CHAPTER 2
Dispute
Settlement
Why ADR?
• The mounting costs and delays inherent in the judicial system, the fact that
few cases were actually resolved by litigation; the escalating confrontational
nature of society; the difficulty of collection; the limited nature of judicial
remedies.
• There are few things people dread more than litigation. Even minor cases
have a way of damaging relationships, tarnishing reputations, and eating up
enormous sums of time and money.
• Behavioral Scientists say that the urge to compromise is instinctive, that
most people do not like conflict and that they value the good opinion of
others.
• Businessmen fear damage to reputation, exposure of trade secrets and skyhigh awards from plaintiff sympathetic juries. Non-litigation solutions help to
avoid all of these.
• Professor Robert F. Cochran, in the June 1993 issue of Arbitration Journal
suggested that “Lawyers who fail to present the option of pursuing
alternatives to litigation may be at risk of attorney discipline or malpractice
liability.”
• The CPR Institute for Dispute Resolution reports that some 4,000
corporations have signed a pledge to seriously explore using ADR before
pursuing litigation and some 1,500 law firms have pledged to assure that
their attorneys are knowledgeable about ADR
Alternative Dispute Resolution Systems
Expense
Time, Cost, Emotions
Most
Least
Trial &
Appeal
Mock
Trial
Arbitration
Negotiated
Minitrial
Settlement
Mediation
Reasons For
Settlement Without Litigation
• Costs
– Attorney’s Fees
– Court Costs
• Time
– Litigation often takes a very long time
• Personal Reasons
–
–
–
–
Compromise Is Instinctive
Dislike Of Trouble
Opinion Of Others
Possibility of “Win/Win” Solutions
• Business Reasons
– Bad For Business
– Sympathetic Juries
Alternative Dispute Resolution
• Negotiation
– Parties make offers and counter-offers for settlements.
– May be face-to-face or through lawyers.
• Mediation
– Neutral person (mediator) facilitates negotiations and
attempts to get parties to reach a voluntary settlement.
– Mediator does not render a decision, but may propose a
basis for settlement (mediation agreement)
– Mediation may be ordered by a judge.
• Arbitration
– Neutral person (arbitrator) is involved.
– Arbitrator usually renders a binding decision (award)
– Arbitration may be voluntary or mandatory (if chosen in
advance as the method for dispute resolution.)
Other Means of Dispute Settlement
• Alternative Dispute Resolution (ADR)
– Minitrial - Disputing party executives preview evidence and likely
trial outcome as an aid to negotiation
– Parties stage a short trial to a panel of three “judges.”
– Two of the “judges” are executives of the disputing corporations;
the third is a neutral party.
– Lawyers present shortened cases; “judges” discuss settlement.
– Summary Jury Trial – “mock” jury trial to encourage and aid
settlement
– Initiated and supervised by a court.
– Each side summarizes to a mock jury what witnesses would say if
called before a real jury.
– Jury deliberates and tries to reach consensus, but may vote
individually if necessary.
– Allows each side to see how a trial might turn out.
– Private Judging - binding decision by “rent-a-judge (e.g. “People’s
Court”)
Negotiation
•
•
•
•
Negotiation is a bilateral method of dispute
resolution.
Typically, parties make offers and counteroffers.
Negotiations may be direct, even face-toface, or performed through the use of
intermediaries, such as lawyers.
Acquiescence may be viewed as
negotiation with little debate. One party
states his or her terms, and the other
agrees.
Negotiation
Some typical situations that might involve
negotiation: as part of the sales process (by both
buyer and seller); between individuals for primarily
personal reasons (e.g. negotiating a pay increase or
remuneration package or ‘‘discussing’’ with your
spouse where to go on holiday); in wage bargaining
(as between an employer organization and a union
or staff group); in political circles (as in treaties
between governments); internationally (either
between individuals or organizations in different
countries or literally on a world wide basis – like the
recent talks about measures to combat global
warming); and in corporate affairs (takeovers,
mergers and a variety of alliances and
collaborations, sought or forced by circumstances).
Negotiation
• Negotiation
– Primary benefits
• Expediency
• Minimize animosity
• Avoid of the costs of litigation
Types Of Negotiations
• Position-Based- Parties State
Opinions
• Interest-Based
Positional Negotiation
High Price
Buyer’s
Resistance Point
Zone of
Agreement
Seller’s
Resistance Point
Low Price
Positional Negotiation
High Price
Seller’s
Resistance Point
No Zone of
Agreement
Buyer’s
Resistance Point
Low Price
Position-Based Negotiations
• ‘‘There are two fools in
every market place. One
asks too little, the other asks
too much.’’ Traditional
Russian proverb
Interest-Based NegotiationsElements
• Communication- Share Complaint, Joint Problem
• Relationship- Discuss Benefits By Continuing
• Interests- Mutually Exclusive?
• Options- Not A Proposal For Compromise
• Legitimacy- Accepted Standards
• Alternatives- Possible Outcomes Without
Negotiation
• Commitment- Realistic
Interest-Based Negotiations
• 3 Types of Interests (also called the 3 “C”s;
see Steve Cohen, Negotiating Skills for
Managers)
• Common interests: Those interests shared
by the negotiating parties who want the
same things for the same reasons.
• Complementary interests: Those interests
that exist when the negotiating parties want
the same result, but because it will serve
different interests.
• Conflicting interests: Those interests that
exist when one or more negotiators’
interests are in opposition to interests of
other negotiators.
Principled Negotiation
• Principled negotiation involves: 1) Separating the
people from the problem: avoiding personalities
and emotions (or flagging them openly),
understanding the other’s point of view, and
ensuring every aspect of clear communications.
2) Focusing on interests, not positions: here the
distinction is that position is something decided
upon, whereas interests influence the position
adopted. 3) Inventing options for mutual gain:
usually defined as searching for a larger cake,
rather than arguing over the size of slices. 4)
Insisting on objective criteria: this focuses
discussion on criteria independent of people’s
(perhaps stubbornly) held positions and promotes
a ‘‘win-win’’ outcome.
The Value of Silence in Negotiation
• ‘‘Silence is even better than asking
questions if the mood is right; it is always a
hard argument to counter. Your opponent
will give away his thoughts, approach,
opinions, strategy. Talk less; learn more.
There is a weight in silence, a great value in
an interval in presenting your argument, an
influential thoughtfulness in a pause.’’
Michael Shea, author and former press
secretary to Queen Elizabeth
Negotiation
• An “iceberg” in the context of negotiation is
a hidden factor of major significance.
• Some other key factors in the negotiating
process
–
–
–
–
Power, perceived or actual.
Burdens, financial & otherwise.
Third-Party Impacts, like competitors
Legitimacy ( Credibility or Believability), which
is often based on one’s prior track record.
– Deadlines.
– Limited or Abundant Resources.
– Access to timely and accurate information
(Technology may be a factor here).
Negotiation
• As to “good faith”, a distinction needs
to drawn between before and after
agreement. UCC § 1-203, imposes
an obligation of good faith in the
performance of an agreement. The
Code however is silent and therefore
does not impose an obligation of good
faith in the negotiation of the
agreement.
Negotiation
• Ten steps to Successful Negotiation
(from “Negotiating” by Patrick Forsyth)
–
–
–
–
–
–
–
–
–
–
1) Preparation
2) Communicate clearly
3) Look the part
4) Respect the people
5) Aim High
6) Get their shopping list
7) Keep searching for variables
8) Utilize the techniques
9) Manage and control the process
10) Be ever on your guard.
Mediation
• Third Party Assists In Resolving DisputeAvoid Litigation
• Parties Agree To Use
• Reduces Court Caseload- No Judicial
Review
• Settlement = Mutual Choice
Mediation
• Advantage To Parties
– Determine To Pursue
– Retain Control Of Outcome
– Non-Adversarial = Reduced Antagonism
• Disadvantage
– No Enforcement
– Selection Mediator- Qualifications
Mediation Procedures
Informal- Controlled By Parties
Mediator
Opening Statement/Rules
Parties
•View Statement
•Exchange
•Discuss Options- Caucus
Agreement
Written/Signed
Mediation
• Mediation is the fastest growing method of dispute resolution in
the U.S.
