TRIALS AND RESOLVING DISPUTES Chapter 3 Meiners, Ringleb & Edwards The Legal Environment of Business, 12th Edition ©2015 Cengage Learning.

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Transcript TRIALS AND RESOLVING DISPUTES Chapter 3 Meiners, Ringleb & Edwards The Legal Environment of Business, 12th Edition ©2015 Cengage Learning.

RIALS AND

ESOLVING

ISPUTES

Chapter 3

Meiners, Ringleb & Edwards The Legal Environment of Business, 12 th Edition

HAPTER

SSUES



Basic Trial Procedures

 Procedures and Processes of Litigating a Dispute 

Remedies in Civil Litigation

 Appellate Stage 

Enforcement Stage

 Alternative Dispute Resolution (ADR)  Arbitration  Negotiation-Settlement  Mediation ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

HE

UDICIAL

YSTEM

 The court system is adversarial in nature.



Parties have the

 

responsibility for bringing a lawsuit, shaping issues and presenting evidence.

Lawyers represent the parties’ claims.

Judges don’t investigate.

 Court applies legal rules to facts presented.



Trials are often costly and uncertain.

 Complex facts, extensive evidence, mountains of business records involved.



Juries tend to be less sympathetic to businesses

ASIC

RIAL

ROCEDURES

 Pleading Stage 

Discovery Stage

 Pretrial Stage 

Trial Stage

 Appellate Stage 

Enforcement Stage



See Exhibit 3.2

HE

LEADINGS

TAGE

 Formal statements made to the court by the parties  Jurisdiction needed over subject matter & parties  Notice given of lawsuit by

service of process

through

summons

 Complaint   Alleges facts for jurisdiction & remedy/remedies Requests remedy(ies)  Responses to Complaint    Motion to Dismiss (Demurrer)  By defendant Answer (may include

affirmative defenses –

usually by defendant) Counterclaim   Reply

See Exhibit 3.1 (Casino owner pokes a hole in a Picasso, and sues Lloyds of London for compensation for losses under his insurance policy with them.)

URPOSE OF

ISCOVERY

(Legal Tools to Obtain Evidence)

 Rules of Civil Procedure set guidelines & limits to the process   Purposes to (1) preserve evidence, (2) limit element of surprise, (3) encourage settlement Depositions of parties and witnesses (including experts) – sometimes videotaped  Interrogatories of the parties  Use of Expert Witnesses  Requests for Admissions  Orders of Production of Documents   Physical/Mental Examinations Impacts on business – expensive & time-consuming  Court may sanction a party who fails to comply with discovery requirements .

  Default Judgment Contempt of court (fines, pay costs to the other party) ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

C ASE

B ARABIN V . A STEN J OHNSON , I NC .

 Henry Barabin was exposed to asbestos from 1964-1984.

 Mostly worked at a paper mill that used dryer felts containing asbestos  Suppler was AstenJohnson  In 2006 Barabin was diagnosed with rare lung cancer; cause was exposure to asbestos   He sued AstenJohnson moved to exclude expert testimony of Barabin’s Dr. Cohen because he had “dubious credentials and his lack of expertise with regard to dryer felts and paper mills.”   District Court chose not to hold a

Daubert

hearing to determine if Cohen was qualified expert Jury was to determine if Cohen’s testimony was credible  Jury found for Barabin  Awarded damages of $10,200,000  AstenJohnson appealed.

C ASE

B ARABIN V . A STEN J OHNSON , I NC .

 District court determines relevance and reliability of expert testimony    Admission or exclusion under

Daubert

expert testimony rests on scientific reliability/relevance of Expert’s opinion must be deduced from a “scientific method” to be admissible Test under

Daubert

is not correctness of expert’s conclusions:  Rather the “soundness of expert’s methodology”  Factors in assessing reliability of expert testimony:  (1) whether scientific theory/technique can be (has been) tested   (2) whether theory/technique has been subjected to peer review & publication (3) whether there is a known or potential error rate, and  (4) whether the theory/technique is generally accepted in the relevant scientific community  HELD: District erred. New Trial is provided.

