1. Chapter 3: Courts and Alternative Dispute Resolution
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Chapter 3: Courts and
Alternative Dispute Resolution

2. 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?

3. Learning Objectives
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?

4. The Judiciary’s Role in American Government
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….”

5. Basic Judicial Requirements
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.

6. Basic Judicial Requirements
Jurisdiction over Persons or Property.
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.

7. Basic Judicial Requirements
Jurisdiction over Persons or Property.
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. Basic Judicial Requirements
Jurisdiction over Persons or Property.
Corporate Contacts: corporation advertises or sells products within a state.
CASE 3.1 Southern Prestige Industries, Inc. v. Independence Plating Corp. (2010). Did the New Jersey firm have minimum contacts with North Carolina?

9. Basic Judicial Requirements
Jurisdiction over Persons or Property.
A court generally has in rem jurisdiction over any property situated within its geographical borders.
Power to decide issues relating to property, whether the property is real, personal, tangible, or intangible.

10. Basic Judicial Requirements
Jurisdiction over Subject Matter.
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)vs. Limited jurisdiction.

11. Basic Judicial Requirements
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.

12. Basic Judicial Requirements
Jurisdiction of the Federal Courts.
“Federal Question” cases in which the rights or obligations of a party are created or defined by some federal law.

13. Basic Judicial Requirements
Jurisdiction of the Federal Courts.
“Diversity” cases occur when:
The parties are not from the same state, and
The amount in controversy is greater than $75,000.

14. Exclusive vs. Concurrent Jurisdiction

15. Jurisdiction in Cyberspace
“Sliding Scale” Standard.
Three Different Types of Contacts:
(1) substantial business over the internet, (2) some interactivity through a website, (3) passive advertising.
No Yes
Substantial Business Interaction
Passive Website

16. Jurisdiction in Cyberspace
International Jurisdictional Issues.
Because the internet is global there are fundamental jurisdiction issues in international transactions.
CASE 3.2 Gucci America, Inc. v. Wang Huoqing (2011). U.S. District court exercised jurisdiction over Chinese defendant who advertised and sold goods over the internet.

17. Basic Judicial Requirements
Venue.
Venue is concerned with the most appropriate location for the trial.
Generally, proper venue is whether the injury occurred.

18. Basic Judicial Requirements
Standing to Sue.
In order to bring a lawsuit, a party must have “standing” to sue.
Standing means a sufficient “stake” in the controversy; the party must have suffered a legal injury. There must be a “justiciable controversy.”

19. State and Federal Court Systems
Ct. Criminal
Appeals
Supreme
Court
Court of
District Court
County Court
Municipal
Justice
Texas Courts
U.S. Supreme
Circuit
Courts of
U.S. District
Federal Courts 19

20. State and Federal Court Systems20

21. State Court Systems Trial Courts. “Courts of record”-court reporters.
Small Claims Courts are informal, inferior courts with limited amounts in controversy (usually $5,000).  21

22. State Court Systems Trial Courts.
Evidence presented (witness testimony, physical objects, documents, and pictures.)
Witnesses are examined and cross- examined.
Verdicts and Judgments are rendered. 22

23. State Court Systems Appellate, or Reviewing, Courts.
Review trial courts proceedings 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. 23

24. Federal Court System U.S. District Courts. U.S. Courts of Appeal.
Trial courts in the federal system.
Today there are ninety-four judicial districts.
U.S. Courts of Appeal.
Thirteen U.S. Circuit Courts of Appeals.

25. Exhibit 3.3: U.S. Courts of Appeal25

26. Federal Court System United States Supreme Court.
The two most fundamental ways to have your case heard in a supreme court are:
State Courts: Appeals of Right.
U.S. Supreme Court: By Writ of Certiorari.  26

27. U.S. Supreme Court 27

28. Following a State Court Case
The Pleadings.
Plaintiff’s Complaint.
Service and Summons.
Defendant’s Answer /Motion to Dismiss.

29. Following a State Court Case
Pre-Trial Motions.
Motion for Judgment on the Pleadings.
Motion for Summary Judgment.

30. Following a State Court Case
Discovery.
Depositions and Interrogatories.
Requests for Documents.
Requests for Admission.
Electronic Discovery.
E-discovery procedures.
Advantages and disadvantages.

31. Following a State Court Case
Pretrial Conference.
Informal discussion between the judge and opposing counsel, explore the possibility of a settlement, or identify the real issues in dispute, and plan the course of the trial.

32. Following a State Court Case
Jury Selection.
Trials can be with or without a jury (bench trial).
Seventh amendment guarantees the right to jury trial in federal cases if the amount in controversy exceeds $20.
Voir Dire.

33. 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.

34. Following a State Court Case
At the Trial.
Motion for a Directed Verdict.
Closing Arguments.
Post-Trial Motions.
Motion for J.N.O.V.
Motion for New Trial.

35. 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.

36. Following a State Court Case
The Appeal.
Appeal to a Higher Court: writ of certiorari .
Enforcing the Judgment.
Even if a plaintiff wins a damages award, there is no guarantee she can collect it from the defendant.

37. Courts Adapt to the Online World
Electronic Filing.
Courts Online (websites, court dockets).
Cyber Courts and Proceedings.

38. Alternative Dispute Resolution
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.

39. Alternative Dispute Resolution
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.

40. 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.

41. Mediation Involves a neutral 3rd 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.

42. Arbitration
Many employment contracts have binding arbitration clauses.
Arbitrator’s Decision.
Settling of a dispute by a neutral 3rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official. 

43. Arbitration Arbitration Clauses and Statutes.
Uniform Arbitration Act of 1955.
Federal Arbitration Act (FAA).
CASE 3.3 Cleveland Construction, Inc. v. Levco Construction, Inc. (2012). FAA preempted the Texas statute which required a party to submit to arbitration outside Texas.

44. Arbitration The Issue of Arbitrability.
Mandatory Arbitration in the Employment Context.
Generally, arbitration clauses are enforceable. 

45. Arbitration Mandatory Arbitration in the Employment Context.
Results may be unpredictable because arbitrators do not have to follow precedent, rules of procedure, evidence.
Arbitrators do not have to issue written opinions and generally no discovery.

46. Arbitration Private Arbitration Proceedings.
In 2011, the Delaware Chancery Court established a new confidential arbitration process, allowing parties to arbitrate in private.

47. Other Types of ADR Mini-Trial.
Attorneys for each side informally present their case before a mutually agreed-upon neutral 3rd party (e.g., a retired judge) who renders a non- binding “verdict.” This facilitates further discussion and settlement.

48. Other Types of ADR Expert evaluations.
Conciliation: 3rd party assists in reconciling differences.
Summary Jury Trials.
Used by numerous federal courts.
Like a trial, but jury’s verdict is nonbinding.

49. Providers of ADR Services
Non-profit organizations:
American Arbitration Association.
Better Business Bureau.
For Profit:
JAMS-ADR.com(Flash enabled).

50. Online Dispute Resolution
Also called ODR.
Uses the Internet to resolve disputes.
Still in its infancy but is gaining momentum.
See, e.g.,