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Chapter 2Chapter 2Courts and AlternativeCourts and Alternative
Dispute ResolutionDispute Resolution
BUSINESS LAW: Text Cases !BUSINESS LAW: Text Cases !Le"al# Ethi$al# International# andLe"al# Ethi$al# International# and
E%Co&&er$e Environ&entE%Co&&er$e Environ&ent ''''thth Ed(Ed(
Copyright © 2009 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
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§1: The Judiciary’s Role In§1: The Judiciary’s Role In
American Government American Government
Judicial e!ie" "as esta#lished #y theJudicial e!ie" "as esta#lished #y the
$.S. Supre%e Court in$.S. Supre%e Court in Marbury v.Marbury v.
MadisonMadison &'(0)* "here Chief Justice&'(0)* "here Chief Justice+arshall "rote+arshall "rote
t is e%phatically the pro!ince andt is e%phatically the pro!ince and
duty of the /udiciary to say "hat theduty of the /udiciary to say "hat thela" is.1la" is.1
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§2: Basic Judicial Requirements§2: Basic Judicial Requirements
JurisdictionJurisdiction Juris1 &la"* diction1 &to Juris1 &la"* diction1 &to
spea* is the po"er of a court to hear aspea* is the po"er of a court to hear a
dispute and to spea the la"1 into adispute and to spea the la"1 into a
contro!ersy and render a !erdict that iscontro!ersy and render a !erdict that is
legally #inding on the parties to thelegally #inding on the parties to the
dispute.dispute.
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Jurisdiction OverJurisdiction Over
ersons or ro!ertyersons or ro!erty
4ersons4ersons po"er of a court to co%pel the po"er of a court to co%pel the
presence of the parties &includingpresence of the parties &including
corporations* to a dispute to appear #eforecorporations* to a dispute to appear #efore
the court and litigate.the court and litigate.
In RemIn Rem po"er to decide issues relating to po"er to decide issues relating to
property, "hether the property is real,property, "hether the property is real,
personal, tangi#le, or intangi#le.personal, tangi#le, or intangi#le. 5 6 court generally has 6 court generally has in remin rem /urisdiction o!er any /urisdiction o!er any
property situated "ithin its geographical #orders.property situated "ithin its geographical #orders.
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Long 6r% Statutes courts use long-ar%Long 6r% Statutes courts use long-ar%
statutes for non-resident parties #ased onstatutes for non-resident parties #ased on
%ini%u% contacts1 "ith state. +eans%ini%u% contacts1 "ith state. +eans
defendant had so%e connection "ith foru%defendant had so%e connection "ith foru%
state.state.
Corporate Contacts does #usiness orCorporate Contacts does #usiness or
ad!ertises "ithin state.ad!ertises "ithin state. 5 CASE 2.1CASE 2.1 Mastondrea v. Occidental HotelsMastondrea v. Occidental Hotels
Management S.A.Management S.A. (2007).(2007).
Jurisdiction OverJurisdiction Over
ersons or ro!ertyersons or ro!erty
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"u#$ect %atter Jurisdiction"u#$ect %atter Jurisdiction
his is a li%itation on the types of cases ahis is a li%itation on the types of cases a
court can hear, usually deter%ined #ycourt can hear, usually deter%ined #y
federal or state statutes.federal or state statutes.
:or e;a%ple, #anruptcy, fa%ily or:or e;a%ple, #anruptcy, fa%ily or
cri%inal cases.cri%inal cases.
<eneral &unli%ited* /urisdiction.<eneral &unli%ited* /urisdiction. Li%ited /urisdiction.Li%ited /urisdiction.
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Ori&inal and A!!ellateOri&inal and A!!ellate
JurisdictionJurisdiction Courts of original /urisdiction is "here theCourts of original /urisdiction is "here the
case started &trial*.case started &trial*.
Courts of appellate /urisdiction ha!e theCourts of appellate /urisdiction ha!e thepo"er to hear an appeal fro% anotherpo"er to hear an appeal fro% another
court.court.
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'ederal (ourt Jurisdiction'ederal (ourt Jurisdiction
:ederal >uestion1 cases in "hich the:ederal >uestion1 cases in "hich the
rights or o#ligations of a party are createdrights or o#ligations of a party are created
or defined #y so%e federal la".or defined #y so%e federal la".
?i!ersity1 cases "here?i!ersity1 cases "here
5 he parties are not fro% the sa%e state, andhe parties are not fro% the sa%e state, and
5he a%ount in contro!ersy is greater thanhe a%ount in contro!ersy is greater than
@=7,000.@=7,000.
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)*clusive vs+)*clusive vs+
(oncurrent Jurisdiction(oncurrent Jurisdiction A;clusi!e only one court &state or federal*A;clusi!e only one court &state or federal*
has the po"er &/urisdiction* to hear thehas the po"er &/urisdiction* to hear the
case.case.
Concurrent %ore than one court can hearConcurrent %ore than one court can hear
the case.the case.
