518) Dispute Resolution (Chapters 2 and 3) – Part 1 Professor Charles H. Smith Summer 2012

The American Court System “Dual” court system in the United States – federal court system plus each state has its own court system. Cases generally filed in trial court – District Court in the federal court system; Superior Court in California. Right to an appeal from trial court to intermediate appellate court – Court of Appeals (federal – 13 circuits); Court of Appeal (California – 6 districts).

The American Court System cont. Appeal from intermediate appellate court to supreme court (United States Supreme Court or California Supreme Court) not by right but by supreme court’s discretion only. Appeal from California Supreme Court to United States Supreme Court only by discretion and if case involves federal question.

Chart re American Court System Federal Court System – see map on page 39 California State Court System United States District Court for the [region, if any] District of [state]; e.g., we are in the Central District of California Superior Court for the County of [all 58 counties have Superior Court]; e.g., we are in the Orange County Superior Court Court of Appeals for the [1st-11th, D.C. or Fed.] Circuit; e.g., we are in the Ninth Circuit Court of Appeal of the [1st-6th] Appellate District, Division ___; e.g., we are in the Fourth Appellate District, Division Three United States Supreme Court California Supreme Court

How to Become a Judge (and Stay on the Bench)? Federal Court System Appointment of federal judge is a two-step process – nomination by President and then confirmation by Senate. All federal court judges appointed for life; removal from bench by resignation, death, or impeachment by Senate. California State Court System Superior Court – appointment by Governor (90%) or election to all or remaining part of 6-year term (10%); all judges subject to re-election at end of 6-year term; judicial election can be just like any other election. Court of Appeal and Supreme Court – all appellate justices are appointed by Governor to all or remaining part of 12-year term; people vote in confirmation election at end of 12-year term; cannot be elected to Court of Appeal or Supreme Court. Any California state court judge can be removed by Commission on Judicial Performance for misconduct; also, resignation or death.

Introduction to Jurisdiction “Jurisdiction” – the power of a court to decide a certain type of case (subject matter jurisdiction) or to decide a case against a certain party (personal jurisdiction). The merits of the case (i.e., who should win) are not relevant to whether a court has jurisdiction. If a court acts without jurisdiction, any such action (e.g., judgment, order or other ruling) is void and can be set aside by subsequent motion in trial court or reversed by appellate court.

Subject Matter Jurisdiction Subject matter jurisdiction is the power of a court to decide a particular type of case; e.g., contract dispute, violation of free speech rights under federal or state constitutions, violation of federal, state or local statute. California state courts are courts of “general” jurisdiction since they can hear almost all types of cases unless federal statute says only federal court can hear the certain type of case Case study – Case Question 3 (Meiners, page 51). Federal courts are courts of “limited” jurisdiction since they hear limited types of cases only Federal question. Diversity.

Personal Jurisdiction Court’s power to decide case involving certain party – is it fair for the court to proceed against this party (due process)? The courts have created two standards – general and specific General standard applies to three types of parties (see next slide). Specific standard applies to defendants not “domiciled” in the state where the court in which the lawsuit has been filed. Federal courts and most states use the standards stated on the next slide though states are permitted to have more restrictive standards (California is not one of them).

Personal Jurisdiction cont. General standard Plaintiff who files lawsuit in the court hearing the case, or Defendant who is domiciled in the same state where the court is located (forum state), or Defendant’s domicile is out-of-state but defendant has “substantial” relationship or “continuous or systematic” contact with forum state. Specific standard Defendant “purposefully directed” activities at residents of forum state or “purposefully availed” itself of benefits and protections of laws of forum state, and Lawsuit must arise out of or be a result of defendant’s contact(s) with forum state, and Exercise of personal jurisdiction must be “reasonable” (e.g., convenience of witnesses, location of evidence). Case studies – Blimka v. My Web Wholesalers, LLC (Meiners, page 41); Case Question 6 (Meiners, page 52).

Concurrent or Exclusive Jurisdiction Multiple courts may have jurisdiction over a case (“concurrent” jurisdiction), but certain cases can be heard in a specific court system only (“exclusive” jurisdiction). Examples Car accident in Fullerton with defendant who lives in Arizona. Violation of federal civil rights statute that happened in Fullerton. Lawsuit under ERISA.

Introduction to Civil Lawsuit “Road to justice” in civil lawsuit can consume much time and money – may not conclude for several years due to delays, appeals, etc.; attorney’s fees and costs may be in 10’s of 1,000’s of dollars even in average case. All parties to an actual or potential civil lawsuit should undertake a cost/benefit analysis before proceeding; this may include Probability of winning. Expense vs. relief. Value (financial, emotional, etc.) of early settlement. “The principle of the thing” or “test case.” Case study – Ethics Question (Meiners, page 85).

Introduction to Civil Lawsuit cont. Many procedures to follow before, during and after trial, such as filing deadlines, rules of evidence, motions, etc.; noncompliance with these procedures may result in monetary, evidence and/or terminating sanctions. Ultimately, what you can prove may be more important than the truth in court!

Civil Lawsuit Chronology (see pages 54-75) Many steps in a civil lawsuit; particular case may skip steps or stop at a certain step. Accident, breach of contract or other incident(s) – may be one event or series of events over days, weeks, months or even years. Party consults with attorney – initial client interview; review facts, documents, etc.; signing of retainer agreement; evaluate deadlines such as statute of limitations. Informal investigation and/or settlement negotiations prior to lawsuit; note that investigation and negotiation can happen at any time during lawsuit.

Civil Lawsuit Chronology cont. Exhaust administrative remedies (applicable in cases vs. gov’t only) – can have quick deadlines. Filing of complaint and summons issued – complaint specifies parties, ultimate facts in support of causes of action and relief sought; summons is pre-printed form identifying parties, court’s and plaintiff’s attorney’s contact information, and admonition to respond within certain time. Service of summons and complaint – notice to defendant of lawsuit as required by due process. Injunction – court order telling defendant to stop doing something (e.g., using trade secret, foreclosure sale); may need immediately if emergency (TRO/preliminary/permanent); case study – Georgia State Licensing Bd. v. Allen (Meiners, pages 71-72).

Civil Lawsuit Chronology cont. Filing of responsive pleading – answer or motion to dismiss/demurrer (can be based on substantive and/or procedural grounds). Discovery (depositions, written discovery) and related motions – purpose of discovery is to gather information to prepare for trial or settlement; motion to compel if party does not respond properly or at all; potential for great expense and abuse. Status conference – court reviews case with lawyers and may assign to ADR and/or set for trial.

Civil Lawsuit Chronology cont. Motion for summary judgment – granted only if no triable issue of material fact and moving party entitled to judgment as a matter of law; therefore, difficult to win. If MSJ denied (or no MSJ) – further discovery, including designation and depositions of experts (case study – Cooper Tire & Rubber v. Mendez (Meiners, pages 61-62). Pretrial conference – purpose can be settlement conference, final trial preparations, or both. Trial (12-18 months from filing of complaint to trial) – result is judgment (usually) or mistrial (rarely); summary of trial procedure (Meiners, page 66).

Civil Lawsuit Chronology cont. Post-trial motions – new trial, judgment notwithstanding the verdict (JNOV), attorney’s fees, costs. Appeal – can take 1-3 years; about 1 of 8 contested civil cases result in appeal; about 1 of 4 appeals successful due to presumption that trial court made correct decision and appellate court will not review fact disputes. Collection/enforcement of judgment – if losing party does not voluntarily comply with judgment.