   Because no

Daubert

hearing was conducted, District Court failed to assess if Dr. Cohen applied scientific methodologies, reasoning or principles Court merely allowed parties to submit experts’ unfiltered testimony to the jury District court abused discretion when denying AstenJohnson’s motions for new trial ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

I NTERNATIONAL P ROSPECTIVE “BRITISH COURTROOM PROCEDURE”

 Both British & U.S. court proceedings based on adversarial model  However, significant differences in the implementation of the model  British bar divides into

solicitors

and

barristers

 

Solicitors

handle advising commercial and private clients on business/property matters

Barristers

do mostly litigation     Much more specialization in the U.S. than in the British system British Courts: “a more civil & cooperative atmosphere” than the U.S.

Barristers don’t walk around the court while questioning witnesses In UK, most objections re: evidence raised outside the presence of the jury – resolved before the witness is called  Barristers rely on judge to object to evidence  Jury in Britain sees continuous flow of information and less maneuverings by attorneys as in the U.S.

 At end of evidence, in British court, judge summarizes evidence for the jury.

 In U.S. judges do not discuss evidence with jury.

(Continued)

I NTERNATIONAL P ROSPECTIVE “BRITISH COURTROOM PROCEDURE”

 Order of trial is different • In UK defense starts the opening statement at the end of the plaintiff’s/prosecution’s evidence  Some say British trials are superior  Others worry re: active role the judge takes • Concern that one party is prejudiced by judge’ non-verbal behavior (sighing, frowning, etc.)  U.S. Court of Appeals have actually overturned trial verdicts based on such a judge’s behavior.

 General agreement from social science experiment of tapes of trials shown to people:    Shown trials conducted under U.S. and UK rules UK version more civil & view judge more positively than in the U.S.

However participants still prefer the U.S. procedure overall ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

RETRIAL

TAGE



Summary Judgment –

either party may request  Judge renders it 

Pretrial Conference –

either party or court may request  Usually attorneys and judge attend  Simplify issues  Plan course of the trial  Judges get parties to drop certain parts of case  Helps to focus on key issues  Judges often encourage parties to reach out-of-court settlement o

See “Test Yourself”

URY

ELECTION

 6 th and 7 th Amendments gives right to a

jury

cases in certain 

If no use of jury, judge becomes trier of fact

 Selection of jury involves

voir dire



Attorneys allowed limited number of challenges to reject prospective jurors without stating reason –

peremptory challenges

 Usually 12 persons on jury panel 

Some states have fewer – such as 6 jurors

RIAL

TAGE

 Opening Statements by attorneys  Presentation of

Direct Testimony

 Direct Examination, Cross Examination, Redirect Examination, Re Cross Examination  Closing arguments  Instructions to Jury (also called charges)  Verdict by jury. Judgment may be set aside for jury misconduct.

• • 

Example: Juror in Florida used Facebook to friend a defendant in a personal-injury case Juror was sentenced 3 days in jail



Example: Murder conviction in Arkansas thrown out Juror tweeted information about trial despite warning by judge not do

 Motions For A Verdict   Motion For A Directed Verdict/Motion For Judgment As A Matter of Law/Judgment on the Pleadings 

Cases have been presented, but before going to jury, either party requests entering judgment in its favor Motion for Judgment As A Matter of Law/Motion For Judgment Notwithstanding the Verdict (N.O.V.)

EMEDIES IN

IVIL

ITIGATION

(See Exhibit 3.4)

 Monetary damages  Compensatory  Punitive or exemplary  Nominal o

See Naples v. Keystone

Case o

See Pre-Paid Legal Services, Inc. v. Cahill

 Equitable remedies  Specific performance  Injunction  Permanent  Temporary  Preliminary ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

C ASE

N APLES V . K EYSTONE B UILDING AND D EVELOPMENT C ORP .

 The Naples contracted with Keystone to build their new home.

 Work was warranted. Cost was $620,000.

 Major problems occurred soon after they moved in.

 Crews were sent several times to do repair work.

 Problems continued  Expert, Dykins, was hired to evaluate the home. Said extensive work would be needed.

 Estimated costs of repairs: $113,511 + painting for $15, 819.

 Naples sued Keystone for the amount.

  Trial court held for the Naples, awarding them only $59,140. Stated that a higher damage figure had “not been established with a sufficient degree of certainty.”  Naples appealed.

(Continued)

C ASE

N APLES V . K EYSTONE B UILDING AND D EVELOPMENT C ORP .

