chapter 2: traditional and online dispute resolution

CHAPTER 2: TRADITIONAL AND

ONLINE DISPUTE RESOLUTION

© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives1. What is judicial review? How and when was

the power of judicial review established?2. 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?


Learning Objectives3. What is the difference between a trial court

and an appellate court?4. What is discovery, and how does electronic

discovery differ from traditional discovery? 5. What are three alternative methods of

resolving disputes?


• 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….”

• Today, judicial review is exercise by both federal and state courts.

The Judiciary’s Role in American Government


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.


Basic Judicial Requirements• Jurisdiction.– Jurisdiction over Persons or Property.• Court can exercise personal jurisdiction (in personam).• Long-Arm Statutes: Courts exercise jurisdiction over

non-resident defendants based on “minimum contacts” with state.

7© 2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Basic Judicial Requirements Jurisdiction.–Long-Arm Statutes.• Corporate Contacts: does the firm do business or

advertise within the state?

•CASE 2.1 SOUTHERN PRESTIGE INDUSTRIES, INC. INDEPENDENCE PLATING CORP. (2010). Did the New Jersey firm have minimum contacts with North Carolina?


Basic Judicial Requirements Jurisdiction.– Jurisdiction Over Subject Matter.• General and Limited Jurisdiction: statutory

limitation on the types of cases a court can hear (e.g., probate and bankruptcy). • Can also be limited to amount in controversy

(amount of monetary damages).


Basic Judicial Requirements Jurisdiction.–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.


Basic Judicial Requirements Jurisdiction.– Jurisdiction of the Federal Courts.• Federal Questions: rights or obligations of a

party are created or defined by some federal law.• Diversity of Citizenship: parties are not from

same state, and amount in controversy must exceed $75,000.


Basic Judicial Requirements Jurisdiction.–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.


Basic Judicial Requirements Jurisdiction in Cyberspace.–Sliding Scale Standard to determine

whether a court has jurisdiction.

No Yes

Substantial Business

Interaction

Passive Website

Some Interaction


Basic Judicial Requirements Jurisdiction in Cyberspace.– International Jurisdiction Issues.–CASE 2.2 GUCCI AMERICA, INC. V WANG

HUOQING (2011). What factors did the court consider in its decision to assert jurisdiction over the defendant?


Basic Judicial Requirements Venue.–Venue is concerned with the most

appropriate location for the trial.–Generally, proper venue is whether the

injury occurred. Standing to Sue.–A party must have suffered a legal injury and

have a sufficient “stake” in the controversy.


State and Federal Court Systems

Ct. Criminal Appeals

SupremeCourt

Court ofAppeals

District Court County Court

Municipal Court

JusticeCourt

Texas CourtsU.S. Supreme

Court

Circuit Courts ofAppeals

U.S. DistrictCourt

Federal Courts



State Court Systems.–Trial Courts.• “Courts of record”- have court reporters.• Small Claims Courts are informal, inferior courts

with limited amounts in controversy (usually $5,000).



State Court Systems.–Appellate, or Reviewing Courts.• Review trial court proceedings to determine

whether the trial complied with procedural and substantive rules of law.• Generally, appellate courts will consider

questions of law, but not questions of fact.



State Court Systems.–Highest State Courts.• Usually, but not always, called a ‘supreme court.’• Decisions of a state’s highest court on matters of

state law are final. The U.S. Supreme Court can overrule a state supreme court when there are federal laws involved.



The Federal Court System.–Basically a three-tiered system:• U.S. District Courts (trial courts of general

jurisdiction).• U.S. Courts of Appeal. • The U.S. Supreme Court.



The Federal Court System.–U.S. District Courts• Courts of original jurisdiction based on federal

statutes. –U.S. Courts of Appeal.• There are 13 Courts of Appeal representing

district courts throughout the country.


Federal Court System:U.S. Courts of Appeal



The Federal Court System.– The U.S. Supreme Court.• Final arbiter of U.S.

Constitution.• Petition for Court to hear

case by Writ of Certiorari.–www.supremecourt.gov


Following a State Court Case The Pleadings.–The Plaintiff’s Complaint. –The Defendant’s Answer. – Motion to Dismiss.


