Courts, Sources of Law, and Dispute Resolution

1

•Take Quiz 2

Sources Of American Law

Statutory LawFederalState Local

Case Law andCommon Law Doctrines

Constitutional LawFederalState

Administrative Law

2

The Common Law Tradition

King’s Courts. The Common Law originated in medieval England with the creation of the king’s courts and the development of a body of rules that were applied throughout the land.

Year Books Stare decisis. A doctrine under which judges

“stand on decided cases,” or follow the rule of precedent, in deciding cases. This is the cornerstone of the common law tradition.– Brown v. Board of Education (p.72)– Leegin Creative Leather Products (p.73)

Discuss - Why so important to U.S. system?Leegin Belt

Civil Law versus Common Law

4

Constitutional Law

Supreme Law of the Land States have Constitutions

– State constitutions are supreme within state borders to the extent that they do not violate the U.S. Constitution or a federal law.

5

CASE 3.2 Board of Education of Independent School District No. 92 of Pottawatomie County v. Earls (2002). P. 69 • Random drug testing of athletes is

constitutional in Tecumseh Oklahoma school district.

Statutory Law

Created by Legislative Bodies. Laws or ordinances created by federal, state, and local legislatures and governing bodies.

Cannot Violate U.S. Constitution. None of these laws can violate the U.S. Constitution or the relevant state constitutions.

6

Administrative Law

Federal Administrative Agencies. Federal administrative agencies are created by enabling legislation enacted by the U.S. Congress.

Administrative Law. The rules, orders, regulations, and decisions of federal, state, or local government administrative agencies.

Agency functions include:– Rulemaking– Investigation and enforcement– Adjudication

7

Authority HierarchyWhich law wins?

1. US Constitution2. Federal Law3. State Constitution4. State Law5. Case Law

Which source of law takes priority in the following situations, and why?– A federal statute conflicts with the U.S. Constitution.– A federal statute conflicts with a state constitution.– A state statute conflicts with the common law of that state.– A state constitutional amendment conflicts with the U.S.

Constitution.– A federal administrative regulation conflicts with a state

constitution.

8

Finding and Analyzing the Law- terminology you will need to know

US Statutes at Large/ USC Federal Case Law (federal reporters based on location) State Statutory and Case Law (see right) Regulatory Law (CFR) Plaintiffs and Defendants Appellants and Appellees Opinions (unanimous, majority, concurring, dissenting)

Case Cite MeaningWilliams v. Dominion Technology

Partners, LLC, 576 S.E.2d 752 (Virginia, 2003).

Williams is the Plaintiff. Dominion Technology is the

Defendant. Case was decided by the

Virginia Supreme Court. Reported in Volume 576, page

752 of the Southeast 2nd Reporter.

Symbols for Plaintiff = π Defendant = Δ9

Classifications of Law

Substantive vs. Procedural law Civil vs. Criminal law Federal vs. State law National vs. International law Private vs. Public law

10

Uniform Commercial Code (UCC)

International Law

Defined. A body of written and unwritten laws observed by independent nations and governing the acts of individuals as well as governments.

Sources of international law include:– National laws– Customs– Treaties– International organizations and

conferences Treaties

– NAFTA– GATT– EU

International Organizations– UN– NATO11

Courts

12

The Judiciary’s Role in American Government

Courts -- interpret and apply the law. Judicial review—determining the

constitutionality of laws—the judicial branch acts as a check on the executive and legislative branches of government – Marbury v. Madison (Marbury appointed as a federal judge by President John Adams. James Madison was to deliver the documents. Thomas Jefferson won presidential election and ordered that the remaining writs not be delivered.

Judge Elena Kagan Confirmation Hearings

Extent of Commerce Clause

Bush v. Gore (u-Tube clip)Justice Breyer on the US Supreme Court 

13

We will come back to the “commerce clause”Elena Kagan: Confirmation Hearings 'Vapid and Hollow Charade'

Citizens United v. Federal Election Commission  Group 1 = limit campaign spending Group 2 = allow speech

14

Explain law.  Questions: (1) Is corp speech the same as individual speech and therefore worthy of the

same First Amendment protections - why or why not. (2) Obama reacted by stating this is a "a major victory for big oil, Wall Street

Banks, health insurance companies and other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans."  Evaluate that statement.

