BUSINESS LAW TODAY
Essentials 9th Ed.
Roger LeRoy Miller - Institute for University Studies, Arlington, Texas
Gaylord A. Jentz - University of Texas at Austin, Emeritus
Chapter
3
Courts and Alternative
Dispute Resolution
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Learning Objectives
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

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What is judicial review? How and when was the
power of judicial review established?
Before a court can hear a case, it must have
jurisdiction. Over what must it have
jurisdiction? How are the courts applying
traditional jurisdictional concepts to cases
involving Internet transactions?
What is the difference between a trial court and
an appellate court?
What is discovery, and how does electronic
discovery differ?
What are three alternative methods of resolving
disputes?
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The Judiciary’s Role
in American Government
 Judicial Review was established by the
U.S. Supreme Court in Marbury v.
Madison (1803) where Chief Justice
Marshall wrote:
• “It is emphatically the province and
duty of the judiciary to say what the
law is….”
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Jurisdiction
 Jurisdiction:
“Juris” (law) “diction” (to
speak) is the power of a court to hear a
dispute and to “speak the law” into a
controversy and render a verdict that is
legally binding on the parties to the
dispute.
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Jurisdiction Over Persons
 Also called “in personam” jurisdiction.
 Power of a court to compel the presence
of the parties (including corporations) to
a dispute to appear before the court and
litigate.
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Jurisdiction Over Property
 Also called “in rem” jurisdiction.
 Power to decide issues relating to
property, whether the property is real,
personal, tangible, or intangible.
 A court generally has in rem jurisdiction
over any property situated within its
geographical borders.
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Long-Arm Statutes
 Courts use long-arm statutes for nonresident parties based on “minimum
contacts” with state.
See International Shoe Co. v. State of
Washington (1945).
 “Corporate Contacts”: usually
jurisdiction in the state it was
incorporated, principal place of
business, places goods in stream of
commerce or actively advertises.
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Jurisdiction over Subject Matter
 This is a limitation on the types of cases
a court can hear, usually determined by
federal or state statutes.
 For example, bankruptcy, family or
criminal cases.
 General (unlimited) jurisdiction.
 Limited jurisdiction.
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Original and
Appellate Jurisdiction
 Courts of original jurisdiction is where
the case started (trial).
 Courts of appellate jurisdiction have the
power to hear an appeal from another
court.
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Jurisdiction of Federal Courts
 “Federal Question” cases in which
the
rights or obligations of a party are
created or defined by some federal law.
 “Diversity” cases where:
The parties are not from the same state, and
The amount in controversy is greater than
$75,000.
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Exclusive vs. Concurrent Jurisdiction
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Jurisdiction in Cyberspace
 “Sliding Scale” Standard.
Passive
Website
No
Yes
Substantial
Business
Interaction
 International Jurisdictional Issues.
Yahoo, Inc. v. La Ligue Contre La Racisme et
l’Antisemisme (2006).
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Venue
 Venue is concerned with the most
appropriate location for the trial.
 Generally, proper venue is whether the
injury occurred.
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Standing to Sue
 In order to bring a lawsuit, a party must


have “standing” to sue.
Standing is sufficient “stake” in the
controversy; party must have suffered a
legal injury. There must be a “justiciable
controversy.”
CASE 3.1 Oregon v. Legal Services Corp.
(2009). Court dismissed case because Plaintiff
did not have standing, was not legally injured.
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State Court System (Texas)
Texas Courts
Ct. Criminal
Appeals
Supreme
Court
Court of
Appeals
District Court
County Court
Municipal
Court
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Justice
Court
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State Trial Courts
 “Courts of record”- court reporters.
 Opening and closing arguments.
 Juries are selected.
 Evidence, such as witness testimony,
physical objects, documents, and
pictures, is introduced.
 Witnesses are examined and crossexamined.
 Verdicts and Judgments are rendered.
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State Appellate Courts
 Middle level of the court systems.
 Review proceedings conducted in the
trial court to determine whether the
trial was according to the procedural
and substantive rules of law.
 Generally, appellate courts will
consider questions of law, but not
questions of fact.
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State Supreme Courts
 Also known as courts of last resort.
 The two most fundamental ways to have
your case heard in a supreme court are:
Appeals of Right.
By Writ of Certiorari.
 See the U.S. Supreme Court and the
Texas Supreme Court.
