1. © 2004 West Legal Studies in Business A Division of Thomson Learning 1 Chapter 2 Courts and Alternative Dispute Resolution

2. © 2004 West Legal Studies in Business A Division of Thomson Learning 2 §1: 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:Marbury v. Madison “It is emphatically the province and duty of the judiciary to say what the law is….” Judicial Review was established by the U.S. Supreme Court in Marbury v. Madison (1803) where Chief Justice Marshall wrote:Marbury v. Madison “It is emphatically the province and duty of the judiciary to say what the law is….”

3. © 2004 West Legal Studies in Business A Division of Thomson Learning 3 §2: 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.

4. © 2004 West Legal Studies in Business A Division of Thomson Learning 4 Jurisdiction Over Persons Power of a court to compel the presence of the parties (including corporations) to a dispute to appear before the court and litigate. Courts use long-arm statutes for non-resident parties based on “minimum contacts” with state.  Case 2.1: Cole v. Mileti (1998).Cole v. Mileti Power of a court to compel the presence of the parties (including corporations) to a dispute to appear before the court and litigate. Courts use long-arm statutes for non-resident parties based on “minimum contacts” with state.  Case 2.1: Cole v. Mileti (1998).Cole v. Mileti

5. © 2004 West Legal Studies in Business A Division of Thomson Learning 5 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. 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.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning 6 Subject Matter Jurisdiction 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 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

7. © 2004 West Legal Studies in Business A Division of Thomson Learning 7 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. Courts of original jurisdiction is where the case started (trial). Courts of appellate jurisdiction have the power to hear an appeal from another court.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning 8 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. “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.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning 9 Exclusive vs. Concurrent Jurisdiction Exclusive: only one court (state or federal) has the power (jurisdiction) to hear the case. Concurrent: more than one court can hear the case. Exclusive: only one court (state or federal) has the power (jurisdiction) to hear the case. Concurrent: more than one court can hear the case.

10. © 2004 West Legal Studies in Business A Division of Thomson Learning 10 Jurisdiction in Cyberspace “Sliding Scale” Standard Case 2.2 Bird v. Parsons “Sliding Scale” Standard Case 2.2 Bird v. Parsons No Yes Substantial Business Interaction Passive Website

11. © 2004 West Legal Studies in Business A Division of Thomson Learning 11 Venue Venue is concerned with the most appropriate location for the trial. Generally, proper venue is whether the injury occurred. Venue is concerned with the most appropriate location for the trial. Generally, proper venue is whether the injury occurred.

12. © 2004 West Legal Studies in Business A Division of Thomson Learning 12 Standing 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. Case 2.3: High Plains Wireless LP vs. FCC (2002) 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. Case 2.3: High Plains Wireless LP vs. FCC (2002)

13. © 2004 West Legal Studies in Business A Division of Thomson Learning 13 §3: State and Federal Courts Ct. Criminal Appeals Supreme Court Court of Appeals District Court County Court Municipal Court Justice Court Texas Courts U.S. Supreme Court Circuit Courts of Appeals U.S. District Court Federal Courts

14. © 2004 West Legal Studies in Business A Division of Thomson Learning 14 Trial Courts “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. “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.

15. © 2004 West Legal Studies in Business A Division of Thomson Learning 15 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. 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.

16. © 2004 West Legal Studies in Business A Division of Thomson Learning 16 Courts of Appeal

17. © 2004 West Legal Studies in Business A Division of Thomson Learning 17 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 (official site) and the Texas Supreme Court.U.S. Supreme Court Texas Supreme Court 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 (official site) and the Texas Supreme Court.U.S. Supreme Court Texas Supreme Court

18. © 2004 West Legal Studies in Business A Division of Thomson Learning 18 §4: 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. 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.

19. © 2004 West Legal Studies in Business A Division of Thomson Learning 19 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. 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.

20. © 2004 West Legal Studies in Business A Division of Thomson Learning 20 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. 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.

21. © 2004 West Legal Studies in Business A Division of Thomson Learning 21 Assisted Negotiation 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. 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.

22. © 2004 West Legal Studies in Business A Division of Thomson Learning 22 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. 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.

23. © 2004 West Legal Studies in Business A Division of Thomson Learning 23 Arbitration Many labor 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.  Recall the 1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike.1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike. Many labor 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.  Recall the 1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike.1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike.

24. © 2004 West Legal Studies in Business A Division of Thomson Learning 24 Arbitration Disadvantages 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. 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.

25. © 2004 West Legal Studies in Business A Division of Thomson Learning 25 Arbitration Process Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.submission Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement. Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.submission Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

26. © 2004 West Legal Studies in Business A Division of Thomson Learning 26 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 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

27. © 2004 West Legal Studies in Business A Division of Thomson Learning 27 § 5: Online Dispute Resolution Also called ODR Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. See, e.g., www.cybersettle.com.www.cybersettle.com Also called ODR Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. See, e.g., www.cybersettle.com.www.cybersettle.com

28. © 2004 West Legal Studies in Business A Division of Thomson Learning 28 § 6: International Dispute Resolution Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Arbitration clauses are generally incorporated into international contracts. Forum Selection and Choice-of-Law clauses in contracts govern the transaction. Arbitration clauses are generally incorporated into international contracts.

29. © 2004 West Legal Studies in Business A Division of Thomson Learning 29 Law on the Web U.S. Supreme Court OYEZ, OYEZ website Federal Courts National Center for State Courts American Arbitration Association ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.comClicknsettle.comCybersettle Squaretrade.com Legal Research Exercises on the Web U.S. Supreme Court OYEZ, OYEZ website Federal Courts National Center for State Courts American Arbitration Association ODR: Clicknsettle.com, Cybersettle.com, Squaretrade.comClicknsettle.comCybersettle Squaretrade.com Legal Research Exercises on the Web