(3) Newt Gingrich reacted by saying this is a victory for America's middle class.  Evaluate that statement

Group Presentation

http://www.cbsnews.com/video/watch/?id=6148956n

Basic Judicial Requirements

Before a lawsuit can be brought before a court, certain requirements must first be met. These include:

Jurisdiction• Federal

• State• Subject

Jurisdiction• Federal

• State• Subject

VenueVenue Standing to Sue

Standing to Sue

15

16

Federal Question jurisdiction exists when a dispute concerns federal law, statutes, or administrative regulation or treaties of the United States.

Diversity Jurisdiction exists in lawsuits between citizens of different states and the amount in controversy, exclusive of interest and all costs, exceeds $75,000. The “Erie Doctrine” set forth in Erie Railroad v. Tompkins, 304 U.S. 64 (1938).

Federal Jurisdiction

17

Federal Jurisdiction

Natural person citizenship is legal residence or domicile.

Corporations may have dual citizenship based on: – Nerve Center Test;– Place of Operations Test; or– Total Activity Test.

Federal Courts have jurisdiction over United States.

18

Personal jurisdiction: court has legal authority over the parties to the suit. – Court can have jurisdiction based on: Defendant’s

Residence, Defendant’s Act(s) or Location of Property in question.

“Long Arm” Statutes and the “Minimum Contacts” Test for jurisdiction over non-resident defendant if it purposefully availed itself of privilege of conducting business in forum state.

Personal Jurisdiction

Amazon Pulls Out of Colorado. Personal Jurisdiction on the Web, p. 70Amazon cuts ties to all Colorado sales associates based on new Colorado online sales tax.2011 update: Amazon sever ties with 10,000 small businesses in CA to avoid collecting CA sales tax.

19

Choice of Forum

What forum governs? What happens when there are conflicts

among different jurisdictions? Forum Non Conveniens.

– CASE 3.3 Radeljak v. Daimler-Chrysler Corp. (2006). Granted defendant’s motion to dismiss and did not force DCC to litigate in Croatia.

Venue

Venue has to do with the most appropriate location for a trial, which is usually the geographical area in which the event leading to the dispute took place or where the parties reside.

20

Standing to Sue

A requirement that a party must have a legally protected and tangible interest at stake sufficient to justify seeking relief through the court system.– Plaintiff must be the proper person.– Plaintiff must have a personal interest in the outcome.– Plaintiff will benefit from a favorable ruling.

The controversy at issue must also be a justifiable controversy, one that is real and substantial, as opposed to hypothetical or academic.

Auto Plant Subsidy Case21

CASE 3.1 ACLU v. National Security Agency (2007). Case dismissed for lack of jurisdiction because plaintiffs had no standing to challenge the wireless wiretap program.

Trial Courts

State courts: Courts of general jurisdiction

may be called by a variety of names.

Courts of limited jurisdiction include:– Divorce courts– Probate courts– Traffic courts– Small claims courts

Federal courts: Court of general jurisdiction

is the U.S. District court. Courts of limited jurisdiction

include:– U.S. Tax Court– U.S. Bankruptcy

Court– U.S. Court of Federal

Claims

Intermediate Appellate Courts

Supreme Courts 22

23

Following a Case Through the State CourtsFollowing a Case Through the State Courts

A sample civil court case in a state court would involve the following:

ThePleadings

ThePleadings

PretrialMotionsPretrialMotions

DiscoveryDiscovery

PretrialConference

PretrialConference

TrialTrialPost trialMotions

Post trialMotions

The AppealThe Appeal24

25

Adversarial System

Attorney Represents Client as an Adversary

Judge is Unbiased, Serves to Enforce Rules

Work-Product

The Pleadings

Complaint:– Filed by the plaintiff with the court to initiate the lawsuit;

served with a summons on the defendant.– Default judgment

Answer:– Admits or denies allegations made by the plaintiff; – may assert a counterclaim or – an affirmative defense.

