HELP COLLEGE OF ARTS AND TECHNOLOGY

IN COLLABORATION WITH
SOUTHERN NEW HAMPSHIRE UNIVERSITY
____________________________________________
BUSINESS LAW [BUS 206]

LECTURE 2
CIVIL DISPUTE RESOLUTION

THE U.S. COURT SYSTEM

Judicial Process in the U.S.

represents a balance between [1] to be fair and impartial, and [2] to operate
efficiently as well as a commitment to the adversary system
Courts

are impartial tribunals established by governmental bodies to settle disputes

may render a binding decision only when it has jurisdiction over the dispute
and the parties to that dispute i.e. when it has a right to hear and make a
judgment in a case
Jurisdiction

means the power or authority of a court to hear and decide a given case
to resolve a lawsuit, a court must have two (2) kinds of jurisdiction:
[1] subject matter jurisdiction refers to the authority of a particular court
to adjudicate a controversy of a particular kind. If lacks jurisdiction, no action
it takes in the case will have legal effect
[2] jurisdiction over the parties power to bind the parties involved in the
dispute. Required for the court to render an enforceable judgment that
affects the rights and duties of the parties to the lawsuit

THE U.S. COURT SYSTEM (contd)

Types of Court
Original Jurisdiction trial court
General Jurisdiction broad authority civil and criminal cases
Special Jurisdiction also limited jurisdiction hear particular kind of cases
Appellate Jurisdiction reviews the work of a lower court

A. Federal Judicial System

Article III of the U.S. Constitution judicial power of the United States shall be vested
in one Supreme Court and such lower courts as Congress may establish
Congress has established a lower Federal court system consisting of a number of
special courts, district courts, and courts of appeals
The Federal court system is staffed by judges who receive lifetime appointments
from the President, subject to confirmation by the Senate
[1] District Courts

Trial courts of general jurisdiction that can hear and decide most legal controversies
Most cases begin in a district court and it is here that issues of fact are decided
Generally presided over by one(1) judge although in certain cases three (3) judges
preside

THE U.S. COURT SYSTEM (contd)

[2] Courts of Appeals

hear appeals from district courts and review orders of certain administrative agencies,
the Tax Court, and the Bankruptcy Court
Generally hear cases in panels of three (3) judges
Function to examine the record of a case on appeal and to determine if the trial
court committed prejudicial error
If prejudicial error exist - will reverse or modify the judgment and if necessary remand
it (send it back) to the lower court for further proceeding
if no prejudicial error will affirm the decision of the lower court
[3] The Supreme Court

nation's highest court, whose principal function is to review decisions of the Federal
Courts of Appeals and the highest State courts
Consists of nine (9) justices a Chief Justice and eight (8) Associate Justices
Sit as a group in Washington D.C.
A quorum consists of any six (6) justices
[4] Special Courts

have jurisdiction over cases in a particular area of Federal law particular subject
matter
includes the U.S. Court of Federal Claims, the U.S. Tax Court, the U.S. Bankruptcy
Courts, and the U.S. Court of Appeals for the Federal Circuit

THE U.S. COURT SYSTEM (contd)

B. State Courts

Each of the fifty (50) States and the District of Columbia has its own court
system
In most States the voters elect judges for a stated term
[1] Inferior Trial Courts

At the bottom of the States court system

hear minor criminal cases, such as traffic offenses, and civil cases involving
small amounts of money; conduct preliminary hearings in more serious
criminal cases
Usually do not keep a complete written record of trial proceedings
[2] Trial Courts

have general jurisdiction over civil and criminal cases

May be called county, district, superior, circuit or common pleas courts
In New York the trial court is called the Supreme Court
These courts do not have a dollar limitation on their jurisdiction in civil cases
Hear all criminal cases other than minor offences
Maintains formal records of their proceedings as procedural safeguards

THE U.S. COURT SYSTEM (contd)

[3] Special Courts

trial courts, such as probate courts and family courts, having jurisdiction
over a particular area of State law
Appeals from these special courts go to the general State appellate courts
[4] Appellate Courts

Courts with appellate jurisdiction that review the decisions of lower courts in
that state
Decisions of the general trial courts in a state would be appealed to these
courts
[5] Supreme Courts

highest court in most states generally known as the state supreme court
New York call their highest court the court of appeals
Primarily appellate jurisdiction
Decision is final except in those circumstances in which a federal subject
matter or treaty or the U.S. Constitution is involved
Cases with these federal subject matter issues can be appealed to the U.S.
Supreme Court