Following a State Court Case The Pleadings.–Plaintiff’s Complaint. • Court acquires jurisdiction over subject matter

and Plaintiff.• Facts: What happened.• Prayer: Court relief.


Following a State Court Case The Pleadings.–Defendant’s Answer:• Makes General Denial.

• May move for Change of Venue.

• May allege Affirmative Defenses.

• May assert Counterclaims against Plaintiff.


Following a State Court Case The Pleadings.–Motion to Dismiss.• Many lawsuits never go to trial. Perhaps there is

a settlement, or the case was dismissed.• Either party (normally defendant) can ask the

court to dismiss the case if the pleadings fail to show a legal claim.


Following a State Court Case Pretrial Pleadings.–Motion for Judgment on the Pleadings.• Asks the court to rule on the case, based on the

pleadings.–Motion For Summary Judgment.• Asks a court to grant a judgment for moving party

without a trial. Facts are viewed in the light most favorable to the other party. Admissible evidence is submitted.


Following a State Court Case Discovery: process by which parties

obtain information from the opposing party prior to trial.–Depositions and Interrogatories.• Sworn testimony recorded and transcribed by

court official (court reporter).• Written questions and answers under oath.


Following a State Court Case Discovery.–Requests for Other Information.–Electronic Discovery.• FRCP deals specifically with preservation,

retrieval, and production of electronic data.


Following a State Court Case Pretrial Conference. Jury Selection.–Voir Dire.– Jurors can be dismissed peremptorily (no

reason or for cause (bias).


Following a State Court Case The Trial.–Opening Statements. –Rules of Evidence.• Judge decides what evidence is admissible for

jury’s consideration.• Evidence must be relevant to the issues (tends to

prove or disprove).


Following a State Court Case The Trial.–Motion for Directed Verdict: at conclusion

of plaintiffs’ case, court looks at evidence in most favorable light to defendant.


Following a State Court Case The Trial.–Expert Witnesses. Provide specialized

knowledge and opinions that help jurors decide issues.• CASE 2.3 DOWNEY V. BOB’S DISCOUNT

FURNITURE HOLDINGS, INC. (2011). Why did the trial court abuse its discretion?


Following a State Court Case The Trial.–Closing Arguments: each attorney

summarizes the facts and evidence and tells her client’s story in the most compelling way possible.–Verdict: The verdict specifies the jury’s

findings and liability. A jury can award money damages in a civil case.


Following a State Court Case Posttrial Motions.–Motion for J.N.O.V.: granted only if the

jury’s verdict was unreasonable and erroneous.–Motion for New Trial: after looking at all

the evidence, judge will grant the motion IF the jury was in error.


Following a State Court Case The Appeal.–A party may appeal the jury’s verdict or

any legal issue, motion or court ruling during the trial.–Appellants must have legitimate grounds

for appeal (usually legal error).


Following a State Court Case The Appeal.–Appellate Review: the appeals court can

affirm (agree with) or reverse (disagree with) the lower court’s decision.–Higher Appellate Courts.


Following a State Court Case Enforcing the Judgment.–Even if a plaintiff wins a jury award of

damages, the defendant may not have sufficient assets or insurance to cover the amount.–Usually these factors are considered

before a lawsuit is filed.


• Electronic Filing.• Courts Online (websites, court dockets).• Cyber Courts and Proceedings.

Courts Adapt to the Online World


Alternative Dispute Resolution

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.



Negotiation.–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.



Mediation.–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.



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 well-respected government official.



Arbitration.–Arbitration Clauses and Statutes.• Uniform Arbitration Act of 1955.• Federal Arbitration Act.

– Issue of Arbitrability.–Mandatory Arbitration in the Employment

Context: generally mandatory arbitration clauses are enforceable.



• Other Types of ADR.• Providers of ADR Services.– Non-profit organizations:• American Arbitration Association.• Better Business Bureau.

– For Profit: • JAMS-ADR.com(Flash enabled).

http://www.adr.org/

http://www.bbb.org/

http://www.jamsadr.com/



• 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 .

http://www.cybersettle.com/

chapter 2: traditional and online dispute resolution

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