Motion to dismiss:– A request to the court to dismiss the case for stated reasons,

such as the plaintiff’s failure to state a claim for which relief can be granted.

27

Pretrial Motions

Motion for judgment on the pleadings: Will be granted if the parties agree on the facts and the only question is how the

law applies to the facts. The judge bases the decision solely on the pleadings.

Motion for summary judgment: Will be granted if the parties agree on the facts. The judge applies the law in

rendering a judgment.

The judge can consider evidence outside the pleadings when evaluating the motion.

Motion for Judgment Notwithstanding the verdict

28

Discovery

The process of gathering evidence concerning the case. Discovery involves:– Depositions (sworn testimony

by a party or a witness)– Interrogatories (written

questions by one party towards the other made with assistance from the attorneys)

– Various requests (for admissions, documents, medical exams)

Rudy Giuliani – I do not recall

29

Ethical Consideration, p. 98Ethical to bury opposing attorney in paper-work in response to a discovery request?

DepositionClinton – What “is” is.

30

Corporate documents, both tangible and intangible (computer hard drives and email) can be discovered and used to find the company liable.

Managers must have document retention policies in place.

Necessary Elements of a Document Retention Program:

Well-planned and systematic. No destruction in the face of a

potential lawsuit. No selective destruction.

Sarbanes-Oxley – felony punishable by up to 20 years in prison

Document Retention and Destruction

To: David B. DuncanCc: Michael C. Odom@ANDERSEN WO: Richard Corgci@ANDERSEN WODate: 10/16/2001 08:39 PMFrom: Nancy A. TempleSubject: Re: Press Release draftAttachments: ATT&ICIQ; 3rd qtr press release memo.docDave - Here are a few suggested comments for consideration.-I recommended deleting reference to consultation with legal group and deleting my name on the memo. Reference to the legal group consultation arguably is a waiver of attorney-client privileged advice and if my name is mentioned it increases the chances that I might be a witness, which I prefer to avoid.-I suggested deleting some language that might suggest we concluded the release is misleading.-In light of the "non-recurring" characterization, the lack of any suggestion that this characterization is not in accordance with GAAP, and the lack of income statements in accordance with GAAP. I will consult further within the legal group as to whether we should do anything more to protect ourselves from potential Section 10A issues.Nancy

Pretrial Conference

Either party or the court can request a pretrial conference to:– Identify the matters in dispute after discovery

has taken place, or– To plan the course of the trial

Jury Selection CaseGroup 3 = JEB Group 4 = TB

32

Group Presentation

Jury Selection

The jury selection process, also known as voir dire, consists of questions directed to prospective jurors to assess potential bias.

Jury video – McMahon, Philadelphia DA Training Video – 33

TrialTrial

The typical course of a trial can be diagrammed as follows:

OpeningStatementsOpening

StatementsPlaintiff’s Introduction

of EvidencePlaintiff’s Introduction

of Evidence

Defendant’s Introduction of

Evidence

Defendant’s Introduction of

Evidence

ClosingArguments

ClosingArguments

34

35

Class Actions

If defendant’s actions affected a group of people, case may be brought as class action.

Written notice to all potential class members.

(But a member may “opt out.”) Advantages in product liability cases A product liability class action suit has the

following advantages:– Settlement binds present and future claimants,– Standardized payment schedules,– Some claimants can be excluded, and– Filing and settlement can occur in the same

day.

Facebook sued in 2008 for allegedly improperly sharing customer information. Facebook offered $9.5 million to settle – plaintiff’s attorneys' get 30% rest goes to a Foundation to promote privacy rights. Foundation established by Facebook. “Paying itself to get out of a broad range of legal issues.”

Are class actions good/bad?

2011 Supreme Court CaseWallMart

Class action not allowed for 1.6 million female workers.

Post Trial Motions

After a jury has rendered its verdict, either party may make a post trial motion. These include:

– Motion for judgment N.O.V. (Notwithstanding the verdict) will be granted if the judge is convinced that the jury was in error.

– Motion for a new trial will be granted if the judge is convinced that the jury was in error, or there was newly discovered evidence, misconduct by the participants during the trial, or error by the judge.

