Chapter 4 Resolving Disputes: Litigation and Alternative Dispute Resolution Options McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

4-2 CHAPTER OVERVIEW The role of dispute resolution in business planning. The process of using civil litigation to resolve disputes. Methods of alternative dispute resolution.

4-3 CIVIL LITIGATION A dispute resolution process where the parties and their counsel argue their view of a civil (noncriminal) controversy in a court of law

4-4 LITIGATION The odds of a business organization becoming involved in litigation have increased precipitously in recent years. From 1980 to 2005, the number of civil cases filed in federal courts more than doubled.

4-5 Pre-lawsuit: Demand/Settlement Negotiations If the issues are relatively simple, this can be a cost-effective method to resolve a dispute fairly and quickly. Also minimizes publicity.

4-6 Standing Means that the party asserting the claim: (1) must have suffered an injury in fact; (2) suffered harm that is direct, concrete, and individualized; (3) articulates what legal redress exists to compensate for the injury.

4-7 Parties to a Lawsuit Plaintiff: The party who initiates a lawsuit by filing a complaint with the clerk of the court against the defendant. Defendant: The party sued in a civil lawsuit, (a defendant may be called a respondent).

4-8 Pleadings Stage Complaint and Summons Answer Counterclaim Cross-Claim

4-9 Discovery Stage Depositions Interrogatories Requests for production Request for Admissions

4-10 Motions Used During Litigation To Dismiss For Summary Judgment To Compel Discovery To Dismiss for Mistrial For Judgment as a Matter of Law

4-11 Bridgestone Americas,Inc. v. Mayberry, 854 N.E.2d 355 (Indiana 2006) Discovery controversy: whether to order information disclosed or not ? The court must weigh the potential harm of disclosure against the need for the information in reaching a decision.

4-12 Pretrial Conference The conference is generally held between the attorneys for the parties and the judge. The primary reason is to encourage settlement. Second, the court will resolve any outstanding motions.

4-13 Trial If the case cannot be settled, the parties will eventually go to trial. The trial generally takes place in front of a judge as the finder of law and with a jury as a finder of fact.

4-14 Jury Selection and Opening Process of asking potential jurors questions to reveal any prejudices. The questioning process is known as voir dire. After the jury is selected, the attorneys present their theory of the case and what they hope to prove to the jury in opening statements.

4-15 Testimony After the opening statement, the plaintiff’s attorney then asks questions, known as direct examination, of the witnesses. The defendant’s attorney may then conduct cross-examination of the witnesses.

4-16 Submission of Evidence Each side also uses its witnesses to introduce relevant evidence, or to: –authenticate documents, –verify physical evidence, or –provide expert testimony accompanied by charts or graphs shown to the jury.

4-17 Closing Arguments Once the testimony/evidence is presented to the jury, the attorneys sum up the case and try to convince the jury that their version of the case is more compelling. This is known as a closing argument.

4-18 Charging the Jury The judge then charges the jury, by giving them instructions on how to work through the process of coming to a factual decision. The judge will also inform the jury that the standard of proof in a civil case is a preponderance of the evidence.

4-19 Deliberations After receiving the charge, jurors move to a private room and engage in deliberations. Although the jury is permitted to send questions to the judge, the jurors are alone in their deliberations.

4-20 Verdict The jury returns a decision: the verdict. If, however, the jury cannot agree on a verdict, this is known as a hung jury and the litigants must start the process all over. Rules for civil litigation frequently do not require a unanimous verdict, so hung juries are rare in a commercial dispute.

4-21 Post-trial Motions and Appeals Appellate courts engage in judicial review to decide whether any errors were committed during the trial and also have the power to reverse or modify the decisions of trial courts.

4-22 Collecting the Judgment Collecting judgments may sometimes be difficult, especially if the defendant’s assets are tied up in nonliquid forms such as real estate, or are exempt from claims of creditors through a bankruptcy filing.

4-23 ALTERNATIVE DISPUTE RESOLUTION Increasingly popular due to the following: Cost Time Privacy

4-24 Arbitration Voluntary or Contractual vs Legally mandated

4-25 Mediation Mediation is becoming increasingly common as a cost-efficient form primarily because mediation is relatively informal and does not require as much time or preparation as arbitration.

4-26 Green Tree Financial Corporation v. Randolph, 531 U.S. 70 (2000) “[W]e have recognized that federal statutory claims can be appropriately resolved through arbitration, and we have enforced agreements to arbitrate that involve such claims.”

4-27 Expert Evaluation For parties involved in a business dispute where the issues are somewhat complex and related to the intricacies of a certain industry or profession, expert evaluation by an independent expert who recommends a settlement is a popular alternative.

4-28 Hybrid Form of ADR Sometimes known as med-arb, both parties first submit to mediation for a set period of time (perhaps two days). If the mediation fails, the process then moves to binding arbitration.

4-29 learning outcomes checklist Identify the ways in which dispute resolution can be used in business planning Explain the meaning and purpose of civil litigation as a method of resolving disputes Articulate the concept of standing.

4-30 learning outcomes checklist 4- 4 Name the stages of litigation and identify the characteristics of each stage List the methods of alternative dispute resolution (ADR) and potential advantages of using ADR Distinguish between arbitration and mediation and explain both processes.

4-31 learning outcomes checklist 4- 7 Apply the legal standards for when an arbitration clause may be held invalid Explain how online dispute resolution can be used to solve small claim disputes Provide an example of a hybrid form of alternative dispute resolution.