• According to a Cornell survey conducted in 1997 by the
Foundation for the Prevention and early Resolution of Conflict:
– 81% say mediation provides a more satisfactory process
than litigation
– 66% say is provides more satisfactory results
– 59% say it preserves good relationships
– 79% of voluntary cases settled
– - G.F. Phillips, What your client needs to know about ADR,
Dispute Resolution Journal, Vol. 55 (2000)
Mediation
Private mediation introduces a third party as
an intermediary between disputing parties.
The private mediator is hired by the parties,
is neutral, and directs the process. The
parties retain the power to resolve the
dispute.
• Court-sponsored mediation may be offered
(or ordered) by a court and becomes part of
the litigation process. Therefore, the overall
process begins with a formal complaint
stating a legal cause of action that is filed
with the clerk of the court. A court-appointed
mediator (sometimes called a settlement
judge) controls the mediation process, and
the parties control the outcome of their
dispute.
Mediation
•
Church-Sponsored Mediation/Conciliation has existed in the United
States since Colonial times.
•
An example of a “Conciliation Clause” from a modern church
constitution & bylaws: “The parties to this agreement are Christians
and believe that the Bible commands them to make every effort to live
at peace and to resolve disputes with each other in private or within
the Christian church (see Matt.18:15-20; 1 Cor. 6:1-8). Therefore, the
parties agree that any claim or dispute arising from or related to this
agreement shall be settled by biblically-based mediation or, if
necessary, legally binding arbitration. Judgment upon an arbitration
decision may be entered in any court otherwise having jurisdiction.
The parties understand that these methods shall be the sole remedy
for any controversy or claim arising out of this agreement and
expressly waive their right to file a lawsuit in any civil court against one
another for such disputes, except to enforce an arbitration decision.”
Mediation
The National Mediation Board was
created in 1934 to deal with
labor/management disputes,
primarily in the transportation arena,
such as airlines or railways.
Arbitration
Virtually any commercial matter can be
submitted for arbitration.
Most states have statutes based on the
Uniform Arbitration Act of 1955 under which
arbitration clauses will be enforced.
Arbitration- Submissions
• Parties Agree To ArbitrationWritten
• Specific Matters Agreed To
Arbitrate
• Matters For Arbitration
– Questions Of Fact
– Questions Of Law
– Most Fact & Law
Arbitrators
• Chosen By Disputing Parties
• Expertise
– Knowledge of “Common Law Of Shop”
– Beyond Legal Expertise
• Number = 1 – 3
• Authority- Granted By Agreement
Arbitrators
HOWSAM v. DEAN WITTER REYNOLDS, INC.
123 S.Ct. 588 (2002)
•
FACTS:As a client of the Dean Witter Reynolds
brokerage firm, Karen Howsam invested in four limited
partnerships. These investments were made between 1986
and 1994. The client agreement signed by Howsam required
all disputes with Dean Witter Reynolds to be arbitrated. When
she lost money on her investments Howsam filed for
arbitration claiming that Dean Witter Reynolds had
misrepresented the investments in the limited partnerships.
The NASD’s arbitration agreement has a six-year statute of
limitations. Dean Witter Reynolds filed a lawsuit seeking to
have the arbitration submission enjoined since the statute of
limitations had run out.
•
ISSUE: Who, a judge or an arbitrator, makes the decision
concerning the application of a statute of limitations to an
arbitration proceeding?
Arbitrators
HOWSAM v. DEAN WITTER REYNOLDS, INC.
123 S.Ct. 588 (2002)
• DECISION: The arbitrator.
• REASONS: 1. Judges decide issues of arbitrability.
2. Arbitrators, however, resolve gateway
procedural disputes.
3. The application of a statute of limitations to the
timeliness of an arbitration proceeding is a gateway procedure;
therefore, its application is to be resolved by the arbitrator.
Federal Arbitration Act
• Enacted 1925
• Revised/Reenacted 1947
• Policy
– Interstate Commerce
– Favors Use
• State Law- Supremacy Of U.S.
Constitution/Commerce Clause
Federal Arbitration Act
Doctor’s Associates, Inc. (DAI) is the franchisor of Subway sandwich
shops. Casarotto sought and was awarded a Subway franchise in Great
Falls, Montana. DAI’s franchise agreement contained an arbitration
clause on page nine. A dispute arose, and Casarotto sued DAI in
Montana’s court. DAI moved to have the case stayed pending arbitration.
The trial court granted DAI’s motion. Casarotto sought review, and the
Montana Supreme Court reinstated the lawsuit since the arbitration
clause was invalid under Montana law. This law required arbitration
clauses to appear on the first page of a contract with the clause being in
capital letters and underlined. DAI was granted certiorari by the U.S.
Supreme Court. Issue: When the Federal Arbitration Act conflicts with
provisions of a state law, which one should be enforced? Held: The
Federal Arbitration Act. Federal laws are supreme when compared to
state laws. The Federal Arbitration Act allows state laws to override an
arbitration clause only if the state law voids the entire contract. Since the
Montana law concerns the validity of the arbitration clause and not the
entire contract, the state law cannot be enforced. Doctor’s Associates,
Inc. v. Casarotto, 116 S.Ct. 1652 (1996).
Typical Arbitration Contracts
•
•
•
•
Stockbroker &
Client
Commodities
Broker & Customer
Brokerage Firm &
Employee
Attorney & Client
•
•
•
•
Collective
Bargaining
Owner-Contractor
& ContractorSubcontractor
Insurance Co. &
Insured
Public Carrier &
Shipper
Arbitration
• See Circuit City v. Saint Clair Adams, p. 30
• Supreme Court held that a mandatory arbitration agreement that
an employee was required to sign when he applied for his job is
covered by the Federal Arbitration Act and is therefore
enforceable. Case shows the strong support for ADR, even when
important issues of public policy are involved. Note: Cases that
go through ADR usually have no public reporting or oversight.
The main impetus for this judicial preference is the growing
caseload of courts and the fact that public funding has not kept up
with the increases. This was a 5-4 decision. The issue of forcing
employees to sign arbitration agreements is controversial, and a
bill was introduced in Congress after the decision was handed
down to make arbitration agreements voluntary. In some states,
where the arbitration clause is not obvious, or the party to the
contract has no choice but to sign, and the contract involves
something important like a job, the state court will refuse to force
the party to arbitrate.
Arbitration
AT&T TECH., INC. v. COMMUNICATIONS WORKERS
106 S.Ct. 1415 (1986)
•
FACTS: A collective bargaining agreement provided that the
employer was free to exercise certain management functions,
including the termination of employees for lack of work. During the
course of this agreement, the employer laid off seventy-nine workers.
In response, the union filed a grievance claiming that there was no
lack of work. The union sought arbitration of this dispute under the
contract provision that differences arising over the interpretation of
the agreement would be submitted to arbitration. The employer
refused to submit the grievance to arbitration on the ground that the
layoffs were not arbitrable. The union then sought to compel
arbitration of the issue by filing suit in federal district court. The
employer objected to this suit on the grounds that an arbitrator
should decide whether the layoff issue should be submitted to
arbitration.
•
ISSUE: Who decides in the first instance if an issue is subject
to an arbitration clause?
Arbitration
AT&T TECH., INC. v. COMMUNICATIONS WORKERS
106 S.Ct. 1415 (1986)
•
DECISION:
•
REASONS: 1. Arbitration is a matter of contract and a party cannot
be required to submit to arbitration any dispute which he has not
agreed so to submit.
2. It is the court's duty to interpret the agreement and to
determine whether the parties intended to arbitrate grievances
concerning layoffs predicated on a lack of work as determined by the
employer.
3. If the court determines that the agreement requires a
dispute to be submitted to arbitration, then it is for the arbitrator to
determine the relative merits of the parties' substantive interpretations
of the agreement.
4. A court, in deciding the arbitrability issue, is not to
rule on the potential merits of the underlying claims.
•
•
•
The courts.