36

Ferlito v. Johnson & Johnson Products, Inc.• Mr. and Mrs. Ferlito went to a Halloween party

dressed as Little Bo Peep (Mrs) and a sheep (Mr.)

• Mr. Ferlito’s sheep costume made from J&J cotton balls

• Mr. Ferlito lit a cigarette and his cotton balls caught on fire causing third degree burns.

• Jury awarded $550,000

Not actual picture of Mr.Ferlito

The Appeal

Either party can appeal the trial court’s judgment to an appropriate court of appeals.

After reviewing the record on appeal, the abstracts, and the attorneys’ briefs, the appellate court holds a hearing and renders its opinion.

Enforcing the Judgment

Securing a verdict does not mean there are assets to pay the judgment.

One of the primary factors to decide before filing suit is whether the defendant has resources or assets to pay a judgment.

Roles of an Attorney

Adviser – advises a client on steps to take to avoid possible legal problems.

Drafter – writes contracts and other documents for clients.

Negotiator – persuades, argues, or settles with another party on a client’s behalf.

Advocate – presents a client’s position in court.Attorney-Client Privilege. Attorney-client privilege prevents a court and other government bodies from compelling disclosure of the information. (WORK PRODUCT – NOT DISCOVERABLE)39

Legal Representation and Alternative Dispute Resolution

40

Question

You owned 100 acres of valuable undeveloped residential real estate. You entered into a contract with a developer to develop the land on August 30, 2009. The developer agreed to pay you as follows:

– $10,000 down, (paid August 30, 2009)– $100,000 on the one year anniversary, (paid August 30, 2010)– $500,000 on the two year anniversary and (due August 30, 2011)– $1,000,000 payment on the third anniversary.

The developed just called you and said it will not make the $500,000 payment. The developer has put in roads and plotted the land but has failed to sell any lots.

The land is currently worth less than the remaining contract payments.

Would you sue?What do you do?

41

Decision to File a Lawsuit

Decision to File Factors include:– Whether the law provides a remedy.– Whether the person can expert to prevail.– Whether the expected benefit will compensate for

expenses and other costs, including any business lost as a result of the lawsuit and accompanying publicity.

Decision to Defend Factors include:– Relationship Risk– Publicity Risk– Cost Risk (settlement may be cheaper)42

The Search for Alternatives to Litigation

Alternative dispute resolution (ADR) Less costly Less time-consuming Private

43

The Search for Alternatives to LitigationThe Search for Alternatives to Litigation

Forms of ADR include:

NegotiationNegotiation

Summary Jury Trial

Summary Jury Trial

MediationMediation

Mini-trialMini-trial Rent-a-Judge

Rent-a-Judge

ArbitrationArbitration

44

45

Negotiation Exercise

Joan works as a paralegal at a 50 person law firm (30 attorneys and 20 support staff). Her immediate supervisor, Jim, tells sexual jokes that bother Joan. Once he showed her an x-rated cartoon that he thought was funny. Jim also ogles Joan and asks Joan to shut the door when they work together in his office. He sometimes touches her shoulder or pushes their chairs so close together their legs touch. This makes Joan uncomfortable. He also uses double entendres around her with one example being the time Joan said “it’s going to be a long hard night” (referring a tough case they are working on) and Jim replied “that’s what she said” and laughed. Assume Jim’s overall behavior amounts to illegal sexual harassment.

Joan talks to Jim about this and he tells her to lighten up and try to have some fun. Jim says he is just trying to reduce tension in an often stressful work environment.

Joan sues for sexual harassment. You are on one side to settle the case. Take 3-4 minutes to plan strategy and then 6-8

minutes to negotiate a settlement. See additional confidential facts. Joan: Groups 1 3 5 7 9 Jim Groups 1 8 6 4 246

If you represent Jim, move your spot to do the negotiating (Joan teams stay put)

Group 3 and 1 join together against group 8

How much money should she get? Text word “HOWMUCH” space and then an amount (i.e. “HOWMUCH $1”).

What else?

47

Text HOWMUCH plus amount to 37607

Or submit HOWMUCH plus message to http://pollev.com

How much money should she get? Text word “HOWMUCH” space and then an amount (i.e. “HOWMUCH $1”).

