P A R T
1
Foundations of American Law
The Nature of Law
The Resolution of Private Disputes
Business and The Constitution
Business Ethics, Corporate Social
Responsibility, Corporate Governance,
and Critical Thinking
McGraw-Hill/Irwin Business Law, 13/e
© 2007 The McGraw-Hill Companies, Inc. All rights reserved.
C H A P T E R
2
The Resolution of Private Disputes
“In case of dissension, never dare to judge till you have heard the
other side.”
Euripides
Learning Objectives
 State
courts and their jurisdiction
 Federal courts and their jurisdiction
 Civil Procedure
 Alternative Dispute Resolution
2-4
The U.S. Judicial System
The United States has a federal court system
and each state has a court system
 Jurisdiction (the power to hear and speak)
may be original (trial) or appellate (reviews
trial court)
 Entry into the Federal court system begins at
the District court level and proceeds through
appellate courts to U.S. Supreme Court

2-5
Court Hierarchy
U.S. Supreme Court
  Courts of Appeals
  District Courts
FEDERAL

Limited
Jurisdiction Courts
(state or federal)
2-6
Supreme Court
  Appeals Courts
  District Courts
  County Courts
  Small Claims
Courts
STATE

General vs. Limited Jurisdiction
General jurisdiction courts (i.e., trial courts)
hear most types of cases
 Limited jurisdiction courts hear specialized
types of cases (family, tax, traffic)
 Subject-matter jurisdiction refers to a court’s
authority to hear a particular type of dispute

2-7
In Personam or In Rem Jurisdiction

In addition to subject-matter jurisdiction, a
court must have either:


2-8
In personam jurisdiction: defendant must be
resident of, located within, or committed acts
within physical boundaries of court authority
In rem jurisdiction: property that is subject of
dispute is located within physical boundaries
of court authority
Federal Court Jurisdiction
Federal courts must have jurisdiction based
on diversity or federal question
 Diversity jurisdiction exists when the dispute
is between citizens of different states and
amount in controversy exceeds $75,000
 Federal question jurisdiction exists when the
dispute arises under the Constitution, laws,
or treaties of the United States

2-9
Civil Procedure

In an adversarial system, the plaintiff bears
the burden of proof to prove his/her case by
a preponderance of the evidence


2 - 10
Burden may shift to defendant
Pre-trial process moves through phases:
action or omission causes harm, complaint
filed, defendant served with summons,
defendant files answer, discovery, pre-trial
motions
Civil Trial Procedure
Jury selection
 Opening statements
 Evidence through
witnesses (direct and
cross-examination)
 Closing arguments
 Jury verdict

2 - 11
Civil Trial Procedure
Trier of Fact (jury or judge) sees material
evidence (physical objects, documents),
hears testimony of witnesses (who provide
factual evidence), and decides outcome of
the case based on facts
 Matters of law are issues not of fact, but of
law; matters of law decided only by a judge

2 - 12
Civil Trial Post-Trial Procedure
After a judgment has been entered, losing
party may appeal decision to a higher court
 After a judgment, winning party must
have the judgment executed (carried out)
to obtain money, property, or action
ordered by the court

2 - 13
Alternate Dispute Resolution
Arbitration: dispute settled by one or more
arbitrators selected by the parties to a
dispute; relatively formal; Uniform or
Federal Arbitration acts typically used
 Mediation: parties choose neutral party to
aid resolution of dispute
 Reference to Third Party: dispute resolution
by rent-a-judge, minitrial, summary jury
trial, or association tribunal

2 - 14
Test Your Knowledge

True=A, False = B



2 - 15
A trial court has original jurisdiction and an
appellate court has appellate jurisdiction
The difference between general jurisdiction
and limited jurisdiction is based on the
amount in controversy (the damages amount)
Subject-matter jurisdiction refers to a court’s
authority to hear a particular type of dispute
Test Your Knowledge

True=A, False = B



2 - 16
In personam jurisdiction refers to the court’s
jurisdiction over the defendant, but in rem
jurisdiction refers to the court’s jurisdiction
over the property in dispute
The burden of proof solely rests on the
plaintiff
Matters of law are determined by either the
jury or the judge.
Test Your Knowledge

Multiple Choice
 Diversity jurisdiction refers to:
(a) a jury pool reflecting ethnic makeup of city
 (b) a citizen’s lawsuit against the government
 (c) a lawsuit by a citizen of one state against a
citizen of a different state


After the verdict:
(a) Either party may make post-verdict motions
 (b) The trial must end
 (c) The trial begins

2 - 17
Test Your Knowledge

Multiple Choice

Alternative dispute resolution methods
include:
(a)
 (b)
 (c)
 (d)

2 - 18
Mediation
Arbitration
Summary jury trial
All of the above
Test Your Knowledge

Multiple Choice

Discovery refers to:
(a) the discovery that a dispute exists
 (b) the pre-trial process involving
interrogatories, requests for admissions, and
requests for documents
 (c) the analysis of fault in a dispute

2 - 19
Thought Question

If you were served with a lawsuit, what
would you do about it?
2 - 20