Arbitration- Awards
• Required- Disclosure Of Findings &
Reasons
• Opinion Letter
• Parties
– Frame Issues
– Define Arbitrator’s Scope
• Court Favors Award
• Final On Submitted Issues- Filed With Court
Clerk
Arbitration- Awards
Mr. & Mrs. Mastrobuono opened an investment and trading
account with Shearson Lehman Hutton, Inc. The paperwork
signed to open an account contained an arbitration clause. A
dispute over the handling of the Mastrobuono’s account arose and
an arbitration was held. The arbitrator awarded the Mastrobuonos
$159,327 in compensatory damages and $400,000 in punitive
damages. Shearson Lehman Hutton objected to the award of
punitive damages.
Issue: Can an arbitrator, under the terms of this arbitration clause,
award punitive damages?
Held: Yes. The New York law, which is applicable state law, does
not prohibit the arbitrators’ award of punitive damages. The
arbitration clause and the securities industry do not exclude the
award of punitive damages.
Arbitration Awards
Final Offer Arbitration = Where an arbiter’s
award cannot be more or less than a predetermined high/low range.
Baseball Arbitration = Where arbiter’s
award is limited to the choice between the
parties’ last offers.
Mandated Arbitration
•
•
•
•
States Adopting
Speeds Up Process
Many Qualified Arbitrators
Types Of Cases
– <$15,000
– Specific Subject Matter
• Record Of Proceedings
Required
Mandatory Arbitration- Procedures
Submit Claim
Discovery
Arbitrator Determines:
Admissibility Of
Evidence
Law/Facts Of Case
Objections
Hearing
8 Months
Voluntary And Contract-Based Arbitration
• Parties Agree To Method By:
– Original Agreement/Contract
– Parties Agreement
• Arbitration Clause- Does Not Specify
Cost
Mandatory Arbitration?
One line of cases (Alexander v. Gardner-Denver
Co.) holds that an employee does not forfeit the
right to litigate a claim of discrimination even
though he or she signs an employment contract
containing an arbitration clause. The second line
of cases (see Gilmer v. Interstate/Johnson Lane
Corp.) holds that the federal policy favoring
arbitration means employees who sign
employment contracts containing arbitration
clauses do waive their right to litigate claims of
discrimination.
Mandatory Arbitration?
WRIGHT v. UNIVERSAL MARITIME SERVICE CORPORATION
119 S.Ct. 391 (1998)
•
FACTS:Wright, a longshoreman who belonged to the
International Longshoreman’s Association, was injured and
received permanent disability benefits. After 3 years, Wright
tried to return to work. No company would hire him due to his
receipt of disability benefits. Despite the existence of an
agreement to arbitrate clause in the collective bargaining
agreement, Wright was advised by the union to hire an
attorney and sue under the American with Disabilities Act
(ADA). When Wright sued the union and six companies the
defendants moved to dismiss since this matter should have
been arbitrated not litigated. The Fourth Circuit Court of
Appeal held for the defendants, dismissed Wright’s suit, and
ordered arbitration.
•
ISSUE: Does the arbitration clause in the collective
bargaining agreement prevent the litigation of claims under
the ADA?
Mandatory Arbitration?
WRIGHT v. UNIVERSAL MARITIME SERVICE CORPORATION
119 S.Ct. 391 (1998)
• DECISION: No.
• REASONS: 1. The Supreme Court reviews two lines of cases
that appear to conflict.
•
2. The Court determines it does not have to
decide which line of cases is correct since this arbitration
clause does not clearly and unmistakably incorporate
employment discrimination laws.
•
3. Thus, Wright may proceed with the lawsuit
even though no arbitration occurred.
Mandatory Arbitration?
GREEN TREE FINANCIAL CORP. v. RANDOLPH
121 S.Ct. 513 (2000)
• FACTS: The contract arising from Larketta Randolph’s
purchase and financing a mobile home contained an
arbitration clause covering all disputes that might arise. When
a dispute arose, Randolph filed a lawsuit in federal court
alleging violations of the Truth-in-Lending Act and the Equal
Credit Opportunity Act. Randolph claimed the arbitration
agreement was unenforceable since it did not specify what
Randolph might have to pay associated with an arbitration
proceeding. The District Court dismissed Randolph’s lawsuit
and ordered arbitration. The appellate court reversed saying
the lack of specificity of the arbitration costs posed such a
financial risk to Randolph that she was entitled to protect her
interests through litigation.
• ISSUE: Is an arbitration agreement that doesn’t specify
anything about costs enforceable?
Mandatory Arbitration?
GREEN TREE FINANCIAL CORP. v. RANDOLPH
121 S.Ct. 513 (2000)
• DECISION: Yes.
•
• REASONS: 1. The Federal Arbitration Act reverses the
historical hostility courts had toward arbitration.
•
2. Statutory claims have successfully been
handled through arbitration proceedings.
•
3. Due to the court’s deference in favor of
arbitration, a party objecting to arbitration has the burden to
prove rights will be denied through arbitration.
•
4. Randolph failed to prove the costs of
arbitration were so substantial as to deny her a proper forum
to resolve her claims.
Mandatory Arbitration?
Robert Gilmer worked as a financial services manager for
Interstate/Johnson Lane. As a condition of this employment,
Gilmer signed a contract containing a clause that all disputes
with Interstate would be submitted to arbitration. Interstate
terminated Gilmer’s employment. Gilmer filed a lawsuit, and
Interstate moved to dismiss the complaint on the basis that the
parties must arbitrate, not litigate. The district court denied
Interstate’s motion, but the court of appeals reversed. Issue:
Did Congress intend to preclude ADEA claims from being
arbitrable? Held: No. Gilmer makes five arguments as to why
ADEA claims should be decided by courts and not by
arbitrators. All five of these arguments are rejected. The Court
concludes that Gilmer failed to meet the burden of establishing
that Congress intended to preclude arbitration of claims under
ADEA. Gilmer v. Interstate/Johnson Lane Corp., 111 S.Ct.
1647 (1991).
Judicial Review Of Arbitration
• Voluntary/Contract-Based
–
–
–
–
Award Is Final
Findings Of Fact/Law- Conclusive
Limited
Correct Fraudulent/Arbitrary Actions/Against Public Policy
• Statutorily-Mandated
– In Accord With Procedural/Due Process Law
– De Novo
– Federal Arbitration Act
Overcoming Arbitration Clauses
in Fraud in the Inducement
Cases
• The U.S. Supreme Court in First
Options of Chicago v. Kaplan, 514
U.S. 938 (1995) ruled that if a matter
involves a claim of fraud in the
inducement, it must be decided by a
court (i.e. litigated)
Summary Jury Trial
• This process leads up to the opportunity for the parties to
discuss the resolution of the dispute, but this opportunity is not a
part of the process. Therefore, the process takes the parties to
the doorstep of resolution.
• A Summary Jury Trial, or “Mock” jury trial is designed to
encourage and aid settlement. It is usually initiated and
supervised by a court. Each side summarizes to a mock jury
what witnesses would say if called before a real jury. The jury
deliberates and tries to reach consensus, but may vote
individually if necessary. This allows each side to see how a trial
might turn out.
• Summary jury trial ends with the parties receiving the jury’s
verdict (if one is reached) and the jurors’ evaluation of the case.
About 95% of all cases are settled relatively quickly after the
jury's verdict. Note: Federal District Judge Thomas Lambros
invented the summary jury trial, in his Cleveland courtroom in
1983.
• In this process, the parties must evaluate what they have heard
and then enter settlement discussions.
Mini Trial
• A mini-trial is not a trial. It is designed for corporatetype disputes, and has two stages. Mini-trials are
usually private processes and not court-sponsored,
although there is no reason why a judge could not
host a mini-trial and be the neutral third party.
• In a mini-trial, the disputing party executives preview
evidence and the likely trial outcome as an aid to
negotiation. Parties stage a short trial to a panel,
usually of three “judges.” Normally, two of the
“judges” are executives of the disputing corporations;
the third is a neutral party. Lawyers present
shortened cases; “judges” discuss settlement.
Mini Trial
• The 2 stages of a Mini-Trial
– The first stage is the summary
presentation of evidence by the attorneys
for each corporation to the panel (a
decision maker from each corporation and
a neutral third party).
– The second stage is a negotiation
between the two corporate
representatives who were members of the
panel or a mediation that includes the
neutral third party as the mediator.