What else?

48

Negotiation and Mediation

Negotiation– With or without attorneys– Simple and fast– No third party

Mediation– Third party involved– With or without attorney – usually no attorneys

Arbitration – More formal– Third party involved– Generally binding

Key is to know what you want and when to you are better off walking away - Negotiation Exercise

49

Start here week 3

MBA Information SessionLooking for Volunteers (4-5)September 27 @ 6:30

50

Establish Best Alternative to a Negotiated Agreement (BATNA).

Establish your interests versus your position. Evaluate each negotiating issue.

Negotiation: Planning

51

In many ways, mediation is an extension of the parties’ negotiations.

History of Mediation. Selecting a Mediator.

– Society of Professionals in Dispute Resolution (SPDR).– American Mediation Council (AMC).

Mediation

52

Mediation

Confidentiality.When to Use Mediation.Mediation Process.Dangers.

Current Events Report – Arbitration Clauses Vaseem ShaikhAngela Sorenson

53

The Federal Arbitration Act (FAA)

Provides Enforcement for Arbitration Decisions. FAA provides the means for enforcing the arbitration procedure that the parties have established for themselves.

FAA Covers Arbitration Clauses in Interstate Commerce. The FAA covers any arbitration clause in a contract that involves interstate commerce

Contract Between Parties

54

CASE 3.4 County of Chautauqua v. Civil Service Employees Association (2007). Court granted county’s petition for permanent stay of arbitration as to which employees to lay off, but granted union’s motion to compel arbitration of bumping.

• Law requires municipalities engaging in layoffs to first decide which positions are essential to providing services and then to protect senior employees offering those services. Cannot comply with the collective bargaining agreement that provides must look solely at seniority and not need.

Question 5, P. 111 - volunteer to cover

Changing rates for AT&T contract Arbitration or Litigation?

55

AT&T Case – Nov 9, 2010AT&T Mobility v. Conepcion

• US Supreme Court Case• $30.22 sales tax on “free phone”• Arbitration clause prevents class

action lawsuits• Plaintiffs argue the clause is

“unconscionable”• Arbitration Clause Details

• AT&T must pay a minimum of $7,500 if it loses

• AT&T pays all arbitration fees

AT&T v. Ting (2003) US Supreme Court Case

• AT&T required to establish contracts with its customers

• AT&T included binding arbitration clause in its contracts

• AT&T’s own study concluded that most customers would stop reading the contract and toss it.

• Contract sent was automatically accepted if not cancelled.

• Frank Boomer received a contract in the mail from his long distance carrier, AT&T.

• Automatically accepted if no action – must call to object

• Boomer did nothing• Later sued in a class-action for

overcharging him

Arbitration Clauses in Employment Contracts

Why Employers Like Arbitration for Employee Disputes. Arbitration is easier, faster, and less costly than litigation. Therefore, more businesses are including arbitration clauses in their contracts. What happens if a potential employee objects to the clause? Is this mandatory condition enforceable?

Is that a Problem?Why might victims of employment discrimination prefer to litigate their claims in a judicial forum rather than having them arbitrated, even assuming that arbitration proceedings would be unbiased and would not violate due process rights?56

What about for medical procedures?

Hooters case

The Arbitration Process

The three steps of arbitration are:

57

Setting Aside an Arbitration Award

Crime or Contrary to Public Policy. No award will be enforced if compliance with the award would result in commission of a crime or would violate public policy. An arbitration award may also be set aside because of defects in the arbitration process.

Bias or Corruption.– Award was result of corruption, fraud, etc.– The arbitrator exhibited bias or corruption.– The arbitrator’s actions substantially prejudiced the rights of

one of the parties.– The arbitrator exceeded his or her powers.

Merits of the Case – will not be reviewed– Sufficiency of evidence– Arbitrator’s reasoning

58

Disadvantages to Arbitration

Arbitration has some disadvantages:– Unpredictable, since arbitrators are not

required to follow prior precedents, but must only follow whatever rules have been provided by the parties.

– Expensive, sometimes as expensive as litigation.

– Time consuming, since discovery is often unavailable, the parties may have to call more witnesses than they would in litigation.