THE U.S. COURT SYSTEM (contd)

Subject Matter Jurisdiction
[1] Exclusive Federal Jurisdiction

Only if Congress so provides, either explicitly or implicitly otherwise share the

jurisdiction with the State courts
Federal criminal prosecution, admiralty, bankruptcy, antitrust, patent,
trademark, copyright, and other specified cases
[2] Concurrent Federal Jurisdiction

authority of more than one court to hear the same case

Two (2) types: [a] federal question jurisdiction, and [b] diversity jurisdiction
Federal question jurisdiction arises whenever there is a Federal question
over which the Federal courts do not have exclusive jurisdiction example
case arising under the Constitution, statutes or treaties of the United States
Diversity jurisdiction arises where there is diversity of citizenship and
the amount in controversy exceeds $75,000 private litigants may bring an
action in a Federal district court or a State court
[3] Exclusive State Jurisdiction

State courts have exclusive jurisdiction over all matters to which the Federal
judicial power does not reach

THE U.S. COURT SYSTEM (contd)

Stare Decisis in the Dual Court System

Stare Decisis - Doctrine that once a court has laid down a principle of law as applicable to a certain state of facts, it will adhere
to that principle and apply it to all future cases having substantially the same facts, regardless of whether the parties and
property are the same or not

In the U.S. stare decisis functions approximately as follows:

[1] The U.S. States Supreme Court has never held itself to be bound rigidly by its won decisions, and lower Federal courts and
State courts have followed that course with respect to their own decisions
[2] A decision of the U.S. Supreme Court on a Federal question is binding on all other courts, Federal or State
[3] On a Federal question, although a decision of a Federal court other than the Supreme Court may be persuasive in a State
court, the decision is not binding
[4] A decision of a State court may be persuasive in the Federal courts, but it is not binding except where Federal jurisdiction is
based on diversity of citizenship. In such a case, the Federal courts must apply State law as determined by the highest State
tribunal
[5] Decisions of the Federal courts (other than the U.S. Supreme Court) are not binding upon other Federal courts of equal or
inferior rank, unless the latter owe obedience to the deciding court. Example a decision of the Fifth Circuit Court of Appeals
binds district courts in the Fifth Circuit but binds no other Federal court
[6] A decision of a State court is binding upon all courts inferior to it in its jurisdiction. Thus, the decision of the supreme court in
a State binds all other courts in that State
[7] A decision of a State court is not binding on courts in other States except where the latter courts are required, under their
conflict of law rules, to apply the law of the former state as determined by the highest court in that State. Example if a North
Carolina court is required to apply Virginia law, it must follow decisions of the Virginia Supreme Court

THE U.S. COURT SYSTEM (contd)

Jurisdiction over the Parties

The second essential type of jurisdiction a court must have

A court must have the power to bind the parties involved in the dispute
The court obtains jurisdiction over the plaintiff when he voluntarily submits to the
courts power by filing a complaint with the court
[1] In Personam Jurisdiction

Or personal jurisdiction is jurisdiction of a court over the parties to a lawsuit

jurisdiction based upon claims against a person, in contrast to jurisdiction over the
person's property
[2] In Rem Jurisdiction

Courts in a State have the jurisdiction to adjudicate claims to property situated within
the State if the plaintiff gives those persons who have an interest in the property
reasonable notice and an opportunity to be heard
jurisdiction based on claims against property
[3] Attachment Jurisdiction

jurisdiction over a defendant's property to obtain payment of a claim not related to the
property
Invoked by seizing the defendants property located within the State to obtain
payment of a claim against the defendant that is unrelated to the property seized

THE U.S. COURT SYSTEM (contd)

Civil Procedure

Civil disputes that enter the judicial system must follow the rules of civil procedure
Designed to resolve the dispute justly, promptly and inexpensively
Participants in the Court System

[1] Plaintiff
party that initiates the proceedings court of original jurisdiction
[2] Prosecutor

criminal case initiate proceedings

[3] Defendant

civil & criminal against whom proceedings are brought

[4] Judge

primary officer of the court

[5] Attorneys or lawyers

trained individuals representatives

[6] Jury

body of citizens sworn by a court to reach a verdict

THE U.S. COURT SYSTEM (contd)