Mini Trial
• The mini-trial is discussed after court-sponsored mediation
because the first stage of the mini-trial, with its opening
statement, formal presentation of facts, and closing argument,
appears more adversarial than mediation. The mediation may
occur in the second stage when the panel members discuss
possible settlement.
• One well-known case of a successful mini-trial involved Allied
Corporation and Shell Oil. After five or six years of bickering
over a contract dispute, Shell finally filed suit. Four years later,
legal fees had consumed hundreds of thousands of dollars and
pretrial discovery was not yet complete. Attorneys for both
companies decided to use the mini-trial in a final effort to
resolve the case without a trial. After a short hearing, the parties
settled the ten-year-old dispute almost at once.
ADR Trends
• Professor Robert F. Cochran, in the June 1993 issue
of Arbitration Journal suggested that “Lawyers who
fail to present the option of pursuing alternatives to
litigation may be at risk of attorney discipline or
malpractice liability.”
• The CPR Institute for Dispute Resolution reports that
some 4,000 corporations have signed a pledge to
seriously explore using ADR before pursuing litigation
and some 1,500 law firms have pledged to assure
that their attorneys are knowledgeable about ADR
ADR Trends
• Med-Arb = a joining mediation and
arbitration, where the parties start out in
mediation, but if they fail to reach
agreement the process shifts to
arbitration.
Trials
What is the central
purpose of a trial?
Trials
To show justice
being done.
The Courts
• Jurisdiction
– A court can only hear cases within its jurisdiction
• Venue
– The location of a matter within a particular jurisdiction.
Generally the initial venue is where the act or injury occurred.
• Removal
– Process for change of venue
• Conflict of Laws
– Procedural law which determines law of which jurisdiction
applies to a particular matter
Types of Jurisdiction
Subject Matter jurisdiction
Power to hear the type of case
Supplemental/Pendent/Ancillary
jurisdiction
Power of federal court to hear a case
within state jurisdiction if it is
associated with a case within federal
court subject matter jurisdiction
Original jurisdiction
Power of a court to try a case or to be the
first to resolve the dispute
Appellate jurisdiction
Power of a court to review a lower court
decision
Exclusive jurisdiction
Power to hear a case is vested in only one
court
Concurrent jurisdiction
Power to hear a case is shared by different
courts (i.e., both federal and state)
Constitutional Law Chapter 3 Table
3-1
Jurisdiction
System Designs, Inc. v. New Customware
Company, Inc., p.34
– Held: The U.S. District Court finds that New
CustomWare’s interactive website met the
“minimum contacts” test because the site was
intended to reach potential customers in Utah,
offered training and registration, and included
a list of major clients with Utah connections.
For these reasons, the court holds that New
CustomWare could have reasonably
anticipated being hauled into the Utah courts.
Jurisdiction
System Designs, Inc. v. New Customware Company, Inc.
– Reasoning: It is increasingly clear that modern businesses no longer require an actual
physical presence in a state in order to engage in commercial activity there. With the
advent of “e-commerce,” business may set up shop without ever actually setting foot in the
state where they intend to sell their wares. Our conceptions of jurisdiction must be flexible
enough to respond to the realities of the modern marketplace. Businesses who structure
their activities to take full advantage of the opportunities that virtual commerce offers can
reasonably anticipate that these same activities will potentially subject them to suit in the
locales that they have targeted. Might this cause some businesses to avoid on-line
transactions with “high risk” jurisdictions? According to a recent global survey on internet
jurisdiction, it appears that some companies are avoiding business with such jurisdictions
and are employing various legal and technological tools to influence jurisdictional
outcomes. Undertaken by the American Bar Association and the International Commerce
Commission, the survey suggests that North American companies are generally more
worried about expansive Internet-related jurisdiction exposure than are their counterparts in
Europe and Asia. Discuss the ways that expansive notions of jurisdiction shape the way
organizations transact business, both in the States and abroad. In a global business
context, as internet jurisdiction “grows,” so too does the need for companies to familiarize
themselves with the laws of the countries in which they do transactions. The ABA/ICC
report is available at: http://www.mgblog.com/resc/Global%20Internet%20Survey.pdf
Federal Courts -Two kinds of civil lawsuits were permitted
• Federal Question Cases
– A claim based on the United States
Constitution, a federal statute, or a
federal treaty
• Diversity Cases
– When the plaintiff and defendant are
citizens of two different states, AND
– the amount in dispute is greater than
$75,000
Supreme Court Jurisdiction
Original
Jurisdiction
Exclusive
State v. State
Concurrent
Cases involving
(with district ambassadors, public
courts)
ministers, and consuls
Appellate
Jurisdiction
Direct appeal Review of district court
case requiring a threejudge panel
Writ of
Review of state supreme
certiorari
court and federal appellate
court cases
Constitutional Law Chapter 3 Table
3-2
Subject Matter Jurisdiction
• General Jurisdiction- Authority To Hear Any
Case
• Limited- Authority To Hear Specific Kinds Of
Cases
• Other Limits
– Subject Matter (e.g. Wills & Estates in
Probate Court)
– Amount in Controversy
– Domicile of Parties
– Diversity Of Citizenship
– Federal Issues
Personal (In Personam) Jurisdiction
• Voluntary Submission To Court’s
Power- Venue
• Summons
• Long-Arm Statute- Out-Of-State
Defendant, Due Process
– Tort Committed Within State
– Property Within State
– Transaction Occurred Within State
• Extradition
Personal Jurisdiction
•
•
•
•
•
TOYS “R” US, INC.; GEOFFREY, INC. v. STEP TWO, S.A.; IMAGINARIUM NET,
•
S.L.,2003 U.S. App. LEXIS 1355 (3rd. Cir. 2003)
FACTS: Toys “R” Us, Inc. and Geoffrey, Inc. bought this action against Step Two,
S.A., and Imaginarium Net alleging that Step Two used its Internet web sites to engage in
trademark infringement, unfair competition, misuse of the trademark notice symbol, and
unlawful “cybersquatting.” The district court denied Toys’ request for jurisdictional discovery
and granted Step Two’s motion to dismiss for lack of personal jurisdiction.
ISSUE:
Should the district court have granted Toys’ request for jurisdictional
discovery prior to dismissing the case?
DECISION: Yes. There should be limited jurisdictional discovery, relating to Step Two’s
business activities in the United States.
REASONS: 1. A state court may exercise personal jurisdiction over a nonresident
defendant only so long as there exist "minimum contracts" between the defendant and the
forum state. 2. The concept of minimum contracts performs two related but distinguishable
functions. It protects the defendant against the burdens of litigating in a distant or
inconvenient forum. And it acts to ensure that the states through their courts do not reach
out beyond the limits imposed on them by their status as coequal sovereigns in a federal
system. 3. The defendant's contacts with the forum state must be such that maintenance of
the suit "does not offend 'traditional notions of fair play and substantial justice.'" The
relationship between the defendant and the forum must be such that it is reasonable to
require the corporation to defend the particular suit that is brought there. 4. The district
court’s denial of jurisdictional discovery prevented Toys from obtaining the information
needed to establish personal jurisdiction.
Long-Arm Statute
• A Michigan franchisee refused to vacate a Burger King
restaurant premise after his franchise was terminated. The
Burger King Corporation brought a diversity action in a Florida
federal court. The franchisee claims that the Florida court has
no personal jurisdiction. Issue: Is the Michigan franchisee
subject to the jurisdiction of the Florida court? Held: Yes. The
district court's exercise of jurisdiction pursuant to Florida's
long-arm statute did not violate due process. The federal court
in Florida may constitutionally assert, under Florida's long-arm
statute, personal jurisdiction over a Michigan restaurant
franchisee who, despite having no physical ties with Florida,
established a substantial and continuing relationship with the
franchisor's Florida headquarters and received fair notice from
the franchise documents and course of dealings that he might
be subject to suit in Florida for breach of the franchise contract.
Burger King Corp. v. Rudewicz, 105 S.Ct. 77 (1985).
Personal Jurisdiction
• Shirley Jones, a professional entertainer who lives
and works in California, brought suit in a California
state court claiming that she had been libeled in an
article written by the defendants in Florida and
published in the National Enquirer, a national
magazine having its largest circulation in California.
