Legal Environment of Business
McGraw-Hill
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The Legal & Regulatory Environment of Business 17e
Chapter 4
Litigation
Pagnattaro Cahoy Magid Reed Shedd
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Learning Objectives
To understand the litigation process and the parties to a case
To discuss how issues such as standing, personal jurisdiction and class actions can affect litigation
To understand how pretrial procedures, including pleadings, discovery and motions affect litigation
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Our objectives in this chapter are:
To understand the litigation process and the parties to a case.
To discuss how issues such as standing, personal jurisdiction and class actions can affect litigation.
To understand how pretrial procedures, including pleadings, discovery and motions affect litigation.
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Learning Objectives
To recognize the major steps in a civil trial
To appreciate post trial issues, such as appeals and enforcement
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Our objectives in this chapter are:
To recognize the major steps in a civil trial.
To appreciate post trial issues, such as appeals and enforcement.
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Litigation
Process helps the business community resolve actual disputes
Effective business leaders should develop an understanding of the process
Any lawsuit is an immense drain of time, money, and energy on everyone involved
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Impartial dispute resolution process is essential to any system that preserves private property interests. It is needed to conduct business and enforce rights.
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Parties
Plaintiff: Party who files a civil action
Defendant: Party sued by the plaintiff or person against whom a criminal charge is filed by state
Third-Party Defendant: Parties brought in by the defendant to complete the determination of a controversy
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Counterclaim: Filed by defendant to sue plaintiff. Counterplaintiff: Parties to the counterclaim.
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Standing to Sue
Plaintiff establishing that he or she is entitled to have the court decide the dispute
To establish a standing, plaintiff must allege:
Litigation involves a case or controversy
Personal Stake in the resolution of the controversy
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Court’s power to resolve a controversy is limited by subject matter involved in the case. Standing to sue does not depend upon merits of the plaintiff’s contention that specific conduct is illegal. Plaintiff must have a legally cognizable claim to maintain a lawsuit.
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Case 4.1 - Standing to Sue
Case
Mayer v. Belichick
605 F.3d 223 (3rd Cir.)
United States District Court for District of New Jersey
Issue
Videotaping the New York Jets coaches and players on the field with the purpose of illegally recording, capturing and stealing the New York Jets signals and visual coaching instructions by the Patriots
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Third Circuit found that, because the plaintiff did not have a legally protected right arising out of the alleged dishonest videotaping program, he did not state
an actionable injury. Accordingly, defendant’s motions to dismiss were granted.
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Personal Jurisdiction
Having authority over the parties to the case on the part of the court
Personal jurisdiction over the defendant obtained by:
Summons
Service of process
Long-Arm Statutes: Provision for the service of process beyond the boundaries of the state
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Summons: Notice to appear in court. Service of process - Publication of notice and mailing summons to the last known address. Long-arm statutes are valid and constitutional only if defendant is provided with due process of law. Personal jurisdiction is obtained under long-arm statutes only when requiring defendant to appear does not violate due process.
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Personal Jurisdiction
Long-arm statute allows a court to obtain jurisdiction over defendant outside its borders
Extradition: Voluntary turning in of prisoner from one state to another by the presiding governors
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Due process requires that if a defendant is outside the state where the lawsuit is filed he or she has certain minimum contact with the state.
Long-arm statute allows a court to obtain jurisdiction over defendant outside its borders when defendant:
Has committed a tort within the state.
Owns property within the state that is the subject matter of the lawsuit.
Has entered into a contract or transacted business within the state.
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For any court to exercise authority in any
given case, which of the following must happen:
Court has jurisdiction of subject matter
Court can exercise personal jurisdiction of
the defendant
Plaintiff has standing to bring the case before
the court
All the above
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Answer: D.
Class-Action Suits
One or more plaintiffs file suit on their own behalf and on behalf of all other persons who may have a similar claim
Involve matters in which no one member of the class has sufficient financial interest to warrant litigation
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Plaintiffs seeking to bring class-action suit must pay all court costs.
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Figure 4.1 - Pretrial Procedure
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Figure illustrates the steps involved in the pretrial procedure.
