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Chapter 4

Resolving Disputes:

Litigation and

Alternative Dispute

Resolution Options

McGraw-Hill/Irwin

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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CHAPTER OVERVIEW

  • The role of dispute resolution in business planning.

  • The process of using civil litigation to resolve disputes.

  • Methods of alternative dispute resolution.

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CIVIL LITIGATION

  • A dispute resolution process where the parties and their counsel argue their view of a civil (noncriminal) controversy in a court of law

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LITIGATION

  • The odds of a business organization becoming involved in litigation have increased precipitously in recent years.

  • From 1980 to 2005, the number of civil cases filed in federal courts more than doubled.

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Pre-lawsuit: Demand/Settlement Negotiations

  • If the issues are relatively simple, this can be a cost-effective method to resolve a dispute fairly and quickly.

  • Also minimizes publicity.

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Standing

  • Means that the party asserting the claim:

  • (1) must have suffered an injury in fact;
  • (2) suffered harm that is direct, concrete, and individualized;
  • (3) articulates what legal redress exists to compensate for the injury.

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Parties to a Lawsuit

  • Plaintiff: The party who initiates a lawsuit by filing a complaint with the clerk of the court against the defendant.

  • Defendant: The party sued in a civil lawsuit, (a defendant may be called a respondent).

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Pleadings Stage

  • Complaint and Summons

  • Answer

  • Counterclaim

  • Cross-Claim

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Discovery Stage

  • Depositions

  • Interrogatories

  • Requests for production

  • Request for Admissions

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Motions Used During Litigation

  • To Dismiss

  • For Summary Judgment

  • To Compel Discovery

  • To Dismiss for Mistrial

  • For Judgment as a Matter of Law

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Bridgestone Americas,Inc. v. Mayberry,
854 N.E.2d 355 (Indiana 2006)

  • Discovery controversy: whether to order information disclosed or not ?

  • The court must weigh the potential harm of disclosure against the need for the information in reaching a decision.

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Pretrial Conference

  • The conference is generally held between the attorneys for the parties and the judge.

  • The primary reason is to encourage settlement.

  • Second, the court will resolve any outstanding motions.

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Trial

  • If the case cannot be settled, the parties will eventually go to trial.

  • The trial generally takes place in front of a judge as the finder of law and with a jury as a finder of fact.

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Jury Selection and Opening

  • Process of asking potential jurors questions to reveal any prejudices.

  • The questioning process is known as voir dire.

  • After the jury is selected, the attorneys present their theory of the case and what they hope to prove to the jury in opening statements.

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Testimony

  • After the opening statement, the plaintiff’s attorney then asks questions, known as direct examination, of the witnesses.

  • The defendant’s attorney may then conduct cross-examination of the witnesses.

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Submission of Evidence

  • Each side also uses its witnesses to introduce relevant evidence, or to:

  • authenticate documents,
  • verify physical evidence, or
  • provide expert testimony accompanied by charts or graphs shown to the jury.

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Closing Arguments

  • Once the testimony/evidence is presented to the jury, the attorneys sum up the case and try to convince the jury that their version of the case is more compelling.

  • This is known as a closing argument.

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Charging the Jury

  • The judge then charges the jury, by giving them instructions on how to work through the process of coming to a factual decision.

  • The judge will also inform the jury that the standard of proof in a civil case is a preponderance of the evidence.

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Deliberations

  • After receiving the charge, jurors move to a private room and engage in deliberations.

  • Although the jury is permitted to send questions to the judge, the jurors are alone in their deliberations.

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Verdict

  • The jury returns a decision: the verdict.

  • If, however, the jury cannot agree on a verdict, this is known as a hung jury and the litigants must start the process all over.

  • Rules for civil litigation frequently do not require a unanimous verdict, so hung juries are rare in a commercial dispute.

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Post-trial Motions and Appeals

  • Appellate courts engage in judicial review to decide whether any errors were committed during the trial and also have the power to reverse or modify the decisions of trial courts.

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Students tend to think that one can appeal their case simply because they lost, and need help understanding that appeals are based on legal issues, not factual ones.

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Collecting the Judgment

  • Collecting judgments may sometimes be difficult, especially if the defendant’s assets are tied up in nonliquid forms such as real estate, or are exempt from claims of creditors through a bankruptcy filing.

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ALTERNATIVE DISPUTE RESOLUTION

Increasingly popular due to the following:

  • Cost

  • Time

  • Privacy

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Arbitration

  • Voluntary or Contractual

vs

  • Legally mandated

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Consider explaining the Federal Arbitration Act

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Mediation

  • Mediation is becoming increasingly common as a cost-efficient form primarily because mediation is relatively informal and does not require as much time or preparation as arbitration.

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Green Tree Financial Corporation v. Randolph, 531 U.S. 70 (2000)

“[W]e have recognized that federal statutory claims can be appropriately resolved through arbitration, and we have enforced agreements to arbitrate that involve such claims.”

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Expert Evaluation

  • For parties involved in a business dispute where the issues are somewhat complex and related to the intricacies of a certain industry or profession, expert evaluation by an independent expert who recommends a settlement is a popular alternative.

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Hybrid Form of ADR

  • Sometimes known as med-arb, both parties first submit to mediation for a set period of time (perhaps two days).

  • If the mediation fails, the process then moves to binding arbitration.

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learning outcomes checklist

  • 4 - 1 Identify the ways in which dispute resolution can be used in business planning.

  • 4- 2 Explain the meaning and purpose of civil litigation as a method of resolving disputes.

  • 4- 3 Articulate the concept of standing.

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learning outcomes checklist

  • 4- 4 Name the stages of litigation and identify the characteristics of each stage.

  • 4- 5 List the methods of alternative dispute resolution (ADR) and potential advantages of using ADR.

  • 4- 6 Distinguish between arbitration and mediation and explain both processes .

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learning outcomes checklist

  • 4- 7 Apply the legal standards for when an arbitration clause may be held invalid.

  • 4- 8 Explain how online dispute resolution can be used to solve small claim disputes.

  • 4 - 9 Provide an example of a hybrid form of alternative dispute resolution.