Issue: Does the California court have jurisdiction
over the defendant?
• Held: Yes. California has personal jurisdiction over
the defendant since the defendant's contacts with
the state satisfied the Due Process "minimum
contacts test." California is the focal point both of
the allegedly libelous article and of the harm
suffered. Calder v. Jones, 104 S.Ct. 1482 (1984).
Property (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.
Cyber-Space Jurisdiction
When does a court have jurisdiction?
“Sliding Scale” Standard (Bird v.
Parsons, 289 F.3d 865 (2002) )
Passive Website = No
Substantial Business = Yes
Federal &
State Courts
Supreme Court
Of U.S.
U. S. Court
Of Appeals
Highest State
Courts
Federal Courts of Original
Jurisdiction
U. S. Court
Of Appeals
Federal Admin.
Agencies
U. S. District
Courts
Specialized U.S.
Courts
Specialized
U. S. Courts
Court of
Appeals
Bankruptcy
Tax Court
U.S. Court of
Federal Claims
Court of
International Trade
U. S. District
Courts
Merit Systems
Protection Board
Patent & Trademark
Office
The Federal Court System
United States
Supreme Court

(Highest Appeals Court)
Three judges hear each
case, brought up from
the District Courts.
U.S.
District
Courts
Primary
Trial
Court
U.S.
Bankruptcy
Courts
U.S. Courts of
Appeals (12
Circuits)
Lower
Appeals
Courts
Trial Courts of
Limited (Specific)
Jurisdiction
U.S. Court of
Appeals for the
Federal Circuit
U.S. Court of
International
Trade
U.S. Tax
Courts
Various
Federal
Agencies
Nine Justices; appointed for
life; may refuse to hear a
case; final authority
Hears appeals
from specialized
trial courts.
U.S. Claims
Court
U.S. Patent &
Trademark
Office
Trial Courts of Limited
(Specific) Jurisdiction
Circuits in the Federal Court System
Puerto Rico is
part of Circuit 1
2
8

9

10
7
6
3
Virgin Islands
are part of
Circuit 3
4
11
Northern Marianna Islands are part of
Circuit 9 (along with Alaska and Hawaii.)
1
5
D.C. Circuit
Washington, D.C.
Federal Circuit
Washington, D.C.
Source: Administrative Office of the United
States Courts
Federal Trial Courts
Court
Type
Function
U.S. District Courts
Constitutional
Primary trial courts in federal court system;
judges and/or juries hear civil and criminal
cases
Bankruptcy Court
Adjunct to
District Court
Hears bankruptcy matters
U.S. Court of
Constitutional
International Trade
Handles controversies involving international
trade agreements and tariffs
U.S. Court of Federal
Claims
Legislative
Hears cases seeking money damages against the
United States
U.S. Tax Court
Legislative
Hears cases involving tax disputes
U.S. Court of Appeals
for Veterans
Claims
Legislative
Hears appeals from administrative hearings of
the Bureau of Veterans’ Appeals
Court of Military
Review
Legislative
Handles military proceedings
Constitutional Law Chapter 2 Table
2-3
The U.S. Supreme Court
• Receives cases by Writ of Certiorari
(Cert.) at the Court’s discretion
State Court System
Highest State
Court
State Court
Of Appeals
State Trial
Court
Local Trial
Courts
State Admin.
Agencies
State Courts
• State Courts
– Trial Courts
• In NC = District or Superior
– Intermediate Appellate Courts
– Highest Level Appellate Courts
Special State Courts
•
•
•
•
•
•
Landlord/Tenant
Small Claims/Magistrate
Juvenile
Drug
Domestic
Administrative Hearings
Parties
• Plaintiff v. Defendant (Civil)
• State or U.S. v. Defendant (Criminal)
• Counterclaim- Counterplaintiff v. Counterdefendant
• Appellant v. Appellee (Court of Appeals)
• Petitioner v. Respondent (U.S. Supreme Court)
• Claimant v. Employer in ESC
• Third-Party Defendant
Class-Action Suits
• Filed On Behalf Of All With Similar
Claim
• Examples on p.94
• Notice Given To All Members Of Class
• Plaintiffs Pay Court Costs
• Settlement
– Benefits Class
– Release All Claims
Class-Action Suits
Advantages of Class Actions
– Depending on the case, a class action may offer a number
of advantages. Each of these advantages essentially stems
from the fact that a class action aggregates a large number
of individualized claims into one representational lawsuit.
Although aggregation creates the potential for harm, it also
creates potential benefits.
– First, aggregation may increase the efficiency of the legal
process. In cases with common questions of law and fact,
aggregation of claims into a class action may avoid the
necessity of repeating "days of the same witnesses,
exhibits and issues from trial to trial." Jenkins v. Raymark
Indus., Inc., 782 F.2d 468, 473 (5th Cir. 1986) (granting
certification of a class action involving asbestos).
Class-Action Suits
Advantages of Class Actions
• Second, a class action overcomes "the problem that small
recoveries do not provide the incentive for any individual to
bring a solo action prosecuting his or her rights." Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting
Mace v. Van Ru Credit Corp., 109 F.3d 388, 344 (7th Cir.
1997)). "A class action solves this problem by aggregating the
relatively paltry potential recoveries into something worth
someone’s (usually an attorney’s) labor." Amchem Prods.,
Inc., 521 U.S. at 617 (quoting Mace, 109 F.3d at 344). In other
words, a class action ensures that a defendant who engages
in widespread harm -- but does so minimally against each
individual plaintiff -- must compensate those individuals for
their injuries. For example, thousands of shareholders of a
public company may have losses too small to justify separate
lawsuits, but a class action can be brought efficiently on behalf
of all shareholders.
Class-Action Suits
Advantages of Class Actions
• Third, in "limited fund" cases, a class action
ensures that all plaintiffs receive relief and
that early-filing plaintiffs do not raid the fund
(i.e., the defendant) of all its assets before
other plaintiffs may be compensated. See
Ortiz v. Fibreboard Corp., 527 U.S. 815
(1999). A class action in such a situation
centralizes all claims into one venue where
a court can equitably divide the assets
amongst all the plaintiffs if they win the
case.
Class-Action Suits
Advantages of Class Actions
• Finally, a class action avoids the situation
where different court rulings could create
"incompatible standards" of conduct for the
defendant to follow. For example, a court
might certify a case for class treatment
where a number of individual bond-holders
sue to determine whether they may convert
their bonds to common stock. Refusing to
litigate the case in one trial could result in
different outcomes and inconsistent
standards of conduct for the defendant
corporation. Thus, courts will generally allow
a class action in such a situation. See, e.g.,
Van Gemert v. Boeing Co., 259 F. Supp. 125
(S.D.N.Y. 1966).
Class-Action Suits
Advantages of Class Actions
• Whether a class action is superior to individual
litigation depends on the case. The Advisory
Committee Note to Rule 23, for example, states that
mass torts are ordinarily "not appropriate" for class
treatment. Class treatment generally does little to
improve the efficiency of a mass tort because the
claims almost always involve individualized issues
of law and fact that will have to be re-tried on an
individual basis. See Castano v. Am. Tobacco Co.,
84 F.3d 734 (5th Cir. 1996) (rejecting nationwide
class action against tobacco companies). Mass
torts also involve high individual damage awards;
thus, the absence of class treatment will not impede
the ability of individual claimants to seek justice.
See id. Other cases, however, may be more
conducive to class treatment
Class-Action Suits
•
Wal-Mart vs. Class Actions
(Business Week, March 21, 2005, p.73, by Aaron Bernstein)
•
The retail giant's novel defense in a massive suit could rewrite the
playbook.
Corporate America could find it a whole lot easier to fight off employment
class actions if Wal-Mart Stores Inc. prevails in a sex discrimination case
to be heard soon by the U.S. Ninth Circuit Court of Appeals. Indeed, a
Wal-Mart victory could tilt the playing field for virtually all of these kinds of
suits, which have plagued Boeing, Coca-Cola, and dozens of other large
employers over the years.
Wal-Mart's ambitious legal strategy strikes at the heart of what it means
to file a class action. The company maintains that its constitutional rights
would be violated if the court allows a suit to go forward involving up to
1.5 million of the retailing giant's current and former female employees.
