P A R T
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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
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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
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The U.S. Judicial System
The United States has a federal court system
and each state has a court system
 A Court is established by a government to
hear and decide matters before it and redress
past or prevent future wrongs
 Jurisdiction (the power to hear and speak)
may be original (trial) or appellate (reviews
trial court)

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Federal Court Hierarchy
U.S. Supreme Court (appellate jurisdiction;
final review and final decision)
  Courts of Appeals (appellate
jurisdiction)
  District Courts (trial courts; original
jurisdiction) or Statutory Courts (original
limited jurisdiction), such as Tax Court,
Court of Int’l Trade, Court of Federal
Claims, etc.

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State Court Hierarchy
State Supreme Court (final appellate)
  State Civil Court of Appeals and State Criminal
Court of Appeals
  District Courts (trial courts for civil matters over
certain $ amount) and Criminal Courts
  County Courts (trial courts for civil matters
under certain $ amount)
  Justice of the Peace Courts (small claims and
misdemeanor courts)
 Limited Jurisdiction Courts (i.e., family, probate,
traffic, zoning)

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General vs. Limited Jurisdiction

General jurisdiction courts (i.e., trial courts)
hear most types of cases



Levels generally classified according to dollar
amount of damages or location
Examples: county courts, district courts
Limited jurisdiction courts hear specialized
types of cases and appeals from these
decisions often require a new trial in a court
of general jurisdiction

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Examples: traffic court, tax court, family court
Subject-Matter Jurisdiction
Subject-matter jurisdiction refers to a court’s
authority to hear a particular type of dispute.
 Courts of criminal jurisdiction hear trials of
crimes and misdemeanors, which are
offenses against the public at large
 Courts of civil jurisdiction hear and decide
issues concerning private rights and duties
(e.g., contracts, torts), as well as non-criminal
public matters (e.g., zoning, probate)

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In Personam or In Rem Jurisdiction
In addition to subject-matter jurisdiction, a
court must have either in personam or in rem
jurisdiction
 In personam jurisdiction requires that the
defendant be a resident of, located within, or
have committed acts within the physical
boundaries of the court’s authority

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In Personam or In Rem Jurisdiction

In rem jurisdiction applies when property that
is the subject of the dispute is located within
physical boundaries of the court’s authority

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Example: a dispute over a house sale
Bombliss v. Cornelsen

Facts & Procedural History:



Illinois residents sued Oklahoma residents in
Illinois court and the Oklahoma defendants
moved to dismiss for lack of in personam
jurisdiction
Trial court dismissed complaint and Plaintiffs
appealed
Issue: Does the Illinois long-arm statute
permit state courts to exercise jurisdiction
over Oklahoma defendants?
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Bombliss v. Cornelsen

Analysis and Application to Facts:




Defendant must purposefully avail himself of the privilege of
conducting activities within the state such that he would
reasonably anticipate being haled into the state’s court
Where a contract exists, minimum contacts shown by
negotiations between parties, the course of dealing between
parties, and foreseeable future consequences
Existence of a contract, defendants’ interactive website, and
contact with potential customers of plaintiffs equate to
minimum contacts
Holding: In personam jurisdiction exists. Trial court
decision reversed and case remanded.
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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

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Civil Procedure
A set of rules establishing how a lawsuit
proceeds from beginning to end
 In an adversarial system, the plaintiff bears
the burden of proof to prove his/her case by
a preponderance of the evidence
 Once the plaintiff has made a “prima facie”
case (i.e., proved the basic case), the burden
of proof may shift to the defendant

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Civil Pre-Trial Procedure
Action or event occurs allegedly causes
harm 
 Injured party, known as Plaintiff, files a
Petition or Complaint 
 Sheriff serves “process” (writ, notice,
summons) on Defendant 
 Defendant Answers Complaint 
 Case proceeds to trial or settlement

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Civil Pre-Trial Procedure
Plaintiff’s complaint or petition plus
the defendant’s answer or response are
known as the pleadings
 Defendant may enter a counterclaim
against the plaintiff or a crosscomplaint against a third party
 Other parties may enter the case

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Civil Pre-Trial Procedure
Motion Practice: some motions ask the
judge to decide the result before trial
 Motion to dismiss (or demurrer)
 Motion for judgment on the pleadings
 Motion for summary judgment
 Motions should NOT be taken lightly!

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Civil Pre-Trial Procedure

Discovery: Obtaining evidence from the other
party through interrogatories, requests for
admissions, requests for documents, and
depositions

The discovery process can be a battleground


See Allstate Indemnity Co. v. Ruiz
Pretrial Conference: where the judge will hear
and rule on many evidentiary issues,
discovery disputes, and other concerns
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Civil Trial Procedure
Jury Selection
(Voir Dire)
 Opening
Statement from
each party

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Civil Trial Procedure

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Plaintiff’s case through direct examination
of witnesses (defendant performs crossexamination) and defendant’s case
through direct examination (and
plaintiff’s cross-examination)
Civil Trial Procedure
Closing Argument or Summation from
each party
 Jury verdict

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Civil Trial Procedure
Trial motions include: motions in limine
(motion to limit evidence), voluntary nonsuit or dismissal (drop the case), motion for
compulsory non-suit or summary judgment
 After summation or closing argument, a
party may move for a mistrial
(overwhelming prejudice or injustice) or
directed verdict (weight of evidence leads to
only one conclusion)

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Civil Trial Procedure
Trier of Fact sees material evidence (physical
objects, documents), hears testimony of
witnesses (who provide factual evidence),
and decides outcome of the case based on
facts; trier of fact may be judge or jury
 Matters of law are issues not of fact, but of
law; matters of law decided only by a judge
 E.g., whether a statute means X or Y, or
one law or another applies to the facts

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Civil Trial Post-Trial Procedure

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After the jury verdict, a party may make a
motion for new trial, judgment non obstanto
verdicto (notwithstanding the verdict) or
J.N.O.V., or remittitur (defendant’s request
for the judge to reduce the amount of
damages the jury recommended; very
common)
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
 Bottom line: a judgment is issued and
enforcement of the judgment begins

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Point of Procedure
Not all dispute resolution mechanisms in the
legal system are heard by a judge
 Disputes with government often resolved by
the relevant administrative agency



Administrative agencies generally have a
unique dispute resolution process (hearings
and appeals)
Also, disputants may choose alternative
dispute resolution
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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

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Why Choose ADR?
Less costly, in general
 May be more appropriate method of
resolution for certain types of cases (e.g.,
family law disputes, real estate disputes
between neighbors, high-tech or trade-secret
disputes)
 May be required by clause in contract

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Test Your Knowledge

True=A, False = B
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

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Test Your Knowledge

True=A, False = B



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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:




Methods of alternative dispute resolution
include:




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(a) a jury pool that reflects the ethnic makeup of the 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
(a)
(b)
(c)
(d)
Mediation
Arbitration
Summary jury trial
All of the above
Test Your Knowledge

Multiple Choice

Discovery refers to:




After the verdict:



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(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
(a) Either party may make post-verdict motions
(b) The trial must end
(c) The trial begins
Thought Question

If you were served with a lawsuit, what would you
do about it?
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