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Federal Court System
Federal Courts
U.S. Supreme
Court
Writ of Certiorari
to bring case
Circuit
Courts of
Appeals
13 U.S. Courts of
Appeal 
U.S. District
Courts
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Equivalent to
State Trial Court
19
Exhibit 3.3 U.S. Courts of Appeal
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Following a State Court Case
 Pleadings.
Plaintiff’s Complaint.
Service and Summons.
Defendant’s Answer /Motion to Dismiss.
 Pre-Trial Motions.
Motion for Judgment on the Pleadings.
Motion for Summary Judgment.
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Following a State Court Case
 Discovery.
Depositions and Interrogatories.
Requests for Documents.
Requests for Admission.
Electronic Discovery.
 Pre-Trial Conference.
 Jury Selection (Voir Dire).
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Following a State Court Case
 At the Trial.
 Opening arguments.
 Plaintiff’s Case in Chief.
• Defense cross-examines Plaintiff’s witnesses.
 Defense Case in Chief.
• Plaintiff cross-examines Defense witnesses.
 Closing Arguments.
 Motion for a Directed Verdict.
 Post-Trial Motions.
 Motion for J.N.O.V.
 Motion for New Trial.
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Following a State Court Case
 The Appeal.
 Filing the Appeal.
• Briefs pointing out reversible error that require reversal of the
trial court’s verdict.
 Appellate Review.
• Courts do not consider new evidence. Only consider briefs
and evidence presented at trial.
 CASE 3.2
Evans v. Eaton Corp. (2008).
Appellate court must give deference to findings
of fact made by trial court even if a “better
decision-maker” should have been used.
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Courts Adapt to the Online World
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Electronic Filing.
Courts Online (websites, court dockets).
Cyber Courts and Online Dispute
Resolution (Michigan legislation).
Online Dispute Resolution (ODR).
 Negotiation.
 Mediation.
 Arbitration (employment contracts).
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Alternative Dispute Resolution
 Trials are a means of dispute resolution
that are very expensive and sometimes
take many months to resolve.
 There are “alternative dispute resolution”
(ADR) methods to resolve disputes that
are inexpensive, relatively quick and
leave more control with the parties
involved.
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ADR
 ADR describes any procedure or
device for resolving disputes other
than the traditional judicial process.
 Unless court-ordered, there is no
record which is an important factor in
commercial litigation due to trade
secrets.
 Most common: negotiation, mediation,
arbitration.
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Negotiation
 Less than 10% of cases reach trial.
 Negotiation is informal discussion of the
parties, sometimes without attorneys,
where differences are aired with the goal
of coming to a “meeting of the minds” in
resolving the case.
 Successful negotiation involves
thorough preparation, from a position of
strength.
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Mediation
 Involves a neutral 3rd party (mediator).
 Mediator talks face-to-face with parties
(who typically are in different adjoining
rooms) to determine “common ground.”
Advantages: few rules, customize process,
parties control results (win-win).
Disadvantages: mediator fees, no sanctions or
deadlines.
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Arbitration
 Many employment contracts have
binding arbitration clauses.
 Settling of a dispute by a neutral 3rd party
(arbitrator) who renders a legally-binding
decision; usually an expert or wellrespected government official.
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Arbitration
 Arbitration Clauses and Statutes.
Uniform Arbitration Act of 1955.
Federal Arbitration Act.
 Issue of Arbitrability.
 CASE 3.3 NCR Corp. v. Korala
Associates, Ltd. (2008). The arbitration
clause in the contract regarding software
development mandated arbitration of copyright
infringement claim.
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Arbitration Issues
 Mandatory Employment Arbitration.
Generally clauses are enforceable.
 Results may be unpredictable because
arbitrators do not have to follow
precedent or rules of procedure or
evidence.
 Arbitrators do not have to issue written
opinions.
 Generally, no discovery available.
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Other Types of ADR
 Mini-Trial: Attorneys for each side
informally present their case before a
mutually agreed-upon neutral 3rd party
(e.g., a retired judge) who renders a
non-binding “verdict.” This facilitates
further discussion and settlement.
 Expert evaluations.
 Conciliation: 3rd party assists in
reconciling differences.
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Providers of ADR Services
 Non-profit organizations:
American Arbitration Association.
Better Business Bureau.
 For Profit:
JAMS-ADR.com(Flash enabled).
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Online Dispute Resolution
 Also called ODR.
 Uses the Internet to resolve disputes.
 Still in its infancy but is gaining
momentum.
 See, e.g., www.cybersettle.com .
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