Because such a case would deprive the company of its rights to defend
itself against each woman's claim, it argues, the courts should allow suits
only on a store-by-store basis. If the Ninth Circuit agrees and strikes
down the multistate action certified by a lower court, it would likely kill the
largest employment class action in U.S. history. More broadly, it would
open wide the door for all large companies to make similar arguments. "A
victory for Wal-Mart might mean that plaintiffs can't bring nationwide
class actions anymore and that they might have to do them locally or
regionally," …
•
Class-Action Suits
•
… A few companies have tried similar arguments in bits and pieces and
gotten nowhere. But Wal-Mart is the first to tackle the constitutional issues
head-on, … Certainly, it faces tough odds at the Ninth Circuit, one of the
nation's more liberal federal appeals courts. Instead, it's probably aiming
for the more conservative U.S. Supreme Court, say experts. At the same
time, Wal-Mart has been hedging its bets by engaging in settlement talks
with the plaintiffs for several months, say lawyers involved. Still, the
question is whether Wal-Mart's suggested store-by-store alternative
makes sense. After all, the most extreme outcome -- thousands of mini
class actions -- would clog the U.S. courts for years. Even the company's
own prediction that plaintiffs could have grounds to bring discrimination
claims at no more than 10% of its 3,400 U.S. stores would qualify as a
lawyer's full-employment act. Of course, Wal-Mart may simply believe that
few store-level cases would be filed in the end, although Wal-Mart's
lawyers deny that. Still, "if even 100 suits were brought, it would be a mess
for Wal-Mart," … The case began in 2001, when a group of female WalMart employees sued, claiming that the world's largest retailer
systematically paid women less than men in the same jobs and promoted
men ahead of similarly talented women. Last June a Northern California
District Court judge granted the plaintiffs class status, allowing them to sue
on behalf of all women who had worked at Wal-Mart's U.S. stores since
December, 1998. Wal-Mart quickly appealed the class certification to the
Ninth Circuit, which is due to set the hearing date any day.”
Class-Action Suits
•
The thrust of Wal-Mart's appeal is that the district judge ran roughshod over the
company's constitutional rights to due process and to a jury trial. Despite the
company's reputation for micromanaging down to the penny, it argued that pay and
promotion decisions are made almost entirely by local store managers. So the
judge should have ignored the plaintiffs' statistics showing large nationwide
disparities in the way female employees are paid and promoted. Instead, it should
hear only store-level suits. Doing otherwise, the company says, would leave it
unable to prove that an individual was paid correctly or properly passed over for
promotion. So it could be forced to pay for something it didn't do. That would be a
clear violation of the Fifth Amendment's requirement that "no person shall
be...deprived of life, liberty, or property without due process of law.“ … When you're
talking about taking money from one citizen and giving it to another, you can't just
rely on aggregate statistics, which don't tell you who is actually discriminated
against.“ The problem, of course, is that this logic undercuts the very concept of
class actions. The point of grouping many employees together into one lawsuit is to
deal with complaints that they hold in common. In employment discrimination cases,
the problems usually involve disparate policies or practices by the corporation.
Indeed, the plaintiffs' response is that broad workforce data are actually more
reliable than individual hearings in such cases. They point out, for example, that the
retailer promoted hourly workers using a "tap-on-the-shoulder" method, in which
employees couldn't apply for a position and store managers singled out promising
candidates when vacancies occurred. So it would be impossible to tell now which
individual women would have qualified for a promotion even if there had been no
discrimination. "In these circumstances, the use of workforce data to compute
aggregate monetary relief 'has more basis in reality...than an individual-by-individual
approach,"' the plaintiffs say, citing a prominent 1974 class action.
Class-Action Suits
The two sides disagree just as strongly about which approach would
be fairer to the individual women involved. If the court uses aggregate
company statistics, as is typical in such cases, then women who
never had any desire to become managers could get back pay or
damages they're not entitled to, … Or those who suffered egregious
discrimination at one store would get nothing if Wal-Mart wins. The
plaintiffs argue that rough justice is better than no justice at all. They
say that in the nationwide class approach, Wal-Mart's total liability
would be set by looking at how all female employees fared across the
company. If some of that money went to women who didn't actually
suffer, then women who did experience discrimination might get less
than they should have. But Wal-Mart itself would be no worse off.
Wal-Mart's sheer size puts it in a category all its own. If it succeeds in
cutting class actions down to bite-size pieces, large -- and not so
large -- employers could end up benefiting.
Procedural Rules
Pleadings
Appeal
Pretrial Motions
Discovery
Pretrial
Conference
Posttrial
Motions
Trial
Standing To Sue
• Allegations
– Involves a Case/Controversy
(refer: Lujan v. Defenders of
Wildlife, 504 U.S. 555 (1992))
– Plaintiff Has Personal Stake In the
Resolution
A Case or Controversy Does
Not Exist Where:
The issue is moot.
The dispute is already resolved.
The issue is not ripe.
No issue has yet arisen.
The plaintiff lacks standing.
The plaintiff has suffered no real harm.
The case involves a political question.
Power belongs to another branch of government.
Constitutional Law Chapter 3 Exhibit
3-1
Standing To Sue
DAIMLERCHRYSLER CORP. et al. v. CUNO et al.
certiorari to the united states court of appeals for the sixth circuit
No. 04–1704. Argued March 1, 2006—Decided May 15, 2006*
The city of Toledo and State of Ohio sought to encourage DaimlerChrysler Corp.
to expand its Toledo operations by offering it local property tax exemptions and a
state franchise tax credit. A group of plaintiffs including Toledo residents who pay
state and local taxes sued in state court, alleging that the tax breaks violated the
Commerce Clause. The taxpayer plaintiffs claimed injury because the tax breaks
depleted the state and local treasuries to which they contributed. Defendants
removed the action to District Court. Plaintiffs moved to remand to state court
because, inter alia, they doubted whether they satisfied either the constitutional
or prudential limitations on standing in federal court. The District Court declined
to remand the case, concluding that plaintiffs had standing under the “municipal
taxpayer standing” rule articulated in Massachusetts v. Mellon, 262 U.S. 447
(1923) . On the merits, the court found that neither tax benefit violated the
Commerce Clause. Without addressing standing, the Sixth Circuit agreed as to
the municipal tax exemption, but held that the state franchise tax credit violated
the Commerce Clause. Defendants sought certiorari to review the invalidation of
the franchise tax credit, and plaintiffs sought certiorari to review the upholding of
the property tax exemption. This Court granted review to consider whether the
franchise tax credit violates the Commerce Clause, and directed the parties to
address the issue of standing.
Held: Plaintiffs have not established their standing to challenge the state
franchise tax credit. Because they have no standing to challenge that credit, the
lower courts erred by considering their claims on the merits. Pp. 4–18.
Standing To Sue
DAIMLERCHRYSLER CORP. et al. v. CUNO et al.
certiorari to the united states court of appeals for the sixth circuit
No. 04–1704. Argued March 1, 2006—Decided May 15, 2006*
1. State taxpayers have no standing under Article III to challenge
state tax or spending decisions simply by virtue of their status as
taxpayers. Pp. 4–13.
(a) Before this Court can address the merits of plaintiffs’ challenge, it
has an obligation to assure itself that the merits question is presented
in a proper Article III “case” or “controversy.” Lujan v. Defenders of
Wildlife, 504 U.S. 555(1992). The case-or-controversy limitation is
crucial in maintaining the “ ‘tripartite allocation of power’ ” set forth in
the Constitution. Valley Forge Christian College v. Americans United
for Separation of Church and State, Inc., 454 U.S. 464 (1982). “Article
III standing … enforces the … case-or-controversy requirement.” Elk
Grove Unified School Dist. v. Newdow, 542 U.S. 1 (2004). The
requisite elements of standing are familiar: “A plaintiff must allege
personal injury fairly traceable to the defendant’s allegedly unlawful
conduct and likely to be redressed by the requested relief.” Allen v.
Wright, 468 U.S. 737 (1984). Plaintiffs, as the parties now asserting
federal jurisdiction, must carry the burden of establishing their
standing. Pp. 4–6.
