1. © 2007 West Legal Studies in Business, A Division of Thomson Learning Chapter 2 Traditional and Online Dispute Resolution

2. © 2007 West Legal Studies in Business, A Division of Thomson Learning 2 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? What is the difference between a trial court and an appellate court? In a lawsuit, what are pleadings? What is discovery, and how does electronic discovery differ from traditional discovery? What is electronic filing? How are online forums being used to resolve disputes? Learning Objectives

3. © 2007 West Legal Studies in Business, A Division of Thomson Learning 3 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….” The Judiciary’s Role in American Government

4. © 2007 West Legal Studies in Business, A Division of Thomson Learning 4 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.

5. © 2007 West Legal Studies in Business, A Division of Thomson Learning 5 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: Snowney v. Harrah’s Entertainment, Inc. (2005).

6. © 2007 West Legal Studies in Business, A Division of Thomson Learning 6 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.

7. © 2007 West Legal Studies in Business, A Division of Thomson Learning 7 Jurisdiction Over Subject Matter 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.

8. © 2007 West Legal Studies in Business, A Division of Thomson Learning 8 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.

9. © 2007 West Legal Studies in Business, A Division of Thomson Learning 9 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. “Diversity” cases where: –The parties are not from the same state, and –The amount in controversy is greater than $75,000.

10. © 2007 West Legal Studies in Business, A Division of Thomson Learning 10 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.

11. © 2007 West Legal Studies in Business, A Division of Thomson Learning 11 Jurisdiction in Cyberspace “Sliding Scale” Standard: When does a court have jurisdiction over internet transactions? Some Interaction Passive Website No Yes Substantial Business Interaction Case-by-Case

12. © 2007 West Legal Studies in Business, A Division of Thomson Learning 12 Venue Venue is concerned with the most appropriate location for the trial. Generally, proper venue is whether the injury occurred.

13. © 2007 West Legal Studies in Business, A Division of Thomson Learning 13 Standing to Sue 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.

14. © 2007 West Legal Studies in Business, A Division of Thomson Learning 14 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

15. © 2007 West Legal Studies in Business, A Division of Thomson Learning 15 Federal Courts of Appeal

16. © 2007 West Legal Studies in Business, A Division of Thomson Learning 16 “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. Trial Courts

17. © 2007 West Legal Studies in Business, A Division of Thomson Learning 17 Following a State Court Case Pleadings. –Plaintiff’s Complaint. –Summons. –Defendant’s Answer /Motion to Dismiss. Pre-Trial Motions. –Motion for Judgment on the Pleadings. –Motion for Summary Judgment.

18. © 2007 West Legal Studies in Business, A Division of Thomson Learning 18 Following a State Court Case Discovery. –Depositions and Interrogatories. –Requests for Documents. –Requests for Admission. –Electronic Discovery (from computer files). Pre-Trial Conference. Jury Selection (Voir Dire).

19. © 2007 West Legal Studies in Business, A Division of Thomson Learning 19 Trial. –Opening arguments. –Plaintiff’s Case in Chief. Defense cross-examines Plaintiff’s witnesses. –Defense Case in Chief. Plaintiff cross-examines Defense witnesses. –Closing Arguments. Verdict / Motion JNOV /Judgment. The Appeal. Following a State Court Case

20. © 2007 West Legal Studies in Business, A Division of Thomson Learning 20 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.

21. © 2007 West Legal Studies in Business, A Division of Thomson Learning 21 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.

22. © 2007 West Legal Studies in Business, A Division of Thomson Learning 22 Electronic Filing. –CASE 2.2 Phansalkar v. Anderson, Weinroth & Co. (2004). Courts Online (websites, court dockets). Cyber Courts and Online Dispute Resolution (Michigan legislation). Online Dispute Resolution (ODR). –Negotiation. –Mediation. –Arbitration (employment contracts). Courts Adapt to the Online World

23. © 2007 West Legal Studies in Business, A Division of Thomson Learning 23 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. Alternative Dispute Resolution

24. © 2007 West Legal Studies in Business, A Division of Thomson Learning 24 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.

25. © 2007 West Legal Studies in Business, A Division of Thomson Learning 25 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.

26. © 2007 West Legal Studies in Business, A Division of Thomson Learning 26 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.

27. © 2007 West Legal Studies in Business, A Division of Thomson Learning 27 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.

28. © 2007 West Legal Studies in Business, A Division of Thomson Learning 28 Arbitration Many employment 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. Mandatory arbitration in employment agreements are generally enforceable. –CASE 2.3: Circuit City Stores, Inc. v. Adam (2001).

29. © 2007 West Legal Studies in Business, A Division of Thomson Learning 29 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.

30. © 2007 West Legal Studies in Business, A Division of Thomson Learning 30 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. Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

31. © 2007 West Legal Studies in Business, A Division of Thomson Learning 31 Online Dispute Resolution Also called ODR. Uses the Internet to resolve disputes. Still in its infancy but is gaining momentum. ICANN (arbitration). VMAG project. CAN-WIN conferencing system.