1. CHAPTER The Court System and Jurisdiction 2

2. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-2 U.S. Court System Both the federal and state court systems are triangular At the bottom there are many trial courts There are fewer appeals courts and one supreme court At the federal level there are 646 District Court Judges 13 Circuit Courts of Appeal One Supreme Court with nine justices Both the federal and state court systems are triangular At the bottom there are many trial courts There are fewer appeals courts and one supreme court At the federal level there are 646 District Court Judges 13 Circuit Courts of Appeal One Supreme Court with nine justices

3. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-3 Trial Courts Trial courts determine the facts and apply existing law to those facts Juries are charged with making factual determinations, except when the parties waive their right to a jury, in which case In general appellate courts will not hear appeals of jury verdicts unless there is evidence of jury tampering or some other procedural irregularity Trial courts determine the facts and apply existing law to those facts Juries are charged with making factual determinations, except when the parties waive their right to a jury, in which case In general appellate courts will not hear appeals of jury verdicts unless there is evidence of jury tampering or some other procedural irregularity

4. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-4 Appellate Courts Appellate courts determine whether legal errors were made at the trial court level Most appeals are denied, as trial court decisions are affirmed Supreme courts can overrule decisions of appellate courts The U.S. Supreme Court is almost entirely an appellate court The U.S. Supreme agrees to hear only a fraction of the appeals made to it Appellate courts determine whether legal errors were made at the trial court level Most appeals are denied, as trial court decisions are affirmed Supreme courts can overrule decisions of appellate courts The U.S. Supreme Court is almost entirely an appellate court The U.S. Supreme agrees to hear only a fraction of the appeals made to it

5. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-5 Appellate Courts Main function of appellate courts is to review trial courts for possible errors of law –Possible errors of law include rulings the trial court on Motions made by either party Admission or non-admission of evidence Instructions to juries –U.S. Courts of Appeals often hear appeals for decisions of administrative agencies such as the FTC, the PTO, and NLRB Decisions of trial courts are only reversed when the errors made are judged material. Main function of appellate courts is to review trial courts for possible errors of law –Possible errors of law include rulings the trial court on Motions made by either party Admission or non-admission of evidence Instructions to juries –U.S. Courts of Appeals often hear appeals for decisions of administrative agencies such as the FTC, the PTO, and NLRB Decisions of trial courts are only reversed when the errors made are judged material.

6. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-6 U.S. Supreme Court Mainly hears appeals from cases that either Have constitutional implications Resolve differences among the U.S. Circuit Court of Appeals Have significant social implications and are considered ripe--appropriate for resolution Appeals to the Supreme Court are based on writs of certiorari Issues majority, concurring and dissenting opinions Mainly hears appeals from cases that either Have constitutional implications Resolve differences among the U.S. Circuit Court of Appeals Have significant social implications and are considered ripe--appropriate for resolution Appeals to the Supreme Court are based on writs of certiorari Issues majority, concurring and dissenting opinions

7. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-7 Specialized Courts At both the federal and state levels there are specialized courts At the federal level there are specialized courts of bankruptcy, tax court, military courts At the state level there are specialized juvenile, probate, domestic relations courts Specialized courts do not have jurisdiction to resolve disputes outside their subject matter. At both the federal and state levels there are specialized courts At the federal level there are specialized courts of bankruptcy, tax court, military courts At the state level there are specialized juvenile, probate, domestic relations courts Specialized courts do not have jurisdiction to resolve disputes outside their subject matter.

8. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-8 Trial Courts In the federal courts, trial courts are called district courts In state courts, trial courts are often divided between District courts for lesser civil cases and criminal misdemeanors, and Superior courts which hear major civil cases and criminal cases involving felonies In the federal courts, trial courts are called district courts In state courts, trial courts are often divided between District courts for lesser civil cases and criminal misdemeanors, and Superior courts which hear major civil cases and criminal cases involving felonies

9. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-9 State Courts Unless a case in state courts involves federal law there are usually no appeals from state to federal court Appeals from state supreme courts to federal court can take place when It is a capital criminal case—it often involves allegations of violations of constitutional law Claims are made by a party that state laws violate the Interstate Commerce Clause Claims are made that state laws violate fundamental constitutional rights involving, for example, race, abortion, and due process. Unless a case in state courts involves federal law there are usually no appeals from state to federal court Appeals from state supreme courts to federal court can take place when It is a capital criminal case—it often involves allegations of violations of constitutional law Claims are made by a party that state laws violate the Interstate Commerce Clause Claims are made that state laws violate fundamental constitutional rights involving, for example, race, abortion, and due process.

10. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-10 Jurisdiction Defendants in civil cases can file a motion to dismiss based on a claim that the court selected by the plaintiff for the lawsuit Does not have jurisdiction over the defendant Or the subject matter of the dispute A court has jurisdiction if it has power to resolve the dispute. Two factors in determining jurisdiction: Subject matter and geography Defendants in civil cases can file a motion to dismiss based on a claim that the court selected by the plaintiff for the lawsuit Does not have jurisdiction over the defendant Or the subject matter of the dispute A court has jurisdiction if it has power to resolve the dispute. Two factors in determining jurisdiction: Subject matter and geography

11. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-11 Jurisdiction: Nomenclature Trial courts have original jurisdiction Obviously, appellate courts have appellate jurisdiction In order to deny the defendant’s motion to dismiss for lack of jurisdiction, the trial court must have both: Jurisdiction over the subject matter of the dispute and Jurisdiction personally over the defendant Obviously, a bankruptcy court does not subject matter jurisdiction to try a criminal case Many trial courts have general jurisdiction to hear any case Trial courts have original jurisdiction Obviously, appellate courts have appellate jurisdiction In order to deny the defendant’s motion to dismiss for lack of jurisdiction, the trial court must have both: Jurisdiction over the subject matter of the dispute and Jurisdiction personally over the defendant Obviously, a bankruptcy court does not subject matter jurisdiction to try a criminal case Many trial courts have general jurisdiction to hear any case

12. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-12 Jurisdiction of State Courts: Over the Person Assume the plaintiff files suit against the defendant in the plaintiff’s state: Clearly the state trial court has jurisdiction over the def., if the def. is a resident of the plaintiff’s state A state court can exercise jurisdiction if the person –Did business within the state, such as sign or perform a contract, or –Committed a tort within the state, such as get involved in a traffic accident States typically pass “Long Arm” statutes that extend the jurisdiction of state courts as far as is constitutionally permissible. Assume the plaintiff files suit against the defendant in the plaintiff’s state: Clearly the state trial court has jurisdiction over the def., if the def. is a resident of the plaintiff’s state A state court can exercise jurisdiction if the person –Did business within the state, such as sign or perform a contract, or –Committed a tort within the state, such as get involved in a traffic accident States typically pass “Long Arm” statutes that extend the jurisdiction of state courts as far as is constitutionally permissible.

13. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-13 Jurisdiction over the Person Suppose the def. is a corporation or a business? Jurisdiction depends on whether the out-of-state business satisfies the minimum contacts test: –The minimum contacts test is satisfied if the business owns property, rents office space, directs employees towards, or directs advertising toward the state –Without more, mail order companies are not subject to the jurisdiction of out-of-state courts Conceptual test is whether the out-of-state company availed itself of the advantages of the state government? –If yes, then jurisdiction is fair and justified Suppose the def. is a corporation or a business? Jurisdiction depends on whether the out-of-state business satisfies the minimum contacts test: –The minimum contacts test is satisfied if the business owns property, rents office space, directs employees towards, or directs advertising toward the state –Without more, mail order companies are not subject to the jurisdiction of out-of-state courts Conceptual test is whether the out-of-state company availed itself of the advantages of the state government? –If yes, then jurisdiction is fair and justified

14. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-14 Jurisdiction over the Person For web sites, mere accessibility does not give out-of-state courts jurisdiction, but if the web site interacts with customers through email or telephone it does… Obviously, even a small amount of interaction between web sites and in-state residents is going to subject the web site to out-of-state courts Web sites can easily avoid exercise of jurisdiction by out-of- state courts simply by have a choice of law clause in their Terms of Service agreement, which the user “agrees to” by browsing the web site. For web sites, mere accessibility does not give out-of-state courts jurisdiction, but if the web site interacts with customers through email or telephone it does… Obviously, even a small amount of interaction between web sites and in-state residents is going to subject the web site to out-of-state courts Web sites can easily avoid exercise of jurisdiction by out-of- state courts simply by have a choice of law clause in their Terms of Service agreement, which the user “agrees to” by browsing the web site.

15. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-15 Jurisdiction: State Courts In rem jurisdiction If an out-of-state resident owns property within a state, that state’s courts have in rem jurisdiction over the property Note further that the plaintiff always has the option of going to the defendant’s home state and suing him or her in that state, If state courts in the pl.’s home state do not have jurisdiction In rem jurisdiction If an out-of-state resident owns property within a state, that state’s courts have in rem jurisdiction over the property Note further that the plaintiff always has the option of going to the defendant’s home state and suing him or her in that state, If state courts in the pl.’s home state do not have jurisdiction

16. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-16 Jurisdiction: Federal Courts A plaintiff can file a lawsuit in federal court if Federal question jurisdiction takes place –The claim (or defense) involves federal law –E.g., the plaintiff the defendant violated the Clean Water Act, which is a federal statute. Diversity –The parties are located in separate states and –The amount in dispute involves more than $75,000 If the case is tried in fed. court, procedural law is governed by the Federal Rules of Civil Proc. A plaintiff can file a lawsuit in federal court if Federal question jurisdiction takes place –The claim (or defense) involves federal law –E.g., the plaintiff the defendant violated the Clean Water Act, which is a federal statute. Diversity –The parties are located in separate states and –The amount in dispute involves more than $75,000 If the case is tried in fed. court, procedural law is governed by the Federal Rules of Civil Proc.

17. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-17 Exclusive and Concurrent Jurisdiction In many cases, plaintiff’s have a choice as to which court system (state or fed.) to file the claim because Jurisdiction over the case is concurrent between federal and state courts E.g., civil rights, securities, any claim based on diversity In other cases, jurisdiction of fed. or state courts is exclusive: Federal courts have exclusive juris. over patent cases, criminal cases and bankruptcy, to name just a few State courts have exclusive juris. over domestic relations, juvenile court, in-state tort claims where diversity does not apply In many cases, plaintiff’s have a choice as to which court system (state or fed.) to file the claim because Jurisdiction over the case is concurrent between federal and state courts E.g., civil rights, securities, any claim based on diversity In other cases, jurisdiction of fed. or state courts is exclusive: Federal courts have exclusive juris. over patent cases, criminal cases and bankruptcy, to name just a few State courts have exclusive juris. over domestic relations, juvenile court, in-state tort claims where diversity does not apply

18. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-18 Exclusive and Concurrent Jurisdiction Plaintiffs can file a suit in state court based on a violation of a federal statute, unless the statute contains language that provides for exclusive juris. of fed. courts. Defendant’s can remove a case to fed. court, if The plaintiff had a choice between fed. and state court and chooses to file in state court Def. may choose to remove a case to fed. court if the def. is concerned that a state court may favor the pl. Plaintiffs can file a suit in state court based on a violation of a federal statute, unless the statute contains language that provides for exclusive juris. of fed. courts. Defendant’s can remove a case to fed. court, if The plaintiff had a choice between fed. and state court and chooses to file in state court Def. may choose to remove a case to fed. court if the def. is concerned that a state court may favor the pl.

19. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-19 Conflicts of Law In some cases there is a genuine issue as to which state’s laws apply Suppose a contract is signed in one state, but performed in another state? In some cases the rules for determining choice of law are simple, i.e., where did the tort occur? In other cases, the choice as to which state’s laws apply is complicated. In contractual situations confusion can be avoided by having choice of law clauses in the contract, which is quite common In some cases there is a genuine issue as to which state’s laws apply Suppose a contract is signed in one state, but performed in another state? In some cases the rules for determining choice of law are simple, i.e., where did the tort occur? In other cases, the choice as to which state’s laws apply is complicated. In contractual situations confusion can be avoided by having choice of law clauses in the contract, which is quite common

20. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-20 Venue Venue is the physical location of where the trial will take place In criminal cases, motions to change venue are sometimes granted based on pre-trial publicity –A motion to change venue based on pre-trial publicity could be granted in a civil case also At the state level a to change venue is a motion to change the location of the trial within the same state, whereas the same motion at the federal level is a motion to change the state where the trial takes place. –Sometimes venue is changed if going to court is very inconvenient for the defendant or witnesses Motion to change based on forum non conveniens If the motion is granted, the trial will take place in another state or at the fed. level. Venue is the physical location of where the trial will take place In criminal cases, motions to change venue are sometimes granted based on pre-trial publicity –A motion to change venue based on pre-trial publicity could be granted in a civil case also At the state level a to change venue is a motion to change the location of the trial within the same state, whereas the same motion at the federal level is a motion to change the state where the trial takes place. –Sometimes venue is changed if going to court is very inconvenient for the defendant or witnesses Motion to change based on forum non conveniens If the motion is granted, the trial will take place in another state or at the fed. level.

21. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-21 Standing to Sue: Justiciability In order to get into court, the plaintiff must show He or she has a real, current interest at stake Examples, loss of freedom (possible incarceration), loss of property, loss of aesthetics if the person actually uses the park, loss of govt. benefits, loss of job etc. In order to be justiciable the dispute must not be: hypothetical (a dispute in the future), moot (dispute already resolved), or political (decisions that are within the discretion of Congress or the President). Courts sometimes allow exceptions In order to get into court, the plaintiff must show He or she has a real, current interest at stake Examples, loss of freedom (possible incarceration), loss of property, loss of aesthetics if the person actually uses the park, loss of govt. benefits, loss of job etc. In order to be justiciable the dispute must not be: hypothetical (a dispute in the future), moot (dispute already resolved), or political (decisions that are within the discretion of Congress or the President). Courts sometimes allow exceptions

22. McGraw-Hill/Irwin Legal Environment of Business in the Information Age © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-22 Judges and Judicial Officials Federal judges are appointed for life Cannot be removed unless there is a showing of malfeasance—bribery, treason, other crimes Congress cannot reduce the pay of a sitting judge State judges Some are elected and some appointed Judicial immunity applies for most of what judges do, but judges could be censored or removed under state codes of ethics for judges. Federal judges are appointed for life Cannot be removed unless there is a showing of malfeasance—bribery, treason, other crimes Congress cannot reduce the pay of a sitting judge State judges Some are elected and some appointed Judicial immunity applies for most of what judges do, but judges could be censored or removed under state codes of ethics for judges.