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Jurisdiction in (y#ers!aceJurisdiction in (y#ers!ace
Courts use a Sliding Scale1 Standard toCourts use a Sliding Scale1 Standard to
deter%ine "hether to e;ercise /urisdiction.deter%ine "hether to e;ercise /urisdiction.
No Yes
Substantial
Business
Interaction
Passive
Website
SomeInteraction
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,enue ,enue
enue is concerned "ith the %ostenue is concerned "ith the %ost
appropriate location for the trial.appropriate location for the trial.
<enerally, proper !enue is "hether the<enerally, proper !enue is "hether thein/ury occurred.in/ury occurred.
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"tandin& to "ue"tandin& to "ue
n order to #ring a la"suit, a party %ustn order to #ring a la"suit, a party %ust
ha!e standing1 to sue.ha!e standing1 to sue.
Standing is sufficient stae1 in theStanding is sufficient stae1 in thecontro!ersy party %ust ha!e suffered acontro!ersy party %ust ha!e suffered a
legal in/ury.legal in/ury.
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§-:§-: "tate and 'ederal (ourts"tate and 'ederal (ourts
Ct. Criminal
Appeals
Supreme
Court
Court of
Appeals
District Court County Court
Municipal
CourtJustice
Court
Texas Courts
.S. Supreme
Court
Circuit
Courts of
Appeals
.S. District
Court
Federal Courts
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)*hi#it 2+1 "tate and 'ederal (ourts)*hi#it 2+1 "tate and 'ederal (ourts
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Trial (ourtsTrial (ourts
Courts of record1-court reporters.Courts of record1-court reporters. Dpening and closing argu%ents.Dpening and closing argu%ents. Juries are selected.Juries are selected. A!idence, such as "itness testi%ony,A!idence, such as "itness testi%ony,
physical o#/ects, docu%ents, andphysical o#/ects, docu%ents, andpictures, is introduced.pictures, is introduced.
Witnesses are e;a%ined and cross-Witnesses are e;a%ined and cross-e;a%ined.e;a%ined.
erdicts and Judg%ents are rendered.erdicts and Judg%ents are rendered.
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A!!ellate (ourts A!!ellate (ourts
+iddle le!el of the court syste%s.+iddle le!el of the court syste%s.
e!ie" proceedings conducted in the triale!ie" proceedings conducted in the trial
court to deter%ine "hether the trial "ascourt to deter%ine "hether the trial "asaccording to the procedural andaccording to the procedural and
su#stanti!e rules of la".su#stanti!e rules of la".
<enerally, appellate courts "ill consider<enerally, appellate courts "ill considerEuestions of la"Euestions of la", #ut, #ut not Euestions of factnot Euestions of fact..
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)*hi#it 2+2+ 'ederal (ourts o. A!!eal)*hi#it 2+2+ 'ederal (ourts o. A!!eal
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"u!reme (ourts"u!reme (ourts
6lso no"n as courts of last resort. 6lso no"n as courts of last resort.
he t"o %ost funda%ental "ays to ha!ehe t"o %ost funda%ental "ays to ha!e
your case heard in a supre%e court areyour case heard in a supre%e court are 5 6ppeals of ight. 6ppeals of ight.
5 ByBy Writ of Certiorari Writ of Certiorari ..
See the $.S. Supre%e Court and theSee the $.S. Supre%e Court and thee;as Supre%e Court "e#sites.e;as Supre%e Court "e#sites.
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§/: Alternative 0is!ute§/: Alternative 0is!ute
ResolutionResolution
rials are a %eans of dispute resolutionrials are a %eans of dispute resolution
that are !ery e;pensi!e and so%eti%esthat are !ery e;pensi!e and so%eti%es
tae %any %onths to resol!e.tae %any %onths to resol!e.
here are alternati!e dispute resolution1here are alternati!e dispute resolution1
&6?* %ethods to resol!e disputes that&6?* %ethods to resol!e disputes that
are ine;pensi!e, relati!ely Euic and lea!eare ine;pensi!e, relati!ely Euic and lea!e
%ore control "ith the parties in!ol!ed.%ore control "ith the parties in!ol!ed.
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A0R A0R
6? descri#es any procedure or de!ice 6? descri#es any procedure or de!ice
for resol!ing disputes other than thefor resol!ing disputes other than the
traditional /udicial process.traditional /udicial process.
$nless court-ordered, there is no record$nless court-ordered, there is no record"hich is an i%portant factor in"hich is an i%portant factor in
co%%ercial litigation due to trade secrets.co%%ercial litigation due to trade secrets.
+ost co%%on+ost co%%on negotiationnegotiation,, %ediation%ediation,,ar#itrationar#itration..
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e&otiatione&otiation
Less than '0F of cases reach trial.Less than '0F of cases reach trial.
Gegotiation is infor%al discussion of theGegotiation is infor%al discussion of the
parties, so%eti%es "ithout attorneys,parties, so%eti%es "ithout attorneys,"here differences are aired "ith the goal"here differences are aired "ith the goal
of co%ing to a %eeting of the %inds1 inof co%ing to a %eeting of the %inds1 in
resol!ing the case.resol!ing the case.