59

Court-Mandated ADR vs. Court-Annexed Arbitration

Court-Mandated ADR

Most states (and about half the federal courts) have adopted programs to encourage the parties to settle their disputes through ADR.

Some courts require parties to submit to ADR before proceeding to trial.

Court-Annexed Arbitration

Some states require the parties to undergo non-binding arbitration before proceeding to trial.

Note that in court-annexed arbitration, either party may reject the award.

Court-Related Mediation

60

Whole Foods email Issue – p. 108

Discuss, if time.

61

By buying [Wild Oats] we will…avoid nasty price wars in Portland (both Oregon and Maine), Boulder, Nashville, and several other cities which will harm [Whole Foods'] gross margins and profitability.  By buying [Wild Oats]…we eliminate forever the possibility of Kroger, Super Value, or Safeway using their brand equity to launch a competing natural organic food chain to rival us…[Wild Oats] may not be able to defeat us but they can still hurt us….[Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space.  Eliminating them means eliminating this threat forever, or almost forever.

• Should U.S. sue to stop this?

• What is the relevant market?

• How damaging is Whole Foods CEO John Mackey? • “eliminate a competitor” and • “avoid nasty price wars.”

• "Rahodeb“ his blog name on Yahoo• "The end game is now underway for OATS....

Whole Foods is systematically destroying their viability as a business--market by market, city by city."

Save for Ankur Nick current events week 4

ADR Around the Globe

Other countries also encourage mediation, arbitration, and other forms of ADR. Examples:– Japan has recently authorized neutral panels to act as

mediators in product liability suits.– China passed an arbitration law in 1995 that spells out

what types of disputes are arbitrable, the form and content of valid arbitration clauses, etc., all of which should make it simpler for disputes to be settled through ADR. Article on China as Location for arbitration.62

Constitutional Authority to Regulate Business

Constitutional Basis for Business Regulation

The commerce clause (next slide) The contracts clause (retroactive adjustment of pay for executives?, Special

treatment of unions/others in GM and Chrysler) Bill of Rights Freedom of Speech (commercial advertising, business lobbying, business

political contributions) Due Process Compensation for a taking (recent changes to MN Law)

64

65

The Commerce Clause“[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

The breadth of the commerce clause:–Gibbons v. Ogden (1824) – ferry between NY and NJ “substantially affected commerce” Exclusive right to navigate ferry in NY waters

–Wickard. V. Filburn (1942) – farmer growing wheat for own use–CASE 4.1 Heart of Atlanta Motel v. United States (1964). Local hotel that had 75% out-of-state guests refused to rent rooms to blacks in violation of federal law and sued to have the law unconstitutional–United States v. Lopez (1995). School gun free zone law–Health Reform – Commerce? Huge part of economy – but is doing nothing (i.e. not buying insurance) commerce?

Can you think of any businesses in today’s economy that are purely local in charter? Anything the federal government cannot regulate?

66

The Supremacy Clause

The U.S. Constitution provides that the Constitution, laws, and treaties of the United States are “the supreme law of the land.”

Whenever a state law directly conflicts with a federal law, the state law is rendered invalid.

Preemption occurs when Congress chooses to act exclusively in a concurrent area.

Can a Georgia law require contoured rear fender mud guards when other states require square ones?

67

Freedoms guaranteed by the Bill of Rights included the following:

Freedom of Speech

Freedom from Compelled Self-Incrimination

Freedom from Unreasonable Searches and Seizures

Freedom of Religion

Business and the Bill of Rights

68

Freedom of Speech

Political speech – Reasonable restrictions Corporate political speech (campaign finance laws). Commercial speech (advertising)

– Lower standard false or misleading advertising Central Hudson Test

– Substantial Government interest – Law directly advances that interest– Law goes no further than necessary

– CASE 4.2 Bad Frog Brewery, Inc. v. New York State Liquor Authority (1998).

69

Freedom of Speech

Can Government Force Tobacco Companies To Add Graphic Warnings?

Requirements of New Law• Companies must rotate between 9

images• Must be printed on top half – front

and back• Must constitute 20% of any

advertising• Companies will have to spend 10s

of millions of dollars to comply