Chapter 2
Traditional and
Online Dispute
Resolution
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Learning Objectives
• 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?
• In a lawsuit, what are pleadings? What is discovery,
and how does electronic discovery differ from
traditional discovery? What is electronic filing?
• How are online forums being used to resolve 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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• Who was Marbury and why did he sue
James Madison?
• Where did he sue (what court)?
• What did he ask for (what’s it called)?
• How did the U.S. Supreme Court approach
the case … the 3 questions?
• How did it answer each question?
• Who won this case?
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Basic Judicial Requirements
• 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
• Power of a court to compel the presence
of the parties (including corporations) to a
dispute to appear before the court and
litigate.
• Courts use long-arm statutes for nonresident parties based on “minimum
contacts” with state.
• CASE 2.1: Snowney v. Harrah’s
Entertainment, Inc. (2005).
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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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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 the 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
• Exclusive: only one court (state or federal)
has the power (jurisdiction) to hear the
case.
• Concurrent: more than one court can hear
the case.
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Jurisdiction in Cyberspace
• “Sliding Scale” Standard: When does a
court have jurisdiction over internet
transactions?
Passive
Website
Some
Interaction
No
Case-by-Case
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Yes
Substantial
Business
Interaction
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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.
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State and Federal Courts
NY Courts
Federal Courts
U.S. Supreme
Court
Court of Appeals
Supreme Court, Appellate Division
(1st, 2nd, 3rd or 4th Department)
Supreme Court
Municipal
Court
Circuit
Courts of
Appeals
Town
Court
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U.S. District
Court
15
Federal Courts of Appeal
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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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Following a State Court Case
• Pleadings.
– Plaintiff’s Complaint.
– 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 (from computer files).
• Pre-Trial Conference.
• Jury Selection (Voir Dire).
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Following a State Court Case
• 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.
• Verdict / Motion JNOV /Judgment.
• The Appeal.
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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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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.
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Courts Adapt to the Online World
• Electronic Filing.
– CASE 2.2 Phansalkar v. Anderson, Weinroth &
Co. (2004).
• 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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Assisted Negotiation
• 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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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 legallybinding decision; usually an expert or
well-respected government official.
• Mandatory arbitration in employment
agreements are generally enforceable.
– CASE 2.3: Circuit City Stores, Inc. v.
Adam (2001).
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Arbitration Disadvantages
• 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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Arbitration Process
• Case begins with a submission to an
arbitrator. Next comes the hearing where
parties present evidence and arguments.
Finally, the arbitrator renders an award.
• Courts are not involved in arbitration
unless an arbitration clause in a contract
needs enforcement.
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Online Dispute Resolution
• Also called ODR.
• Uses the Internet to resolve disputes.
• Still in its infancy but is gaining
momentum.
• ICANN (arbitration).
• VMAG project.
• CAN-WIN conferencing system.
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