Figure 4.1 - Pretrial Procedure
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Figure illustrates the steps involved in the pretrial procedure.
Pleadings
Legal documents that are filed with a court to begin the litigation process
Complaint: Pleading filed by plaintiff with the court clerk
Answer: Response in the form of written pleading by defendant
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Counterclaims - Causes of action defendant has against the plaintiff.
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Pleadings
Default: Order entered by court when defendant does not respond in any way
After receiving an answer plaintiff files a reply that:
Admits or denies each allegation of the defendant’s counterclaims
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Default grants the plaintiff the relief sought by the complaint. Pleadings give notice of each party’s contentions and serve to set boundary lines of the litigation.
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Discovery
Ensure that the results of lawsuits are based on the merits of the controversy and not on the ability or skill of counsel
Narrows the issues disputed by the parties
Encourages the settlement of the lawsuit and possibly avoiding actual trial
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Discovery practice is designed to ensure that each side is fully aware of all the facts involved in the case and of the intentions of the parties.
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Methods to Discovery
Interrogatories: Series of written questions presented to the opposing parties
Request for production of documents: Either party asking the other to produce specific documents
Depositions: Lawyer orally asks questions of the possible witness
Request for an admission
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Interrogatories must be answered by the party receiving them. All the words spoken during deposition are recorded by a court reporter. Request for an admission: Requesting the other to admit that certain issues presented in the pleadings are no longer in dispute.
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Scope of Discovery
Discovery procedures are intended to be used freely by parties without court’s supervision
Judges provide a liberal interpretation of the degree of discoverable information
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When a question about scope of what is discoverable arises party objecting to discovery seeks the judge’s opinion. Information is considered discoverable when it can lead to evidence admissible during a trial.
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Abuse of Discovery
Discovery imposes a tremendous burden on the judicial system
Aggression during discovery on the part of any party can damage the litigation process
Defendant should be open and responsive to reasonable requests of the plaintiff
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Engaging in a strategy of open warfare leading to trial causes resource damage and greater lawyer expense.
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Food for Thought…
In a survey of 1,000 judges, “abusive discovery” was rated highest among the reasons for the high cost of litigation
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Motions
Statute of limitations: Move defendant to dismiss a suit when a matter of law prevent the plaintiff from winning the suit
Judgment on the pleadings: Motions which asks the judge to decide the case based only on the complaint and its answer
Summary judgment: Motion asking the judge to base a decision on the pleadings and on other evidence
Affidavits: Evidence in the form of sworn statements
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Pretrial filing seeking to determine the rights of concerned party when a question of law is at issue. When either party attempts to convince court that there are only questions of law to be resolved. Lack of jurisdiction of court or expiration of the period during which defendant is subject to suit. Judgement on the pleadings are time-consuming but needless trial is avoided. Judges terminate the litigation process if a lawsuit is found to be frivolous.
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Figure 4.2 - Typical Pretrial Motions
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Figures lists some of the pretrial motions in the litigation process. Many cases settle after a ruling on the motion for summary judgment.
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Figure 4.3 - Trial Steps
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Figure list the steps involved in the trial process.
Figure 4.3 - Trial Steps
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Figure list the steps involved in the trial process.
Food for Thought…
“I consider trial by jury as the only anchor yet devised by man, by which a government can be held to the principles of its constitution”
–Thomas Jefferson
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Jury Selection
Prior to calling of the case, court clerk will have summoned prospective jurors
Voir Dire: Speaking the Truth
Selected jurors are called into jury box to conduct the examination
Peremptory Challenge: No cause or reason needs to be given to excuse a prospective juror
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Voir dire allows the court and attorneys to examine potential jurors as to his or her qualifications and ability to be fair.
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Case 4.2 - Commonality
Case
Wal-Mart stores, Inc. v. Dukes
564 U.S. __ (2011)
Issue
Local managers exercise their discretion over pay and promotions disproportionately in favour of men, having an unlawful disparate impact on female employees; and Wal-Mart refused to curb its managers’ authority
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Commonality is an essential element to establish a class action. Because the plaintiffs were unable to demonstrate commonality, class certification was denied. Even though class certification was denied, women in the potential class can still bring claims if they can demonstrate discrimination.