Standing To Sue
DAIMLERCHRYSLER CORP. et al. v. CUNO et al.
certiorari to the united states court of appeals for the sixth circuit
No. 04–1704. Argued March 1, 2006—Decided May 15, 2006*
(b) Plaintiffs’ principal claim that the franchise tax credit depletes state funds to which they
contribute through their taxes, and thus diminishes the total funds available for lawful uses and
imposes disproportionate burdens on them, is insufficient to establish standing under Article III. This
Court has denied federal taxpayers standing under Article III to object to a particular expenditure of
federal funds simply because they are taxpayers. See, e.g., Valley Forge Christian College, supra,
at 476–482. The animating principle behind cases such as Valley Forge was announced in
Frothingham v. Mellon, decided with Massachusetts v. Mellon,, 262 U.S. 447 (1923)in which the
Court observed that a federal taxpayer’s “interest in the moneys of the Treasury … is shared with
millions of others; is comparatively minute and indeterminable; and the effect upon future taxation,
of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for
an appeal to the preventive powers of a court of equity.” Id., at 486–487. This rationale applies with
undiminished force to state taxpayers who allege simply that a state fiscal decision will deplete the
fisc and “impose disproportionate burdens on them.” See Doremus v. Board of Ed. of Hawthorne,
342 U.S. 429 (1952) . Because state budgets frequently have an array of tax and spending
provisions that may be challenged on a variety of bases, affording state taxpayers standing to press
such challenges simply because their tax burden gives them an interest in the state treasury would
interpose the federal courts as “ ‘virtually continuing monitors of the wisdom and soundness’ ” of
state fiscal administration, contrary to the more modest role Article III envisions for federal courts.
See Allen, supra, at 760–761. Pp. 7–11.
Roberts, C. J., delivered the opinion of the Court, in which Stevens, Scalia, Kennedy, Souter,
Thomas, Breyer, and Alito, JJ., joined. Ginsburg, J., filed an opinion concurring in part and
concurring in the judgment. (Note that this was a 9-0 decision.)
(Note: Parts 1(c) and 2 of this opinion was omitted)
Standing To Sue
•
•
•
The Fair Housing Act of 1968 outlaws discrimination in housing and
authorizes civil suits to enforce the law. Suit was filed against the
defendant operator of two apartment complexes alleging "racial
steering" in violation of the law. Plaintiffs were testers who never
intended to rent an apartment. Coleman, who is black, was told that
no apartments were available, but Willis, who is white, was told that
there were vacancies. In fact, there were apartments available for
rent. The district court held that the plaintiffs lacked standing and
dismissed the suit.
Issue: Did either party have standing to sue under the Fair Housing
Act?
Held: Despite the fact that the "testers" had no intent to rent the
apartments, Congress prohibited misrepresentation to "any person."
Therefore all persons have a legal right to truthful information.
Because Congress, in this act, intended to give standing the fullest
extent possible, a plaintiff must simply allege that the defendant's
actions resulted in a distinct injury. Since Coleman received false
information, he can properly allege that the defendants injured him.
Since Willis received accurate information, he cannot properly allege a
violation of the Fair Housing Act. Havens Realty Corp. v. Coleman,
102 S.Ct. 1114 (1982).
Standing To Sue
FRIENDS OF THE EARTH v. LAIDLAW ENVIRONMENTAL SERVICES,
528 U.S. 167 (2000)
•
FACTS: Laidlaw Environmental Services bought a facility in Roebuck, South Carolina that
included a wastewater treatment plant. The South Carolina Department of Health and
Environmental Control (DHEC) granted Laidlaw a permit to discharge treated water into
the North Tyger River, but limited the discharge of pollutants into the waterway. Laidlaw
began to discharge pollutants, particularly mercury, in excess of the limits sets by the
permit. DHEC and Laidlaw reached a settlement regarding this matter. Friends of the
Earth (FOE) filed a citizen suit against Laidlaw alleging noncompliance with the permit and
seeking declaratory and injunctive relief and an award of civil penalties.
•
ISSUE:
Does FOE have Article III standing to bring the lawsuit?
•
•
DECISION:
Yes.
•
REASONS:
1. To satisfy Article III’s standing requirements, a plaintiff must show (1)
it has suffered an “injury in fact” that is concrete and particularized and actual and
imminent; (2) the injury is fairly traceable to the challenged action of the defendant; and (3)
it is likely that injury will be redressed by a favorable decision. 2. Focusing on injury to the
plaintiff, the district court found that FOE had demonstrated a sufficient injury to establish
standing. The plaintiff alleges an injury that is attributable to the actions of the defendant.
The penalties would redress FOE’s injuries by abating current violations and preventing
future ones.
Standing To Sue
• Plaintiff, an organization concerned with
conservation, brought suit for a declaratory
judgment and an injunction to restrain federal
officials from approving an extensive skiing
development in the Mineral King Valley in the
Sequoia National Forest.
• Issue: Does plaintiff have standing to sue?
• Held: No. A mere "interest in a problem," no matter
how long-standing the interest and no matter how
qualified the organization is in evaluating the
problem, is not sufficient by itself to render the
organization "adversely affected" or "aggrieved"
within the meaning of the APA. The court looks to a
personal stake in the outcome, in order to ensure
that the proceeding will be adversary. Sierra Club
v. Morton, 92 S.Ct. 2361 (1972).
Standing To Sue
• To stabilize competition among dairy
farmers, federal law authorizes the Secretary
of Agriculture to issue orders setting the
minimum prices that processors must pay
farmers for milk. Individual consumers filed
suit challenging the prices.
• Issue: Do they have standing to sue?
• Held: No. Only the processors and farmers
may challenge the process. Block v.
Community Nutrition Institute, 104 S.Ct.
2450 (1984).
The Adversary System
Function of Judge in Common Law
System
– Trial Judge = Referee
– Judges are more directly involved in Civil
Law System
Function of Attorney in Common Law
System
– Zealous Advocacy
The Adversary System
– Question 3. Some of the advantages of the adversarial system include the
method of examining and cross-examining witnesses. It is said that this
method is more likely to bring out the “truth” of the matter. It also allows for
public oversight of cases that are of public interest, and makes it harder for a
dishonest or biased judge to control the outcome of a case. However, some of
the disadvantages of the system include a class bias: the system of witness
examination and cross examination does not work when lawyers on either side
are of unequal skills. This obviously gives the advantage to the wealthy litigant
who can afford to hire better attorneys. Further, the drive to “win” the case can
lead to suppression and misrepresentation of important facts.
– Question 5. The complaint, summons, answer and reply constitute the
pleadings and are key steps in the adversarial process. The complaint states
the plaintiff’s claim in separate, enumerated paragraphs. In the complaint, a
plaintiff must allege sufficient facts to demonstrate that the plaintiff would be
entitled to legal relief. The plaintiff must also state the relief s/he requests and
provide the defendant with sufficient notice of the complaint. After the service
of the complaint, the defendant must file an answer within a designated time
period. The answer responds to the complaint paragraph by paragraph, with
an admission or denial of each of the plaintiff’s allegations. Lastly, the reply is
the plaintiff’s response to the allegations in the defendant’s answer. Note that
not all jurisdictions allow or require a response.
Discovery
• Discovery
– Opportunity to gather evidence
– Depositions (Verbal)
– Interrogatories (Written)
• Usually limited number
– Request Admissions
– Requests to Produce Documents
– Mental/Physical Exams
– Often used as Tactic to Intimidate
Discovery
•
CHUDASAMA v. MAZDA MOTOR CORP.,
•
123 F.3d 1353 (11th Cir. 1997)
•
FACTS: The Chudasamas had an accident while driving a Mazda MPV minivan. There were
serious injuries in this accident. The Chudasamas sued Mazda claiming defects in the van caused
the accident and injuries. The Chudasamas also alleged that Mazda had defrauded them. Mazda
moved to dismiss the fraud claim. The trial judge never ruled on this motion. Mazda refused to
answer what is argued were excessively broad discovery requests. The trial judge sanctioned
Mazda’s refusal to participate in discovery by entering a default judgment against Mazda.
•
ISSUE:
discretion?
•
DECISION: No.