 General rule: Place the party entitled to compensation in position it would have been if there had been no breach  In unfinished construction damages are measured by   (1) Reasonable cost of construction & completion, if this does not involve “unreasonable economic waste” OR  (2) Difference between value contracted for and value of performance that was received (without involving “unreasonable economic waste”) Repairs, however, may not result in improvements on the property – as such repairs would be above the work that was warranted.

  The court did not point to conflicting evidence or explanation why it elected to discredit some portions of the estimate (trim, siding + repair & paint portions of interior) while accepting others verbatim.

Trial court’s award was therefore illogical.

 HELD: Trial court was in error.

 New trial ordered and limited to issue damages to compensate plaintiffs adequately .

P RE -P AID

C ASE

L EGAL S ERVICES , I NC . V . C AHILL

         

Pre-Paid Legal Services, Inc. (PPLSI) sells legal service plans. Members pay a monthly fee



May call a toll-free number to be connected to law firms that contracted with PPLSI Firms provide free or discounted legal assistance Cahill was a successful sales rep. for PPLSI – rose to a senior position

  

Had access to sales records of all representatives Knew the top performers in the country Signed an agreement with PPLSI prohibiting use of such information outside PPLSI Cahill met with top sales associates, including Cabradilla.

 

Told them he was going to work with another company, Nerium Wanted the sales associates to come with him Cahill resigned; posted material about Nerium on PPLSI private website Posting seen only by top sales associates Cahill’s access to PPLSI materials & websites was terminated PPLSI sued Cahill for breach of contract and in tort.

It would be some time before dispute would go to arbitration & PPLSI requested the court to issue a preliminary injunction



Injunction would prohibit Cahill from exploiting information he had learned from PPLSI Magistrate Judge reviewed request, issued a report & recommendation to be reviewed by the District Judge (Continued)

P RE -P AID

C ASE

L EGAL S ERVICES , I NC . V . C AHILL

           

CASE DECISION:

Preliminary Injunction is extraordinary remedy – exception rather than the rule Purpose of preliminary injunction is to preserve status quo – pending outcome of the case In order for court to grant this kind of injunction, request must meet 4-part test. Requesting party must demonstrate



(1) there is a substantial likelihood it will prevail on the merits of case;

  

(2) it will suffer irreparable harm unless injunction is issued; (3) the threatened injury outweighs the harm the injunction might cause the opposing party; AND (4) preliminary injunction if issued will not adversely affect he public interest If Cahill is permitted to breach the non-solicitation agreement, PPLSI will suffer irreparable harm Cahill continued to send text messages to Cabradilla after he rejected his offer to go to Nerium PLUS engaged in another multi-level marketing company Defendant will need to recruit sales associates to Nerium shows PPLSI faces “significant risk” that Cahill will solicit PPLSI associations if not enjoined from contacting them Harm to Cahill being enjoined is minimal



He can still recruit sales associates to Nerium & build his business Only restriction Cahill will face is that he abides by the contract provisions that he agreed to when he started with PPLSI Public interest is promoted through enforcement of valid contracts HELD: PPLSI has satisfied the four requirements HELD: Preliminary injunction should be issued barring Cahill contacting PPLSI sales associates for them to join Nerium HELD: PPLSI entitled to preliminary injunction until issues can be presented to arbitrators

PPELLATE

TAGE

(Appeal Based on Error of Law)



Arguments before the court

 Written Briefs  Oral Arguments 

Decisions by the court

 Majority opinion  Concurring opinions  Dissenting opinions 

Outcomes of decisions

 Affirmed  Modified  Reversed  Remanded 

See

“

German Trial Procedure” re: a different country’s system

NFORCING

UDGMENTS

 If no further appeal is available, judgment becomes final  It is

res judicata

 Enforcement of judgment is through

writ of execution

 Court orders an official (i.e. sheriff) to satisfy judgment through an act (such as seizure of property, garnishment, etc.)  A complexity that causes parties to look for alternative dispute resolution  In U.S. each side usually responsible for own costs  Not in Britain – loser usually pays winner’s legal costs ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

I NTERNATIONAL P ERSPECTIVE “GERMAN TRIAL PROCEDURE”