Successful negotiation in!ol!es thoroughSuccessful negotiation in!ol!es thorough
preparation, fro% a position of strength.preparation, fro% a position of strength.
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Assisted e&otiation Assisted e&otiation
+ini-rial 6ttorneys for each side+ini-rial 6ttorneys for each sideinfor%ally present their case #efore ainfor%ally present their case #efore a%utually agreed-upon neutral )%utually agreed-upon neutral )rdrd partyparty
&&e.g.,e.g., a retired /udge* "ho renders aa retired /udge* "ho renders anon-#inding !erdict.1 his facilitatesnon-#inding !erdict.1 his facilitatesfurther discussion and settle%ent.further discussion and settle%ent.
A;pert e!aluations.A;pert e!aluations. Conciliation )Conciliation )rdrd party assists inparty assists in
reconciling differences.reconciling differences.
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%ediation%ediation
n!ol!es a neutral )n!ol!es a neutral )rdrd party &%ediator*.party &%ediator*.
+ediator tals face-to-face "ith parties+ediator tals face-to-face "ith parties
&"ho typically are in different ad/oining&"ho typically are in different ad/oiningroo%s* to deter%ine co%%on ground.1roo%s* to deter%ine co%%on ground.1
5 6d!antages fe" rules, custo%iHe process, 6d!antages fe" rules, custo%iHe process,
parties control results &"in-"in*.parties control results &"in-"in*.
5 ?isad!antages %ediator fees, no sanctions?isad!antages %ediator fees, no sanctions
or deadlines.or deadlines.
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Ar#itration Ar#itration
Settling of a dispute #y a neutral )Settling of a dispute #y a neutral )rdrd partyparty&ar#itrator* "ho renders a legally-#inding&ar#itrator* "ho renders a legally-#indingdecision usually an e;pert or "ell-respecteddecision usually an e;pert or "ell-respected
go!ern%ent official.go!ern%ent official. 5 6r#itration Clauses and Statutes. 6r#itration Clauses and Statutes.
5 6r#itra#ility of the Case. 6r#itra#ility of the Case.
5 CASE 2.2CASE 2.2 Buckeye !eck as!ing" #nc. v.Buckeye !eck as!ing" #nc. v.adegnaadegna (2006).(2006).
+andatory A%ploy%ent 6r#itration.+andatory A%ploy%ent 6r#itration. 5 CASE 2.3CASE 2.3 Morrison v. ircuit ity Stores" #nc.Morrison v. ircuit ity Stores" #nc.
(2003).(2003).
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Ar#itration 0isadvanta&es Ar#itration 0isadvanta&es
esults %ay #e unpredicta#le #ecauseesults %ay #e unpredicta#le #ecause
ar#itrators do not ha!e to follo" precedentar#itrators do not ha!e to follo" precedent
or rules of procedure or e!idence.or rules of procedure or e!idence.
6r#itrators do not ha!e to issue "ritten 6r#itrators do not ha!e to issue "ritten
opinions.opinions.
<enerally, no disco!ery a!aila#le.<enerally, no disco!ery a!aila#le.
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Ar#itration rocess Ar#itration rocess
Case #egins "ith a su#%ission to anCase #egins "ith a su#%ission to an
ar#itrator. Ge;t co%es the hearing "herear#itrator. Ge;t co%es the hearing "here
parties present e!idence and argu%ents.parties present e!idence and argu%ents.:inally, the ar#itrator renders an a"ard.:inally, the ar#itrator renders an a"ard.
Courts are not in!ol!ed in ar#itrationCourts are not in!ol!ed in ar#itration
unless an ar#itration clause in a contractunless an ar#itration clause in a contractneeds enforce%ent.needs enforce%ent.
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Other Ty!es o. A0ROther Ty!es o. A0R
Aarly Geutral Case A!aluation.Aarly Geutral Case A!aluation.
+ini-rial.+ini-rial.
Su%%ary Jury rials.Su%%ary Jury rials.
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roviders o. A0R "ervicesroviders o. A0R "ervices
Gon-profit organiHationsGon-profit organiHations
5 6%erican 6r#itration 6ssociation. 6%erican 6r#itration 6ssociation.
5Better Business Bureau.Better Business Bureau.
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Online 0is!ute ResolutionOnline 0is!ute Resolution
6lso called D?. 6lso called D?.
$ses the nternet to resol!e disputes.$ses the nternet to resol!e disputes.
Still in its infancy #ut is gainingStill in its infancy #ut is gaining%o%entu%.%o%entu%.
See, e.g., esolution :oru%, nc., irtualSee, e.g., esolution :oru%, nc., irtual
+agistrate 4ro/ect.+agistrate 4ro/ect.
§ I i l 0i§ I t ti l 0i t
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§ : International 0is!ute§ : International 0is!ute
ResolutionResolution
:oru% Selection and Choice-of-La":oru% Selection and Choice-of-La"
clauses in contracts go!ern theclauses in contracts go!ern the
transaction.transaction. 6r#itration clauses are generally 6r#itration clauses are generally
incorporated into international contracts.incorporated into international contracts.
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