•
REASONS: 1. The fraud claim was dubious enough to require the judge to rule on Mazda’s motion
to dismiss. 2. Failing to rule on this motion allowed discovery to become excessively broad. 3.
Entering a default judgment against Mazda was so unduly severe under this case’s circumstances
as to amount to a clear abuse of discretion.
Was this entry of a default judgment a reasonable exercise of the trial judge’s
Pleadings
• Rules of Civil/Criminal Procedure
(Federal/State)
• Complaints
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–
–
–
–
–
Contains allegations
Form matters
Timing matters
See sample pleading on p.35-39
Results in summons requiring appearance
Responded to by Answer or Motion to Dismiss
• May include affirmative defenses, counterclaims
– Failure of defendant to appear = default judgement
Pleadings
• Discovery
– Opportunity to gather evidence
– Depositions (Verbal)
– Interrogatories (Written)
• Usually limited number
– Request Admissions
– Requests to Produce Documents
– Mental/Physical Exams
Pleadings
Plaintiff
Complaint
Answer
Defendant
Motion to
Dismiss
Motions
• Failure to State a Claim
• Statute Of Limitations
• Judgment On Pleadings (No Additional Evidence)
• Summary Judgment (Additional Evidence, e.g.
Affidavits)
• Frivolous Cases (Rule 11 sanctions)
Frivolous Lawsuits
Examples of Frivolous Lawsuits
•
•
•
•
•
(1) Negligence suit by two lottery ticket holders against a T.V.
station that broadcast incorrect lotto numbers. Alleged injury mental distress.
(2) A male with 2 1/2 years of hair growth sued a hair stylist
that cut his hair short on the sides and left it long on top. Alleged
injury - loss of right to enjoy life and a need for psychiatric help to
overcome anxiety.
(3) Lawyer sued city whose policemen had given him three
traffic tickets. Alleged theory - RICO violation - city was a
racketeer organization.
(4) A clerk for a department store was injured on an escalator
when a child played a prank by pressing the emergency stop
button. The clerk sued the manufacturer for her pain and
suffering. Theory - the manufacturer should have known better
than to put a bright-red emergency button on each end of the
escalator.
(5) A father sued a high school in Alvord, Texas for $1 million
in damages after the local high school lowered his daughter's
grade point average from 95.478 to 95.413 for an unexcused
tardiness. Theory - emotional distress.
Trial Proceedings
•
•
•
•
Docket/Continuance
Jury List/Voir Dire/Selection
Opening Statements
Direct Examination/Cross
Examination/Redirect/Recross
• Closing Arguments
• Jury Instructions
• Motion for a Directed Verdict (like
Motion to Dismiss)
Peremptory Challenges
•
J.E.B. v. ALABAMA EX REL. T.B.,
•
114 S.Ct. 1419 (1994)
–
FACTS: At the petitioner's paternity trial, the State of Alabama used 9 of its 10 peremptory
challenges to remove male jurors. The petitioner challenged the state's action as a violation of
the mandate of Boston v. Kentucky that prohibits race-based discrimination in the use of
peremptory challenges. The trial judge overruled the objection and, as a result, the court
empaneled an all-female jury. The jury subsequently found the petitioner to be the father of the
child in question and the trial court ordered him to pay child support.
–
ISSUE: Is discrimination on the basis of gender in the exercise of peremptory challenges
permissible?
–
–
DECISION: No.
REASONS: 1. The exclusion of women from jury service continued well into the 20th century. 2.
Gender-based classifications have been subject to heightened scrutiny in recognition of the real
danger that attitudes regarding gender may be based upon out-dated misconceptions. 3. The
State of Alabama concedes that its decision to strike men may have been based upon the
perception that men, otherwise totally qualified to serve upon a jury, might be more sympathetic
to the arguments of a man in a paternity action. 4. Discrimination by litigants on the basis of
gender during jury selection invites cynicism respecting the jury's neutrality and its obligation to
adhere to the law. Gender may not serve as a proxy for bias.
Peremptory Challenges
•
•
•
Edmonson, a black construction worker employed by Leesville, was injured when a
company-owned truck rolled backward and pinned Edmonson against some
construction equipment. Edmonson sued Leesville on a negligence claim. During
voir dire, Leesville used two of its three peremptory challenges to remove black
persons from the prospective jury. Edmonson asked the district court judge to
require that Leesville explain a race-neutral basis for striking the two jurors. The
judge refused Edmonson's request, and a jury of eleven white persons and one black
person awarded Edmonson only $18,000. Edmonson appealed.
Issue: May a private litigant in a civil trial use peremptory challenges to strike
potential jurors on the basis of race?
Held: No. Discrimination on the basis of race in selecting a jury in a civil proceeding
harms the excluded juror no less than discrimination in a criminal trial. While the
Constitution's protections of individual liberty and equal protection apply in general
only to action by the government, peremptory challenges have no significance
outside a court of law. Their sole purpose is to permit litigants to assist the
government in the selection of an impartial trier of fact. A private entity becomes a
government actor for the limited purpose of using peremptories during jury selection.
The selection of jurors represents a unique governmental function delegated to
private litigants by the government and attributable to the government for purposes of
invoking constitutional protections against discrimination by reason of race.
Edmonson v. Leesville Concrete Company, Inc., 111 S.Ct. 2077 (1991).
Trial Proceedings
• Burden of Proof
• Civil Cases (Preponderance of the Evidence)
• Criminal Cases (Beyond a Reasonable
Doubt)
• Sequestration = separation
• Verdict
• Hung Jury = unable to agree on a
verdict
• Judgment Not Withstanding the
Verdict (J.N.O.V)
Sample Patterned Jury Instructions
• California has adopted the following instructions in Products Liability
cases:
• PRODUCTS LIABILITY--STRICT LIABILITY IN TORT--FAILURE TO
WARN
•
"A product is defective if the use of the product in a manner that is
reasonably foreseeable by the defendant involves a substantial danger
that would not be readily recognized by the ordinary user of the product
and the manufacturer fails to give adequate warning of such danger."
•
"A manufacturer has a duty to provide an adequate warning to the
user on how to use the product if a reasonably foreseeable use of the
product involves a substantial danger that would not be readily
recognized by the ordinary user."
•
"A manufacturer has a duty to provide an adequate warning to the
consumer of a product of potential risks or side effects which are
known, or in the exercise of reasonable care should have been known,
which may follow the foreseeable use of the product."
Post-Trial
• Writ of Execution - Sheriff seizes
sufficient property to cover judgment
• Writ of Garnishment - Attach future
assets or assets held by 3rd party
(e.g. of wages for child support)
• Injunction/Contempt
• Full Faith & Credit
– Consider implications of this in re: Gay
Marriage
Appellate Procedure
• The Appeal
– Basis
• Material Error of Law, preserved by objection
• Insufficient Evidence
– Transcript
– Brief
• Amicus Curie (“Friend of the Court”)
– Oral Arguments
Appellate Procedure
• Results of Appeal
– Affirm
– Reverse
– Remand
– In whole or in part
Res Judicata
•
•
•
There was a collision between an automobile owned by Mr. Cummings
but driven by Mrs. Cummings and one driven by Bernard Dresher.
Henry Dresher, the brother of the driver, was a passenger in the
Dresher car. Both Bernard and Henry sued Mr. and Mrs. Cummings in
the federal court for damages for their injuries. The jury in that case
found Mrs. Cummings was negligent and also found Bernard Dresher
was negligent. Based upon the doctrine of contributory negligence,
Bernard was not allowed to collect damages. However, Henry was
awarded damages since he was not the negligent driver.
Subsequently Mr. Cummings filed suit against Bernard Dresher for
damages to the car sustained in the collision. This suit was brought in
a state court, and Bernard Dresher sought a summary judgment on the
ground of res judicata.
Issue: Is a federal court decision res judicata for a later state court
action involving the same parties and the same events?
Held: Yes. When a full opportunity has been provided to a party in a
prior action to prove his or her freedom from liability or to establish
liability on the part of another, there is no reason for permitting him or
her to retry those issues. In the first case, both drivers were found to
be at fault. One who has had his or her day in court cannot relitigate
the issues. The judgment in the first trial is conclusive. Cummings v.
Dresher, 218 N.E.2d 688 (N.Y. 1966).