 In Germany judges play a more active role in trial process than U.S. judges  Civil procedure is governed by rules called the Zivilprozessordnung (ZPO)  In U.S. judge’s role usually limited to applying law to facts of the case  In Germany:  Judge decides the facts of the case, then applies law to facts  Judge, not lawyers, decides which witnesses to call  Judge, not lawyers, interrogates witnesses and records their testimony  Judges may ask questions only about evidence that parties to the case present themselves  What is presented is more limited than typical presentation at U.S. trials  German courts want to protect many more confidential relationships than do U.S. courts ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

RBITRATION

 Most widely recognized form of ADR  Usually results are faster in resolution of matters  3rd neutral party or panel (usually expert) is

arbitrator

arbiter

 Parties agree upon this ADR in the contract or during a later dispute  

Federal Arbitration Act (FAA) states agreement to arbitrate must be upheld

Arbitrator’s decision is

binding

 Arbitration decision is final and matter usually cannot be litigated again or appealed  Usual rule:

No right

to go to trial (parties to the dispute give up this right)  Appeals from these decisions are very specific and limited.

 Thousands of international disputes go to arbitration each year 

Uniform Arbitration Act (UAA) upholds the integrity of this process

HE

RBITRATION

GREEMENT

   

Decided at time of making the contract or after dispute arises Begins when party files a

submission

Parties agree on arbitrator(s) The hearing procedure

  

Closed door Less restrictive procedural and evidentiary rules than a trial court Procedures include on-line arbitration



Arbitration associations have rules that guide participants/arbitrators

  

Good faith cooperation Voluntary and prompt exchange of documents Uncooperative parties may be required to pay fees and compensation by arbitrator

   

Arbitrators are usually attorneys, but need not be – often are experts in a field The award (decision)

 

Usually given in writing within 30 days of close of arbitration hearing Arbitrators have broad powers to decide remedies

Appealing the award

   

Attacks on arbitrators are rarely successful Errors of fact or law are usually not reviewable Grounds for overturning appeal: fraud, partiality, serious procedural misconduct, excessive use of power by arbitrator Arbitrators have wide latitude in awards Generally arbitration award is final

C YBER L AW “INTERNATIONAL ARBITRATION AND MEDIATION OF DOMAIN NAME DISPUTES

”  World Intellectual Property Organization (WIPO) in Geneva establishes international rules for trademarks and other forms of intellectual property  WIPO has domain name resolution service to protect domains (i.e. .mx for Mexico and .edu for education)  WIPO has a Uniform Domain Name Dispute Resolution Policy (UDRP) dealing with such problems as “cybersquatting”  Parties go to Arbitration and Mediation Center where experts handle disputes  Fees are assessed  If 1-5 names included in a complaint -- $1,500  If 3 panelists are requested -- $3,000  Over 1,000 disputes/year submitted to the Center ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.



Least formal

form of ADR  Parties

decide to settle matter

between themselves  Often use lawyers or representatives, though not required  Lawyers, etc. are

agents

of the parties of the dispute  Negotiated settlement is usually a contract, which

is enforceable, like other contracts

,

TAGES OF

EGOTIATION

 Stage 1: Study issues and information 

Stage 2: Exchange of information

 Different styles: i.e.“tough guy” vs. “problem solver”  Stage 3: Work your strategy  Usually involves compromise 

Stage 4: Agreement is reached; usually a contract is written



Policy of the courts is to enforce negotiated settlements

 3rd neutral person (

mediator

) assists the parties of the dispute 

Parties mutually decide on a resolution

 Mediator makes

suggestions



Mediator’s suggestions are

NOT BINDING

on the parties

 Parties may go to trial after this ADR 

Mediation often helps to maintain the relationship between the parties

 Mediation also involves labor disputes and marital disputes ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

HE

EDIATOR

 Some states have no requirements at law, but many states are moving toward some licensing 

Most people prefer a trained or experienced person

 Usually parties agree to maintain confidentiality 

If no requirements, the mediator may be the choice of the parties

 If mediator fails to act professionally, may be subject to liability to one of the parties ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

HE

EDIATION

ROCESS

 Mediator collects information, outlines key issues, listens, asks questions, observes the parties, discusses options, and encourages compromise  Mediator often helps to draft the settlement agreement  The settlement agreement is enforceable in court  Mediator may assist in deciding the confidentiality of the case  If confidentiality is agreed upon, nothing can be said in public  Information revealed during negotiation or mediation should not be used as evidence if the dispute goes to a later trial ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.