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Food for Thought…
Supreme Court outlawed racial discrimination in peremptory challenges
Batson v. Kentucky, 476 U.S. 79 (1986)
Gender discrimination is banned in the jury selection process
J.E.B. v. Alabama Ex Rel. T.B., 511 U.S. 127 (1994)
Courts are divided on the issue of banning discrimination based on religion in peremptory challenges
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Other Steps During a Trial
Attorneys make opening statements
Plaintiff introduces evidence to establish truth of allegations made in the complaint
Directed Verdict: Motion by defendant
Lawyers summarize the evidence
Jury Instructions: Judge informing the jury with the law applicable to the case
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Opening statements familiarizes the jury with the essential facts that each side is expected to prove. Introducing witness involves examination of witnesses, production of documents, and other exhibits. Plaintiff must have some proof of each essential allegation or lose the case on a directed verdict. Lawyers try to convince the jury of what the case’s outcome should be. Purpose of jury instructions is to bring the facts and the law together that will result in a decision.
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Directed verdict refers to the
Power of court over parties involved
Power granted to litigant to reject jurors
Power of court to order sworn questioning
of witnesses outside of court
Power of court to grant a decision in
favor of defendant when insufficient
evidence is presented at trial
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Answer: D.
Burden of Proof
Criminal Cases
Beyond a Reasonable Doubt
Civil Cases - Subject to two standards
Preponderance of Evidence, &
Clear and Convincing Proof
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Two meanings depending on context.
Responsibility that a person has to come forward with evidence on a issue.
Burden of persuasion - responsibility a person has to be persuasive as to a specific fact.
Beyond a reasonable doubt: Prosecution in a criminal case has the burden of convincing the trier of fact that the defendant is guilty without doubt.
Preponderance of evidence: Requires that a party convince the jury that the facts are as he or she contends.
Clear and convincing proof: Used in situations where the law requires more than a simple preponderance but less than proof beyond a reasonable doubt.
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Deciding the Case
Principal job of the jury is to (1.) Determine what the facts are, and (2.) To apply the law to these facts as instructed by the judge
Verdict: Decision by the jury announced in the courtroom when jury’s deliberations are over
Judgment: Judge deciding whether to accept the verdict or not
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Party dissatisfied with jury’s verdict may seek a judgment notwithstanding the verdict, or go for motion for judgment as a matter of law.
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Post-Trial Issues
Appellant: Party appealing when the result at the trial court level is reached
Appellee: Successful party in the trial court
Petitioner: Party initiating the petition when a petition for certiorari is filed to the Supreme Court
Respondent: Opponent party in the petition
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Losing parties have the right to appeal the case to a higher court.
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Table 4.1 - Litigating Parties
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Table lists the parties in the different types of lawsuits and appeals.
Appellate Procedures
Courts of appeal deal with the record of the proceedings in lower court
Courts of appeal studies the issues, testimony, and proceedings to determine:
Whether prejudicial errors occurred or whether the lower court reached an erroneous result
Brief: Short description of the case by each party to the trial
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Pleadings, testimony, and motions are reduced to a written record. Brief includes factual summary, legal points and authorities, and arguments for reversing or affirming the lower court decision.
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Appellate Procedures
Oral Argument: Specified amount of time given to attorneys to explain orally to the court their position in the case
Vote of the judges’ or justices’ impressions is taken
Each judge prepares an opinion and circulates it among the other members
When a majority of justices approve an opinion it is agreed (does not have to be unanimous).
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Oral argument is used less frequently today with courts often relying on written briefs. Losing party may petition the highest court in the system for a writ of certiorari.
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Figure 4.4 - Appellate Review
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Figure describes the steps and procedures followed in appellate review.
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Enforcement of Judgments and Decrees
Execution: When a court official seizes some property of the debtor, sells it at public auction, and applies the proceeds to the creditor’s claim
Garnishment: Involves having a portion of the debtor’s wages paid to the court, which in turn pays the creditor
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Judicial assistance is needed to enforcing the court decision at times. Adverse judgment can lead to the partial loss of wages to satisfy the creditor.
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