The Pleadings

a series of statements that give notice and establish the issues of

fact and law presented and disputed
[1] Complaint

initial pleading by the plaintiff stating his case

[2] Summons

notice given to inform a person of a lawsuit against her

[3] Answer

defendant's pleading in response to the plaintiff's complaint

[4] Reply

plaintiff's pleading in response to the defendant's answer

THE U.S. COURT SYSTEM (contd)

Pre-Trial Procedure

Process requiring the parties to disclose what evidence is available

to prove the disputed facts; designed to encourage settlement of
cases or to make the trial more efficient
[1] Judgment on Pleadings

a final ruling in favor of one party by the judge based on the pleadings
[2] Discovery

right of each party to obtain evidence from the other party

[3] Pretrial Conference

a conference between the judge and the attorneys to simplify the issues in
dispute and to attempt to settle the dispute without trial
[4] Summary Judgment

final ruling by the judge in favor of one party based on the evidence
disclosed by discovery

THE U.S. COURT SYSTEM (contd)

Trial

Determines facts and the outcome of the case

[1] Jury Selection

Involves a voire dire an examination by the parties attorneys (or in some courts, by the judge) of the potential
jurors
each party has an unlimited number of challenges for cause which prevent a prospective juror from serving if the
juror is biased or cannot be fair and impartial
In addition, each party has a limited number of peremptory challenges which allow the party to disgualify a
prospective juror without showing cause
[2] Conduct of Trial

consists of opening statements by attorneys, direct and cross-examination of witnesses, and closing arguments
[3] Jury Instructions

judge gives the jury the particular rules of law that apply to the case
[4] Verdict

the jury's decision based on those facts the jury determines the evidence proves.
After the Trial
[1] Motions Challenging the Verdict

include motions for a new trial and a motion for judgment notwithstanding the verdict
[2] Appeal

determines whether the trial court committed prejudicial error

[3] Enforcement

plaintiff with an unpaid judgment may resort to a writ of execution to have the sheriff seize property of the
defendants and to garnishment to collect money owed to the defendant by a third party

ALTERNATIVE DISPUTE RESOLUTION (ADR)

Why ADR?

litigation is complex, time-consuming and expensive

court adjudication involve long delays
courts lack special expertise in substantive areas
courts provide only a limited range of remedies
litigation process offers little opportunity for compromise
litigation often causes animosity between the disputants
Alternatives to Litigation

Arbitration most important alternative

Others [1] conciliation, [2] mediation, [3] mini-trials and [4] summary jury trials
The various techniques differ in a number of ways, including:
[1] whether the process is voluntary;
[2] whether the process is binding;
[3] whether the disputants represent themselves or are represented by attorneys;
[4] whether the decision is made by the disputants or by a third party;
[5] whether the procedure used is formal or informal; and
[6] whether the basis for the decision is law or some other criterion

Which method of civil dispute resolution litigation or one of the non-governmental methods is better for a particular
dispute depends on several factors, including;
[1] financial circumstances of the disputants;
[2] the nature of their relationship (commercial or personal, ongoing or limited); and
[3] the urgency of their need for a quick resolution

ADR methods are suitable where privacy, speed, preservation of continuing relations and control over the process
including the flexibility to compromise are important to the parties

ADR (Contd)

Arbitration
a non-judicial proceeding in which a neutral party selected by the
disputants renders a binding decision (award)
less formal and the rules of evidence are more relaxed
Normally conducted in private enables the parties to avoid
unwanted publicity
disputes are settled by one or more arbitrators
facts presented before trained experts
extensively used in commercial contracts
means to avoid expensive litigation
Conciliation

a nonbinding, informal process in which the disputing parties select a

neutral third party (the conciliator) who attempts to help them reach a
mutually acceptable agreement
Mediation
a nonbinding process in which a third party acts as an intermediary
between the disputing parties and proposes solutions for them to
consider

ADR (Contd)
Mini-Trial

a nonbinding process in which attorneys for the disputing parties

(typically corporations) present evidence to managers of the
disputing parties and a neutral third party, after which the managers
attempt to negotiate a settlement in consultation with the third party
A structured settlement process that combines elements of
negotiation, mediation and trials
Summary Jury Trial

mock trial followed by negotiations

Parties present their case to an advisory jury
Not binding
Negotiation

consensual bargaining process in which the parties attempt to reach

an agreement resolving their dispute without the involvement of third
parties.